There have been dozens of articles about the downsizing of the nursing home industry because of the decline in nursing home beds. For years, we were told that the baby boomers would require more nursing homes beds. But because of the lack of safe staffing and the epidemic of abuse and neglect in nursing homes, many boomers have decided to remain at home or choose assisted living facilities instead. Demand for nursing facilities is dropping: the number of MassHealth members residing in nursing homes decreased 2 percent between fiscal years 2016 and 2018, the task force found, while those who received home or community services increased 11 percent during the same time span.
Many national for profit chains are struggling financially because they have siphoned or diverted too many funds away from the nursing homes to related shell companies who do not provide services to the residents. With occupancy trending downward and labor costs on the rise, the margins have grown tighter. In calendar year 2013, the median facility broke even, but in 2017, the median facility had a -3.2 percent profit margin. In Massachusetts, a state panel has suggested closing underperforming homes, creating a streamlined rate structure and offering higher caretaker wages to revitalize the industry.
The task force was instructed by the Legislature to provide a comprehensive look at challenges facing Massachusetts nursing facilities, confirmed many warnings from those on the ground about services supported by $1.28 billion in MassHealth spending in fiscal year 2018.
One member of the task force, 1199 SEIU Executive Vice President Tim Foley, described the report as dire ahead of its release.
“The Commission report makes it clear that this industry is in crisis, the workforce is under paid and our response needs to center on improving occupancy rates in high-quality nursing homes and improving the financial conditions of Medicaid-depending nursing homes,” Foley said in a statement.
System-wide occupancy rates increased from 2018 to 2019, but the report attributed that to closures and a reduction in total beds rather than the addition of new patients. One in six nursing homes across the state had occupancy rates below 80 percent as of April 2019, according to the report, a threshold below which the task force warned facilities are “not sustainable because they cannot independently generate sufficient income to offset fixed and variable costs.”
Another significant finding was that adequate wages are needed to recruit, train and retain staff. Members suggested grants to create career ladders and loan and tuition forgiveness programs as other options.
The vacancy rate for nursing home workers has ballooned from 6 percent in 2010 to 17 percent today, driven largely by slow wage growth.
“Why do we pay people who care for our seniors and our individuals with disabilities so little?” Joanne Edmond, a certified nursing assistant, asked the committee.