June 12, 2024


Comfortable residential structure

America now knows that nursing homes are broken. Does anyone care enough to fix them?

The pandemic turned nursing homes into a death trap for more than 170,000 long-term care residents and staff members who have lost their lives to Covid-19.

But the virus also revealed how America’s system for long-term care is fundamentally broken in ways that will continue to harm vulnerable residents and workers, long after the pandemic has faded away.

The biggest underlying problem? For all the billions of taxpayer dollars that the United States spends on a system meant to care for frail, elderly residents, not enough money is being invested in caregiving itself, according to interviews with more than a dozen nursing home researchers, advocates, industry representatives and staff members.

“The system is broken. Covid didn’t make it dysfunctional, but Covid showed that it was broken and dysfunctional,” said Robert Kramer, founder of Nexus Insights, a long-term care consulting firm. “We are center stage, in the spotlight — whether we like it or not.”

The devastation wrought by Covid-19, and the public attention it has drawn to America’s nursing home crisis, have created a once-in-a-generation opportunity for far-reaching changes targeting the issues that left these facilities so vulnerable in the first place, experts said.

Elder care advocates are now pushing for a strict accounting of how nursing homes use the public money that fills their coffers, as well as new restrictions on how that money is spent.

Such changes could face significant blowback from an industry that has been battered by the pandemic and is now teetering on the brink of bankruptcy, nursing home leaders say. The long-term care industry says it is doing all it can with limited resources — and that the real solution to better care would be more public money through Medicaid, which makes up the bulk of long-term care funding. That effort could also run aground, though, as states face their own budget crises and the federal government is focused elsewhere.

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The biggest obstacle to any sweeping change, however, isn’t the battle between the industry and advocates — it’s simply convincing lawmakers and the public to make long-term care a priority, policy experts said. Though the pandemic pushed nursing homes to the forefront, Americans have historically been loath to confront the issue of caring for the elderly at all.

“Being old and frail is something nobody wants to think about. We don’t want to think about it for ourselves, and we don’t want to think about it for our parents,” said Howard Gleckman, a senior fellow at the Urban Institute. He recalled a phrase from 20th century British journalist Alistair Cooke: “In America, death is optional.”

Risky work, low pay

Nursing homes, by their nature, are ideal breeding grounds for Covid-19: Frail, elderly residents live in close quarters, often requiring support from aides to eat, get out of bed, bathe and get dressed.

This hands-on caregiving is the backbone of what a nursing home provides, and the reason that most residents are in long-term care to begin with. But a chronic failure to value this work, and compensate it accordingly, helped accelerate the pandemic’s catastrophic spread, experts said.

In Washington state, at the first U.S. nursing home with a known Covid-19 outbreak, federal officials determined that the virus had spread, in part, through staff members who worked in multiple facilities — a common practice given the paltry pay and limited benefits for direct caregivers, most of whom are people of color. Working two or more jobs gave workers more financial stability, but also greater exposure to the virus.

Medics transport a patient from the Life Care Center of Kirkland, a long-term care facility in Washington, on March 7, 2020.David Ryder / Reuters file

Low pay, high turnover and tough working conditions made these positions tough to fill long before the pandemic hit. The virus put even more staff members out of commission as they became infected, quarantined or quit altogether, leaving facilities even more short-handed. In December, 30 percent of the country’s nursing homes reported shortages of nurses or aides, according to an analysis from the AARP, which advocates on behalf of older Americans.

Significant staff shortages put nursing homes at even higher risk of Covid-19 outbreaks, several studies have shown. In places that already had at least one case, facilities with more aide hours per resident had fewer deaths and smaller outbreaks, said Tamara Konetzka, a University of Chicago professor who co-authored one of the studies.

That’s partly because a lack of staff makes it difficult to take precautions such as isolating residents, she said. Staff shortages also threatened the overall quality of care for residents, who already faced confinement and social isolation from the pandemic.

Lori Spencer speaks to her mother, Judie Shape, through a window at the Life Care Center of Kirkland in Washington on March 8, 2020. David Ryder / Reuters file

Some facilities relied on staffing agencies to fill in the gap, bringing in temporary workers who were at even higher risk of being exposed. Monique Collins, a contract aide in central Pennsylvania, typically spent just a few weeks at each facility before moving to her next gig.

Collins found that agencies paid far better than staff jobs — $19 or more per hour, instead of $12 or $13 as staff — and she has been working as much as possible to save money for school. The risks were considerable: She was not subject to regular testing for Covid-19 and struggled to acquire her own N95 masks and gowns when facilities didn’t provide enough.

“They didn’t care,” Collins, 31, who has five children, said. Despite the precautions she took, she contracted the virus in late December.

While most nursing aides are paid low wages, their work tending to residents’ basic needs and monitoring their overall well-being should not considered unskilled labor, said Robyn Stone, senior vice president of research for LeadingAge, which represents nonprofit nursing homes.

“The work is not just on the health and medical side,” she said. “It’s about quality of life — helping people to live.”

The toll borne by these front-line workers has prompted some labor unions to push for hazard pay, sick leave and personal protective equipment, as well as permanent wage increases and benefits, even threatening major strikes in cities like Chicago.

Only a fraction of the country’s nursing home workers are unionized, but the unions’ recent demands get to the dispute at the heart of America’s long-care care crisis: Whether nursing homes can actually afford to spend more money on staff and the care of residents.

‘We don’t know where all that money is going’

The typical U.S. nursing home is propped up by two programs: Medicaid, a public insurance system that is intended to support only the very poorest Americans, and Medicare, a health insurance program for older Americans that offers nursing homes more lucrative short-term payments. This is the business model that the pandemic blew up.

America’s long-term care system was created as an afterthought, when nursing home coverage for poor, frail Americans was included, without much fanfare, as part of the 1965 law that established both Medicare and Medicaid — a program jointly funded by states and the federal government. A half-century later, the elderly population has ballooned, and life expectancy has shot up, while personal savings have not, leaving millions of aging Americans unable to pay for the care they need. But unlike most major industrialized nations, the U.S. has no universal public system that covers elder care, which means that many patients, as well as nursing homes, are ultimately left to rely on Medicaid.

The trouble with Medicaid — the only federal program that pays for long-term care — is a reimbursement rate that the industry has long complained is too low, about $200 for each day of care, on average. Medicare pays at least twice as much, but it only covers up to 90 days of post-acute care and rehabilitation, typically following a hospital stay.

Given the prohibitive cost of a nursing home stay — averaging nearly $90,000 a year, according to one industry survey — only a fraction is paid for out of pocket. Instead, many middle-class households spend down their assets to $2,000 or less so that they qualify for Medicaid, which then covers the bills. Medicaid makes up the majority of the $235 billion spent on long-term care annually in the U.S.

The pandemic turned the industry’s long-standing pleas for higher Medicaid rates into an emergency cry for help, as facilities suddenly had to spend money on personal protective equipment and testing, and lucrative short-stay Medicare patients dried up as hospitals stopped elective surgeries. Congress, in response, designated $21 billion in Covid-19 relief funding for nursing homes.

A patient is loaded into an ambulance at Andover Subacute and Rehabilitation Center in New Jersey on April 16, 2020.Stefan Jeremiah / Reuters file

That money is supposed to support facilities through the pandemic and make up for lost revenue. But there is limited oversight and no requirement that the money specifically be spent on staffing or resident care: Nursing homes can also use the money to pay their rent or mortgage or make payments for leasing equipment.

That, advocates say, is the overarching problem with the public money that goes into long-term care — a lack of accountability, whether during pandemic times or not.

As the nursing home industry has consolidated in recent years, with more takeovers by large corporations and Wall Street investors, the ownership structure and finances of many facilities have become increasingly complex and opaque.

Many owners have created third-party contractors that they control or in which they have a financial stake — an arrangement known as “related party” transactions that allows owners to reduce liability and control costs, according to the industry. Critics say the practice allows owners to profit in ways that don’t show up on a nursing home’s balance sheet.

There is evidence linking the use of related parties to lower quality of care: Facilities with such financial arrangements employ fewer nurses and aides per patient on average, and are more likely to be fined for serious health violations and have substantiated complaints of putting residents in jeopardy, Kaiser Health News found. Private equity investment — a growing trend in the industry — also tends to result in staffing cuts and lower quality of care, one study found last year.

Under the Affordable Care Act, nursing homes are supposed to disclose detailed information about their ownership structure, as well as the money spent on direct care, indirect care, capital assets and administrative services.

The new reporting requirements have shown that for-profit facilities tend to spend a lower percentage of revenue on direct care and spend less nursing time per resident, according to a 2016 report from the Government Accountability Office, an independent federal watchdog.

During the pandemic, the staff members and residents of these facilities may have been at higher risk: Multiple studies found that for-profit facilities were more likely to have Covid-19 cases and deaths than nonprofit facilities. That’s not necessarily because of a lack of staff or resident care: For-profit facilities also tend to be larger and serve a higher percentage of Medicaid patients, located in areas with higher community spread.

But the underlying problems can be hard to pinpoint as the data available on nursing home spending can be incomplete and unreliable, and these reports are not routinely audited, advocates and experts say.

“We don’t know where all that money is going, but not enough money is being invested in the care delivered at nursing homes — and predominantly not investing in staff,” said Dr. Rachel Werner, a professor of health care management at the Wharton School of Business. “It’s really become very apparent during the pandemic.”

Industry representatives say it’s a myth that nursing homes are raking in massive profits hidden from public view, despite the recent influx of private equity and other deep-pocketed investors. Struggling nursing homes are now in serious financial jeopardy as occupancy rates have plunged because of the pandemic, with more than 120 facilities closing last year, and far more could close this year without additional financial help, according to the American Health Care Association, which represents for-profit nursing homes.

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With the industry reeling — and more Americans qualifying for Medicaid health coverage because of the pandemic — the federal government agreed last year to reimburse states for a higher percentage of Medicaid spending. But not all states have passed that money onto nursing homes, as they are allowed to reserve it to fill budget holes or serve other purposes. And that help, like the other relief funds from Congress, is only temporary.

The industry groups are now lobbying for more aid in the latest Covid-19 relief bill before Congress, as well as state liability shields, arguing that lawsuits could bankrupt good facilities that did everything they could in the face of an uncontrolled pandemic.

But even after the pandemic recedes, nursing home owners could still be in a highly precarious position, according to industry groups: “Medicaid has not covered the actual cost of care for decades,” the American Health Care Association said.

A chance for change

The overwhelming consensus among industry lobbyists, researchers and consumer advocates alike is that the U.S. has not invested enough in long-term care. But why is the money falling short, and who should get more of it? Are nursing home owners really struggling to keep their facilities afloat — or are they shortchanging the workers and residents?

Advocates insist that federal lawmakers must force the industry to open up its books before offering them more taxpayer money.

“We need more transparency around where money is going — and to what extent it’s being invested into jobs and quality of care versus profits,” said Kezia Scales, director of policy research for PHI, a research and advocacy group for long-term care workers. “Then it will be easier to understand what those rates should be.”

Other proposed changes include a higher wage floor for nursing home workers, stronger federal staffing standards that would require minimum hours of care per patient, and a medical loss ratio limiting the percentage of revenue that facilities can spend on administrative costs and profits — a requirement that New Jersey adopted in September, becoming the first state to do so. Some have also revived calls for universal long-term care insurance, to expand benefits beyond Medicaid, as Washington state has done.

“I consistently read horror stories from around the country of nursing homes that could have done better to protect their residents,” said Rep. Jan Schakowsky, D-Ill., who sponsored a bill to increase minimum nurse staffing hours. “We must ensure nursing home residents are not harmed because of deficiencies in the facilities they rely on to survive.”

Kramer, the industry consultant, cautions against implementing new mandates for staffing without more funding.

“If you’ve got to have more staff, but you’re not getting a penny more per day for the care you provide, then by definition you’re saying that something’s going to give,” he said, warning that struggling facilities could be forced to cut corners in other ways or shut down altogether.

He agrees, however, about the need for greater disclosure, given the fear and mistrust surrounding nursing homes during the pandemic. “There is this false illusion that there is all this money in the related companies, and if we just recovered that, we’d have enough to pay for living wages,” he said.

That extra money doesn’t exist, he said, “but until there is greater accountability and transparency, nobody is going to believe it.”

Funeral director Tom Cheeseman collects a body from a nursing home, on April 3, 2020, in Brooklyn, N.Y.John Minchillo / AP file

During his presidential campaign, Joe Biden unveiled a sweeping proposal to expand home-based alternatives to institutional care, as well as a separate plan to make nursing homes safer, criticizing the Trump administration for weakening oversight of the facilities and providing Covid-19 relief funding without enough accountability. The nursing home safety plan details changes that the Biden administration could adopt without Congress, including more safety and health inspections of facilities, as well as audits of cost reports and ownership data, as advocates have been calling for.

Biden’s plan is lighter on the details about nursing home staffing. The plan promises to “ensure adequate staffing” and says that long-term care workers should be treated “with respect and dignity” and be given “the pay, paid leave, career ladders, and other benefits they deserve.”

The proposal, however, doesn’t detail how this would be achieved, other than by supporting access to union organizing. The White House reaffirmed its commitment to its plan to help caregivers “who are long overdue for policies that value the dignity of their work” and stressed that “it is a priority for this administration,” White House spokesman Kevin Munoz said in a statement. But any bill that requires congressional approval would face a legislative calendar that is jampacked with other priorities and a limited window for potential action, given Democrats’ slim majorities.

Some states, in the meantime, are forging ahead with their own changes. In New York, which recently revealed that it had the most Covid-19 deaths in nursing homes, the state Senate passed a package of bills that would require all facilities to spend at least 70 percent of their revenues on direct patient care, among other changes.

“What is the answer for our elders? This is a moment of opportunity,” said Schakowsky, the Illinois congresswoman, who warns that failing to address the root problems will only fuel more cases of abuse, neglect and premature death. “It could get worse, not better.”