Type to search

“Right-Sizing” of Industry Needed To Save Quality Nursing Homes


By Chris Lisinski
State House News Service

STATE HOUSE, BOSTON, FEB. 11, 2020…..With nursing home demand on the decline and many facilities struggling financially, 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, created in the fiscal year 2019 budget and 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.

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.

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.”

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.

“Structural changes to the industry are needed to ensure longer term financial sustainability,” the report concluded.

In a brief interview with the News Service last week, Elder Affairs Secretary Elizabeth Chen said she does not like to use “crisis language” but sees “valid, complex dynamics” at play that require a response from state government.

“Some of these are issues that have been around for a lot of years, but we can’t just keep letting them go on,” she said. “We need to put our heads down and begin to find solutions.”

Suggested policy changes fell into four categories: adjusting the nursing industry size “in response to current and future demand,” reforming the rate structure, promoting high quality care, and ensuring a sustainable workforce.

Several potential strategies offered in the first category would likely result in closure of some of the most challenged nursing homes in the state. Members agreed the existing system has more capacity than it needs.

Options for “right-sizing” the industry include creating incentives for occupancy and quality “that result in the closure or repurposing of chronically low occupancy and low quality nursing facilities,” and providing the Department of Public Health with clearer authority to revoke licenses of chronic underperformers.

Eighteen of the more than 300 nursing homes in Massachusetts were deemed to be of chronically low quality and low occupancy in the report, representing about 2,500 beds.

The state should also adopt a new, integrated rate structure that promotes occupancy and encourages investing in staff, the panel found. The new model should include regular base-year cost updates and should push greater compliance with user fees.

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 panel found that wages are increasing for the 45,000 direct care staff at nursing homes, but some warned that lagging employee pay growth contributes to the industry-wide struggles. While the minimum wage grew 50 percent between 2014 and 2019, typical starting wages for certified nursing aides grew only 18 percent over the same time.

At a Feb. 4 Elder Affairs Committee hearing, several speakers cited direct experience with workforce strain.

1199 SEIU Vice President of Home Care Rebecca Gutman said the vacancy rate for nursing home workers has ballooned from 6 percent in 2010 to 17 percent today, driven largely by slow wage growth.

Richard Bane, president of BaneCare Management, whose company operates 12 nursing homes in Massachusetts, called the current climate “the worst staffing crisis I’ve seen in my 37-year career.”

“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.

After that hearing, Labor and Workforce Development Secretary Rosalin Acosta said many nursing homes are struggling to attract or retain employees.

“There are about 45,000 workers in the nursing home workforce space, but the nursing home workforce is not growing as fast as the in-home care, and I think that’s going to be a challenge also for the nursing facilities,” she told the News Service.