The pandemic has thrown the long-term care industry into a tailspin.
Fearful of contracting the virus, patients have stayed away from nursing homes, causing a plunge in census numbers for facilities that rely on long-term care residents, short-term rehabilitation referrals and transfers from hospitals.
“Is the industry going to downsize? Yes,” said Andy Edeburn, a principal at Premier, a group purchasing and consulting organization. “Not all nursing homes are going to come back.”
Nursing home occupancies are at an all-time low and facilities are struggling to stay open. Nursing home occupancy dropped 16.5 percentage points to 68.5% in January 2021 from 85% in January 2020, according to the American Health Care Association/National Center for Assisted Living. In addition, 143 facilities closed or merged with other organizations in 2020 and 1,670 are projected to do so in 2021, AHCA/NCAL estimated.
But therein lies an opportunity for nursing homes to reinvent themselves. Edeburn believes facilities can become “super SNFs,” employing more physicians and nurse practitioners, innovating how they care for patients, deploying new technology, and managing more complex cases.
As more patients opt to receive care at home, nursing homes can pivot to compete with long-term care hospitals, instead of relying on therapy patients, he said. But that also could mean less of a need for therapists, who saw their hours and pay cut during the pandemic. It also could be a challenge for an industry that struggles to find and retain staff.
“I don’t know that the nursing home industry will ever go back to the way it was. … It’s an industry in crisis for a number of reasons,” Edeburn said. “We’re always going to have a need for SNFs. What they do and how they do it is going to change.”
Even before the pandemic, major changes were occurring in the post-acute space. Months before the first COVID-19 outbreak in the U.S., in October 2019, CMS changed Medicare reimbursement for therapy services in skilled-nursing facilities. A patient-driven payment model known as PDPM replaced the long-standing Resource Utilization Group payment system, or RUG, which paid facilities based on the number of therapy minutes provided every week.
Under the RUG system, a skilled-nursing facility received $438 per day, on average, for a typical Medicare patient needing assistance with six to 10 activities of daily living, according to an American Journal of Managed Care 2020 report. The change was a big deal for nursing homes because Medicare payments typically subsidize the Medicaid care nursing homes provide.
“If you were a nursing home, the way to make money was to max therapy services if they wanted to survive under (the prospective payment model),” Edeburn said. “PDPM turns that 180 degrees. … They still provide therapy services but therapy is not really the driving force anymore; it is managing medically complex patients.”
Nursing homes knew the change was coming and some altered their business models to get ready. “It took us about a year to prepare for the implementation of (PDPM),” said Don Bivacca, CEO of HMP Senior Solutions, a senior care management firm. “This is a dramatic change.”
In recent years, alternative payment models and quality incentives created a robust and important partnership between the acute and post-acute space. Bundled payments and readmission penalties drove hospitals to seek high-quality nursing facilities. The aim was to keep patients out of a costly setting and improve care by sending patients to facilities that specialized in the care they would most need to thrive.
But then COVID drove a devastating mix of canceled elective surgeries and a fear of contracting the virus in an extremely vulnerable setting that was struggling to acquire masks and other personal protective equipment to keep staff and patients safe.
An analysis by CarePort Health, which sells software to coordinate care between hospitals and post-acute providers, shows transfers dropped nearly 20% during the pandemic. Home health referrals, meanwhile, were up by nearly 10%.
Given that COVID patients are often recovering from respiratory distress and long periods of inactivity, the expertise provided at nursing facilities can be key to improving those patients’ well-being.
Studies estimate that up to three-quarters of COVID patients experience a least one long-term effect that requires physical therapy or pulmonary rehabilitation.
However, in anticipation of and after the change to PDPM, staffing levels for physical therapists in skilled-nursing facilities fell 5.5%, physical therapist assistants dropped 9.4%, occupational therapists decreased 6.1%, and occupational therapy assistants fell 10.2% from September through December 2019, compared with July and August of the same year, according to a recent report in Health Affairs.
Those cuts were “almost entirely” to contract staff. Contract staff represented 100% of the cuts to physical therapists, 92% for physical therapy assistants, 100% for occupational therapists and 93% for occupational therapy assistants, the report found.
And that was before the pandemic. As nursing homes nationwide locked down in 2020, therapy service hours were cut, Bivacca said. No longer could multiple therapists work with residents in the gym at a time; it just wasn’t possible, with quarantine and infection-control procedures, to maintain the same momentum, he said.
So how can skilled-nursing providers design offerings to best boost hospital referrals?
Operators can start by adding more short-term skilled beds, increasing attention to controlling infections, palliative care and clinical care management.
Staffing-wise, facilities can add integrated wellness nurses and implement house calls into their assisted-living and home care programs.
Edeburn said that well-operated nursing homes staff to their census. As the number of patients changes, they adjust staff accordingly. The problem, however, is the shortage of staff in the long-term care industry, a problem exacerbated by the pandemic.
“Staffing is always an issue,” Bivacca said, noting that it once took the company six months to fill a director position.
According to federal data, the total proportion of nursing homes reporting shortages in at least one staff category rose from 19.9% in May to 22.8% in December of 2020. In part, those shortages happened because of the 1,300 estimated COVID deaths affecting nursing home staff. In other cases, it was the situations under which they worked during the pandemic.
Nurses in skilled-nursing facilities saw an average turnover rate of more than 100% in a given year, according to a recent Health Affairs report, which studied a period before the pandemic. While the rates varied by position, the averages were all above 100%: registered nurses, 140.7%; licensed practical nurses, 114.1%; and certified nursing assistants, 129.1%, according to the report.
Nursing facilities with higher turnover rates also saw lower overall scores in CMS’ Nursing Home Compare star rating system, as well as lower scores on health inspections and quality measures, the report found.
Lori Smetanka, executive director of the National Consumer Voice for Quality Long-Term Care, a consumer advocacy organization, worries about the effects of staffing issues on patient care.
“There has been a huge amount of turnover and short staffing during this whole time. We have been really worried about the level of care that residents have been receiving,” Smetanka said.
The National Consumer Voice for Quality Long-Term Care revealed in a recent survey that 85% of respondents said their loved one’s physical ability had declined during the pandemic.
Family members who have been able to visit residents since the fall, when some visitor restrictions were lifted in nursing homes, have said loved ones who used to be able to get out of bed on their own no longer could, while others’ ability to walk had declined, Smetanka said.
The Health Affairs study on the impact of PDPM said it was too soon to see how fewer physical therapists had impacted the quality of care.
The pandemic created a data void after the payment model’s implementation that makes it hard to evaluate its impact, experts say. There were less than two quarters before COVID-19 changed everything.
“These are wacky times. Trying to draw inferences from five months of data is a risky thing to do,” Edeburn said. “Out of COVID, there are some known knowns, but there are more known unknowns. It’s really hard to say what’s going to happen.”