SIOUX FALLS, S.D. — Nursing homes across the Upper Midwest are in peril.
The COVID-19 pandemic tore through many nursing homes in the region, killing vulnerable elder residents, despite intense efforts to keep them safe.
An overwhelming majority of the nursing home residents who remain are now vaccinated against the virus. So while COVID-19 is no longer the concern it once was, the pandemic's toll is far from over.
Nursing homes are now facing a knock-on pandemic crisis with potentially terminal results for some facilities: unexpected additional costs, throttled revenue and unending, expensive staff shortages.
"We are in a much better place. But it was absolutely a rough year. It was a very challenging year. It was a year that will never be forgotten," said Shelly Peterson, president of the North Dakota Long Term Care Association. "And we’re still struggling a lot."
The laundry list of financial problems is a long one, and while each state’s situation is different, there are many common concerns:
Fewer residents means less revenue
New residents aren’t moving in quickly enough to fill the gap
Government funding models in some states weren’t sufficient to cover care costs prior to the pandemic, and remain insufficient
Even with state and federal support, nursing homes bore big additional costs of buying COVID-19 testing and protective equipment
Exhausted staffers have left and veteran workers are retiring
Hiring staff for jobs universally acknowledged as difficult got even more challenging during the pandemic
Fewer workers means nursing homes can serve fewer residents, again hitting the bottom line
The problems potentially add up as red ink on nursing homes’ bottom line, especially for some small rural nursing homes, ones that are often the only such institution for miles.
Patti Cullen, president and CEO of Care Providers of Minnesota, said it remains to be seen how damaging the pandemic has been to the financial health of nursing homes in the state. There's a lot of uncertainty still with ongoing costs and the status of state and federal pandemic aid, she said.
Cullen cited a recent survey of long-term care providers by The American Health Care Association and National Center for Assisted Living, asking facilities about their financial condition. The results were grim and don't bode well for the industry in the near term.
Only one in four nursing homes and assisted living communities are confident they can last a year or more, and more than half of those facilities are operating at a loss, according to the survey.
"The true implications of the pandemic impact aren’t going to be seen until next year," Cullen said.
Even before the pandemic, nursing homes faced challenges that were making it difficult for some to remain open.
The central hurdle is what's paying the bill for many nursing home residents.
A quick primer: Nursing homes are funded by residents backed by both private payment and government funding, such as Medicaid and Medicare.
Medicaid generally reimburses nursing homes for services at a lower rate than private payment. But most facilities rely on Medicaid payments, because few people can afford paying for long-term nursing care out of pocket. So, Medicaid covers about half of nursing homes costs across the U.S., according to The Kaiser Family Fund.
South Dakota embodies how much Medicaid reimbursement rates shape the financial health of nursing homes, with 54% of residents covered by Medicaid, according to the South Dakota Health Care Association.
“When I look at South Dakota, I just thank God we’re not there, because you can’t provide good resident care with the amount of money they get."
- Shelly Peterson, president of the North Dakota Long Term Care Association
The all-important Medicaid reimbursement rates are set by state lawmakers, so states can vary in how much they reimburse via Medicaid for nursing home care. South Dakota's reimbursement rates rank at or near the bottom of all states.
Peterson, of the North Dakota Long Term Care Association, minces no words when she compares South Dakota's reimbursement rates with North Dakota's more generous rates.
“When I look at South Dakota, I just thank God we’re not there, because you can’t provide good resident care with the amount of money they get," she said.
The limited funding means South Dakota nursing homes face chronic financial issues, including low pay that exacerbates staff shortages, that can force them to close.
LISTEN: In the NewsMD podcast "The Health Variant," host and health correspondent Jeremy Fugleberg interviews Tu-Uyen Tran of the Minneapolis Fed, who researched the perilous situation for nursing homes across the region.
Mark Deak, executive director of the South Dakota Health Care Association, ticks off nursing home closures in eight towns in the past five years. But he's quick to diplomatically praise state lawmakers and Gov. Kristi Noem for recent reimbursement rate boosts.
Still, it's not enough, he said. The current reimbursement rates cause a shortfall of $42 a day for each Medicaid-backed resident.
"That was a very heavy lift for a lot of facilities given that shortfall. Frankly it made it hard just for them to keep their doors open," he said. "Unfortunately pre-pandemic, a few of those facilities could not keep their doors open."
Staffing for the difficult jobs of 24/7 caregiving and nursing has been a universal challenge for nursing homes in the region, even in states with more generous reimbursement rates, such as North Dakota, which has often led the nation in its nursing home staffing rate.
Pay rates for critical nursing home workers, such as certified nursing assistants (or CNAs), is higher in North Dakota than in South Dakota, yet still the state's nursing homes struggle to fill every job, Peterson said.
"Our workforce recruitment and retention has been a persistent problem. We went into (the pandemic) challenged and we have a high reliance on contract nursing and continue to have a high reliance on contract nursing, because we don’t have any other alternative," she said. "If you don’t have staff, you can’t provide nursing care.”
The costs of COVID
The sheer human toll of COVID-19 in nursing homes might be easy to quantify, but it's hard to grasp.
More than half of nursing home residents in the Dakotas and more than two in five Minnesota nursing home residents caught COVID-19, according to data from the federal Centers for Medicare and Medicaid Services, through June 27. And significant percentages of each state's residents who fell ill died due to the virus.
In Minnesota, the virus claimed 2,391 nursing home residents. In North Dakota, 615 died. In South Dakota, which has one of the highest per-capita death rates of U.S. states, COVID-19 killed 731 nursing home residents -- more than a third of the state's total virus death toll.
Some nursing homes lost a significant percentage of their populations to the virus, heartbreaking losses to not only family members, but staff who were daily caretakers.
“I don’t think they’ll ever get over it," Peterson said. "It’s a thing you would never, ever think possible."
Beyond the human costs of the surge of COVID-19 fatalities, the financial toll has added up as well. In stark financial terms, it's not easy to replace the revenue lost when many residents die in a short period of time.
"That’s just going to add to the issues brought about by the Medicaid gap," said Deak, in South Dakota.
The pandemic also brought other unforeseen costs, which for some nursing homes added up to busted budgets -- even with a burst of federal and state financial support and eased regulations in response to the pandemic.
Skyrocketing wages for in-demand contract nursing, bonuses and other incentives to retain or recruit staff drove up staffing costs. Nursing homes found themselves scrambling for expensive protective gear and paying tens of thousands of dollars for COVID-19 testing, costs that continue even as the pandemic has receded from nursing homes.
“We didn’t expect, 18 months later, to continue to have all these testing costs that we have to cover," said Cullen, of Care Providers of Minnesota. "In a year you could easily run up $200,000 in testing costs as a provider.”
Nursing homes jobs, sometimes hard to fill as it was, got more difficult to hire for during the pandemic, and the staffing challenge hasn't gone away.
Despite offers of high wages and other incentives, many crucial nursing jobs remain unfilled. and exhausted long-time employees are calling it quits, creating even more jobs to fill.
"A lot of long, long long-time folks essentially said, 'I’m burnt out, I’m done,'' Cullen said. "We’ve seen a lot of retirements.”
Rural homes at particular risk
Rural nursing homes are at particular risk, and if they close, they'll have a disproportionate impact on their local communities.
Peterson, in North Dakota, said she's aware of several rural nursing homes on the brink, unable to make their payrolls.
"Thank goodness they have a good relationship with their bank, because they’re just kind of hanging on," hoping to bring in new residents and staff, she said.
Their closures would hit rural communities hard, closing a major employer, forcing residents to move from their hometowns, often away from family and long-time friends, and relocate a significant distance to a community not their own.
This is a troubling situation for many rural older adults, who studies show would prefer to stay in their own communities as they age, whether in their home or in a nursing care facility.
Nearly one-third of both rural and urban adults preferred care in an institutional setting, such as a nursing home, according to research presented in a May policy brief published by the University of Minnesota Rural Health Research Center.
Having such options is less of an issue for urban residents, who live in areas with multiple options, said lead researcher Carrie Henning-Smith, deputy director of the center and associate professor at the U of M's School of Public Health. But that's more difficult for small, rural communities who may only have one local nursing home.
"In rural areas, in some places, it’s becoming not economically viable to keep a nursing home open, and then you end up with people having to move much farther," Henning-Smith said. "You have families needing to be separated, which is really problematic.”
But in the meantime, facilities in small rural towns have smaller workforces from which to draw, boosting recruitment and contract nurse costs. And now due to COVID-19, find themselves short of both residents and staff.
“That’s just not a sustainable model," said Peterson, in North Dakota. "So if we can’t get our (resident) census back, and we can’t get our workforce stabilized, yes, you will have some of those smaller rural facilities just not be able to survive.”