Proposals to increase the threshold for overtime pay could have serious repercussions for nursing home operators and staff members, Sen. Mike Braun (R-IN), ranking member of the Senate Special Committee on Aging, said Thursday during a committee hearing. 

The minimum salary for overtime exemptions currently is $684 per week, or $35,568 per year.

“What do you think would happen in the nursing home business if, for those that are on a salary, all of a sudden you had to take that up to $80,000 from $35,000?” Braun asked. “How many jobs would be lost? And I think that would cut both ways. Employers may not be able to afford it. Employees may not even demand it.”

Susan Lu, PhD, MA, the Gerald Lyles Rising Star Professor of Management at the Mitchell E. Daniels Jr. School of Business at Purdue University, testified that after studying the issue, she has concluded that “well intentioned” efforts at increasing overtime pay “lead to undesirable staffing changes, and the nursing homes substitute the full-time nurses’ overtime hours with those hours from temporary nurses, from outsiders.”

An issue with using temporary nurses instead of employees, she said, is that temporary nurses are not familiar with the nursing homes that they are going to work for, and they have no existing connection to the residents.

“Understaffing in nursing homes is a dire concern,” added Erin Bliss, assistant inspector general for evaluation and inspections at the Department of Health and Human Services Office of Inspector General in Washington, DC.

“We have seen some nursing homes not even meeting the barest minimum of requirements of having eight hours of registered nurse staffing in a day, and that’s extremely alarming,” Bliss testified. She echoed Lu’s concern about contracted nurses filling in for full-time staff members.

Braun said that he is a “big advocate” of career and technical education for high school students.

“What is the best way to get more people interested in working at a nursing home? Does it have to have something post-secondary or can we do better?” the senator asked. “And maybe doing some things when they’re crafting what they want to do after they get out of high school?”

Bliss agreed that high school programs could help build a pipeline of direct care workers by attracting young people to go into healthcare professions.

Transparency

Meanwhile, according to Sen. Elizabeth Warren (D-MA), corporate greed is having a negative effect on nursing homes.

“Private equity firms have targeted nursing homes for decades, and now new investment vehicles, real estate investment trusts—or REITs—are in the game to snap up nursing homes as lucrative investments for these profiteers,” Warren said. “Their interest in nursing homes has less to do with providing care to those in need and a lot more to do with money.” 

It can be very difficult to identify nursing home owners and management to uncover the parties to be held accountable when something goes wrong, Bliss noted.

“So the way this gets so tangled up is that private equity and REIT owners set up these complex legal arrangements to avoid transparency and to try to evade responsibility when something goes wrong. And also, by the way, to make money,” Warren said.

Read more about the hearing from McKnight’s Long-Term Care News and on the committee website.