Long Term Care Faces Worst Financial Crisis In Years; Closures Loom Without Additional Funding

Long term care residents and staff have been at the epicenter of the COVID-19 pandemic since the beginning. From increased routine testing to hiring additional staff and purchasing personal protective equipment (PPE), providers have dedicated extensive resources to fight this virus. These additional costs have magnified the financial shortfalls facilities faced for years prior to the pandemic, and now many are at risk of shutting down for good.

The American Health Care Association and National Center for Assisted Living (AHCA/NCAL) conducted an ana​lysis that estimated that the long term care industry is expected to lose $94 billion over a two-year period (2020-2021). Last year, nursing homes spend roughly $30 billion on PPE and additional staffing alone.

In addition to increased expenditures, long term care facilities have suffered a sharp decline in occupancy – a situation AHCA/CNAL President and CEO Mark Parkinson called a “business nightmare.” In a recent interview, Parkinson said, “In three short months, we’ve gone from 71% to 67% … We need census to recover at a rate of about 1% a month, and while that doesn’t sound like a lot, it’s not as easy as it might seem … If the census doesn’t recover at all, or recover slower than that, the sector has a real problem.”

The same AHCA/NCAL analysis estimated that without immediate assistance, more than 1,600 nursing homes could close in 2021—more than 10 times the number of facilities that closed last year. The average nursing home has the capacity to serve approximately 100 residents.

Emmett Reed, executive director of the Florida Health Care Association, also stressed the impact declining occupancy has had on finances. In a committee hearing before the Florida State Senate, Reed said, “If we don’t start to see occupancy increase over the next six or seven months, maybe even less, you’re going to start seeing nursing homes in a very dire situation financially. It’s just, the margins are razor-thin.”

With increased costs of care and a decline in residents, many facilities will no longer be able to afford to run their facilities, leaving thousands of elderly individuals displaced and forced to find new care. Pandemic-related closures continue to occur across the country. Long term care providers in California, Indiana, Connecticut, Massachusetts, Colorado, Kansas, Michigan, Nebraska, New Hampshire, New York and Rhode Island have made the difficult decision to permanently close their doors.

The country cannot afford to wait for more closures and force seniors to search for new care options before providing assistance. We must act now. AHCA/NCAL is urging Congress to prioritize long term care residents and staff by allocating $20 billion in funding, either through an enhanced Federal Medicaid Assistance Percentage for long-term services and support, or through a dedicated portion to the Provider Relief Fund. This financial support will bring much-needed relief and enable providers to continue to protecting residents and staff. America’s most vulnerable population and their dedicated caregivers cannot fight this fight alone.