Nursing Home Reform or Bailout?

COVID-19 Health Care

New Orleans      In Covid-country over the last eighteen months, the mascot of the nursing home industry has been the bearded figure of the Grim Reaper, scythe in hand.  Almost one-third of the USA coronavirus deaths have been experienced by residents of nursing homes.  Not surprisingly, there are calls for reform, but sometimes it is hard to parse the boundaries between desperately needed change and a wholesale bailout for a failed corporate business model applied to precarious health care.

A bill proposed by Democratic Senator Ron Wyden of Oregon and Republican Senator Bob Casey of Pennsylvania is an interesting mixture of both.   The bill includes:

  • Raising salaries and benefits for workers by allowing states to increase federal Medicaid matching funds for six years.This provision would open the door to minimum staffing levels which would be a win, and, goodness knows, nursing home workers are underpaid, but we would fear the Obamacare effect where many red states might balk at the expenditure and are too under the thumb of nursing home lobbyists.
  • Require an infection prevention and control specialist.
  • Require a registered nurse 24 hours a day.
  • Increase inspections for low performing homes.
  • Forbidding arbitration for disputes.

Certainly, this would cost billions, but would it do the job or just put a big Band-Aid over the problem?  In the giant $3.5 trillion stimulus package that President Biden is trying to add to the recently passed $1 trillion infrastructure bill, $400 billion is included to expand home and community care, which will frankly increase the pressure on nursing homes to reform in order to compete.

Nursing homes are a funny business.  When we first started organizing the homes, it seemed more a real estate play than a health care one.  Reimbursement rates were enough then that companies could run the homes and staff and then let the real estate appreciate and sell for a pretty penny down the line.  Often the ownership in the 1980s seemed clueless about the actual healthcare part of the business.  As long as reimburse rates held up and the cost reports allowed owners high leasing and management fees, it was a win-win investment.  Aging demographics increased, and census counts stayed high.  Staffing, supplies, and client amenities were low on the list.

For a period in the 21st century as rankings entered the picture and home care put pressure on the homes, some of the big operators and real estate men seemed to exit.  More recently real estate investment trusts and private equity have arrived, pulling homes back from the healthcare model, although we’ve seen some REITs go under in homes we represent.  The pandemic turns the tables towards care again, or at least, so we hope.

Nursing home associations and lobbyists are voicing support for this bill, making me a bit suspicious.  Even without the bill, wages have risen over the pandemic as staff shortages increased and the risks of working in the homes became clearer to workers.  Inspections are still less than robust and a long way from transparent as states, under the influence of the industry, make cost reports and evaluations almost prohibitive to acquire at the scale needed to evaluate any real progress.

This bill faces high hurdles under any reckoning, but unless it is battened down tighter to make sure that the intended beneficiaries – workers and clients – get the benefits, the industry will do what it has always done and siphon off the money to ownership and management and leave everyone else in the same mess.