AHCA Releases Report Highlighting Unprecedented Economic Crisis in Nursing Homesreport, produced by CLA (CliftonLarsonAllen LLP), highlights that the cost of care and other operations in nursing homes is far exceeding their reimbursement rates, resulting in a projected 4.8 percent negative margin. The industry is also facing a historic workforce crisis and significant declines in occupancy as a result of the pandemic. The unprecedented challenges have resulted in reduced access to care for seniors and individuals with disabilities across the country.
Key findings from the report include:
- Increasing Costs Due to Labor and Inflation: The CLA report found that average increase in wages for nurses at all levels doubled from 2020 to 2021. Rates for contracted and agency nurses are also two to three times higher than pre-pandemic rates.
- Negative Margins: CLA projects the median 2022 year-end operating margin to be -4.8 percent with a median occupancy of 77.3 percent. This projection is based on maintaining the current Patient-Driven Payment Model through Medicare and state public health emergency (PHE) funding levels. The CLA report emphasizes that any reduction in reimbursement could deepen financial issues for the long term care sector.
- Increased Risk for Closures: The CLA report found that 32 to 40 percent of residents (as many as 417,000 residents) are currently living in nursing homes that are considered financially “at risk” – including buildings with Five-Star quality ratings.
- Challenges with Access to Capital: Medicare margins and PHE related funding provided help and support throughout 2020 and early 2021, but potential cuts to these programs pose risk to nursing homes as they continue to face financial challenges such as occupancy decline, staffing shortages, and increased labor costs.
The full report is available here.
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