Senior living providers facing millions of dollars in lost revenue, new costs tied to COVID-19

Not-for-profit senior living providers are facing millions of dollars in lost revenue and new costs associated with the COVID-19 pandemic.

Senior communities have seen populations fall as a result of COVID-19 deaths, people moving back in with family out of communities and decreased referrals of seniors coming for short-term rehab at skilled-nursing facilities after elective surgeries.

“People are not moving into senior living communities, or they are getting sick with COVID and need to be hospitalized,” said Kelli Dobner, chief advancement officer for Detroit-based Samaritas.

“Every day they are not with us, we lose revenue.”

At the same time, significant new costs for personal protection equipment that’s now needed, “appreciation pay” and other staff incentives to keep caregivers coming to work are bringing unbudgeted costs.

“This is an industry issue … we all are experiencing these challenges,” Dobner said.

Samaritas, which is operating on a $120 million budget, is forecasting a gap of $5 million for the year.

“That’s a conservative approach to where we think we’re going to be … based on reopening costs and lost revenue,” Dobner said.

About 68 percent of the revenue gap stems from lost referrals and fewer number of people served across its programs, with the bulk of it, approximately $2 million, coming from reductions in the number of seniors in its independent living, assisted and skilled nursing facilities, Dobner said.

Samaritas started the year with 611 residents in its five continuum-of-care communities. After dropping to 482 at one point, it’s now hovering around 500, Dobner said last week.

Thirteen seniors in the not-for-profit’s communities have died of COVID-19, she said.

A total of 1,979 residents of nursing homes in Michigan had died as of June 21, according to data reported by the state.

Another 19 are hospitalized due to COVID-19, and as of last week, 17 were recovering from COVID-19 at an off-site, third-party COVID care facility in Grand Rapids. Those at the off-site location are expected to return to Samaritas once they recover, Dobner said.

The not-for-profit budgeted to have 650 seniors in those communities for March-June, she said.

But its actual population was 603 in March, 565 in April and 541 in May. The lower population numbers translate to decreased dollars coming in.

“Based on the downward trend in census, we do not expect to meet our annual budget and have been preparing for a census in the range of 530-600 in the remaining months of the year,” with the lowest population forecast in the fall in anticipation of a resurgence of COVID-19 then, Dobner said.

Outside of its senior living facilities, Samaritas has lost revenue with fewer referrals in other programs, as well, including its foster-care program, a treatment program for women referred by the Michigan Department of Corrections for treatment related to trafficking and/or addictions, support services for people with disabilities and refugee services which had been focused on people coming from African nations early in the year, Dobner said.

Just under a third of Samaritas’ multimillion-dollar funding gap stems from the unbudgeted costs of purchasing PPE, cleaning supplies, technology to keep seniors connected to family and physicians and $1.39 million in employee appreciation pay and food brought in so staff doesn’t have to go off-site to get a meal and then have to go back through check-in processes.

Samaritas employs close to 1,000 frontline people providing care for seniors across 18 sites in the eastern, western and central parts of the state, and other employees delivering services for people with disabilities and children in foster care, Dobner said.

Other senior living providers are incurring the same costs.

While Presbyterian Villages of Michigan generally saw stable occupancy in its 32 communities, it didn’t have any new tenants moving in until late May/early June, President and CEO Roger Myers said.

The biggest hit to its revenue — a loss of $3 million to $4 million — came with the lack of referrals of short-term rehab patients to its skilled nursing sites in Chesterfield Township and Jackson, which dried up when elective surgeries were discontinued in the region, he said.

“So where we’d normally have 30-35 short-stay patients that were going through a recovery in a nursing home … for 10-20-day stays … right around the middle of March that all ceased. It’s just now beginning to restart.”

Occupancy in its nursing homes, typically at 95 percent, dropped to less than 60 percent during the pandemic, he said.

PVM did not disclose how many people it had in its skilled-nursing and assisted-living sites before and after the pandemic but said six residents of its communities died of COVID-19.

“We won’t overnight rebuild the occupancy to what it was pre-COVID,” Myers said.

“Right now we think that by early December we’ll be back to where we were in February.”

Like Samaritas, PVM, which is operating on a budget of about $146 million, has had incrementally higher costs related to things like PPE and appreciation pay for employees, he said.

It recently implemented a 10 percent to 15 percent pay cut for about 40 of its 500 employees. Those seeing cuts were at the executive and management-level, with an annual salary of $75,000 or more, Myers said.

“We think that will only be in place through the end of this year. If we can increase our revenue back to where it was sooner, then we can reverse some of those reductions back.”

It also tabled the launch of construction on a $25 million expansion in Chesterfield Township to add 130 units of independent living cottages and an aggregate building.

Individual donors are really stepping up to support in areas like PPE, Myers said. “Our objective is to be able to say at the end of this that philanthropy covered 100 percent of added PPE cost.”

And while it will take time to recover from the financial impact of the pandemic, Myers said PVM’s outlook is still very positive.

“There’s been a heightened appreciation for technology that was always in our plan but now is even moreso,” he said, to help residents feel less isolated and to consult with their physicians through telehealth visits when possible.

United Methodist Retirement Communities and Porter Hills, which came together under joint management last year, are facing a $3 million-$3.5 million revenue gap, said President and CEO Steve Fetyko.

The two have a combined budget of about $150 million, making them the second-largest not-for-profit senior living organization in Michigan, behind Trinity Health. About half of their budget is aligned with senior living communities on the east and west sides of the state. The rest funds home and community-based services delivered through the Program for All-Inclusive Care for the Elderly program.

UMRC and Porter Hills have seen 41 positive cases of COVID-19 and 14 deaths, as a result, among the 164 senior residents in its skilled nursing facilities, Fetyko said last week.

The combined occupancy of the two not-for-profits’ nursing homes was around 88 percent before the pandemic, he said. It dropped to a low of 70 percent and now is sitting at about 77 percent.

Assisted living and independent living communities have seen smaller losses in terms of occupancy on a percentage basis, Fetyko said. Roughly $2 million of the revenue gap UMRC and Porter Hills project is tied to lower numbers of referrals in skilled nursing — as few as 400 on a given day, down from 450 at the start of the year — and also lower numbers of people moving in to assisted living and independent living, Fetyko said.

While skilled nursing referrals have begun to pick up with elective surgeries resuming in recent weeks, new residents coming into the assisted living and skilled nursing facilities have still been low, he said.

“What we’re hearing as a common theme is they want to know that there’s the ability for … family and others to visit them in the community.”

A state order prohibiting visits to senior living facilities except in end-of-life situations was set to expire June 26.

In addition to cutting costs, senior living providers are working to raise dollars to help fill the gaps.

UMRC and Porter Hills secured roughly $1.5 million in CARES Act dollars through the Centers for Medicaid Care, Fetyko said.

They also launched a “Not All Heroes Wear Capes” campaign that raised over $1 million between mid-March and mid-June to help cover the costs of PPE and putting 760 employees up in hotels to protect their families from COVID-19 spread, said Wendy Brightman, president, UMRC and Porter Hills foundations.

Samaritas is shifting from galas to themed, drive-in movie fundraisers in Detroit in August and in Grand Rapids in September.

And eight senior living providers jointly applied and secured $120,000 in grants from the Community Foundation for Southeastern Michigan to support PPE costs and staff incentive pay. The group included: Samaritas, PVM, UMRC/Porter Hills, Church of Christ Care Center, EHM Foundation, Jewish Senior Life, Wellspring and Woodhaven Retirement Communities.

Samaritas is part of a similar collaborative seeking joint funding on the west side of the state, Dobner said.

“We learned long before COVID hit that collaboration was the way to go. This crisis has proven that tenfold.”