for sale sign

As staffing shortages continue to plague nursing homes, sales, closures and admissions stoppages are becoming more frequent, according to respondents to a survey by the Long-Term Care Imperative, a collaboration of LeadingAge Minnesota and Care Providers of Minnesota, the state affiliate of the American Health Care Association. 

Sixty of the 100 survey respondents said that, due to staffing shortages, they already have or will be reducing the number of residents and patients they can accept. Twenty-percent of the responding providers said they are considering selling their SNFs or closing altogether. 

More than 100 nursing homes across the Gopher State have closed since 2000, with six closing this year alone, according to the associations.

Lack of state funding is one reason for financial instability, according to LeadingAge Minnesota. Additionally, according to LeadingAge Minnesota, the rates provided by the state no longer cover the cost of care.

Patti Cullen, CAE, president and CEO of  Care Providers of Minnesota, told the McKnight’s Business Daily that Minnesota’s rate equalization law limits providers’ ability to charge private-pay residents any more than what the Medicaid program will pay. The nursing facility base rate in 2020 was approximately $270 per day, with variances based on resident/patient acuity, historical rates and geographic location, she added.  

“Our payment system for nursing facilities, which is technically a ‘cost-based’ system, was designed at a time when average inflationary cost increases were 2% to 2% and when census was over 90%,” said Cullen, a 2022 McKnight’s Women of Distinction Hall of Honor inductee. “The rates should be high enough to cover their costs and to be able to be competitive in the labor market for staff recruitment and retention.”

Nursing homes have faced double-digit increases in wages and products costs, she said, and those increased expenses won’t be reflected in increased rates for at least 18 months.  

“As a result, nursing facilities have been taking drastic financial steps to keep their operations cash flowing,” Cullen said. “They are forced to spend down any reserves, reduce cash on hand and pay wages far above what they are being paid for in their rates to retain and recruit staff.”

Consequently, she said, nursing homes also are experiencing a voluntary decrease in occupancy because they don’t have the workers to provide care — and empty beds mean decreased revenue.

The survey responses show that almost half of the state’s nursing facilities are operating at an annual loss of $300,000 or more, 43% have no financial reserves and many report that they have no line of credit available to them. 

Cullen said that her organization’s members “would like to see their current expenses reflected in their current rates, which means a change to the formula to adjust for known cost increases.”

“They would like to see a significant rate increase so they can be competitive in the labor market and fill the open staff positions so they can begin to fill their open beds,” she added. “They would like to have ongoing COVID-19 related expenses such as personal protective equipment paid for directly by the state.”

Additionally, Cullen said, the state needs to help build up the direct care workforce by continuing to offer the nursing assistant program that was piloted during the pandemic, which paid for tuition, uniforms and transportation for incoming students getting their nursing assistant certification.

“We also need regulatory flexibility as we phase out some of the public health emergency waivers,” Cullen said, “and for nursing facilities that are in serious financial distress, we need to help them pay their vendors and work toward financial health before they are forced into closure.”