The COVID-19 pandemic contributed to substantial eldercare cost hikes, especially for assisted living and in-home care. That’s according to the results of Genworth’s 2020 Cost of Care Survey, announced Wednesday.
Over the course of a single year, assisted living community rates increased by 6.15% to an annual national median cost of $51,600 annually. From 2004 to 2020, assisted living costs have increased an average of 3.8% annually, or 79.17% over time. This compares with a 62.38% increase for a private nursing home room and a 30.22% increase for home health aides in that time period.
Annual assisted living costs ranged from a low of $36,000 in Missouri to a high of $80,280 in Delaware.
In a supplemental study on why costs are increasing, owners and senior administrators of 79 long-term care providers cited a workforce shortage (54%), personal protective equipment costs, wage pressures, higher recruiting and retention costs, and regulatory, licensing and employee certification costs are forcing them to increase the cost of care they are providing under “extraordinary circumstances.”
“Providers have been competing with higher-paying, less-demanding jobs for years, but with COVID-19, they told us it has become much more difficult to recruit and retain care professionals because of factors such as concerns about exposure to COVID-19 and parents needing to stay home with school-aged children,” said Gordon Saunders, Genworth senior brand marketing manager. For consumers, he said, “COVID-19 has underscored the need to plan ahead for long-term care, considering both where we want to receive care, as well as how we will pay for it.”
Study participants said they had to increase wages — in some cases offering hazard pay up to 50% more for workers in COVID-19 units — and increase spending for training on new safety procedures, testing, PPE and cleaning supplies, and benefits. Many operators (84%) said they were trying to absorb these new costs, but 62% predicted they would need to raise rates in the next six months, and 43% said those increases would top 5% or more. About 25% said their companies offered options to residents to reduce costs, including reduced flat rates, reduced care levels and rate discounts.
Less than half of facility care providers said the demand for their care setting had increased, with more than a fourth saying that demand decreased. This compares with 78% of home care providers indicating that demand for their services had increased. And although a preference for home care is expected to continue among consumers, 67% of survey respondents said they see the demand increasing for assisted living.
Operators also said they anticipate that future residents will have high standards.
“Future residents will continue to look at the same things when choosing a facility — reputation quality of care, access to care, and proximity to their current living situation,” one respondent said. “What will change is how the pandemic affects a facility’s ability to provide those things. The financial constraints providers are going through is going to make it difficult to maintain a higher quality of care.”
The 2020 study results came from about 15,000 surveys completed by key decision makers in assisted living communities, nursing homes, adult day health facilities and home care providers contacted by CareScout, a Genworth Financial company.