‘At Risk’: Two New Reports Expose Financial and Staffing Crises for Pennsylvania Nursing Homes
HARRISBURG, Pa (June 7, 2022) –– New reports reveal a looming financial catastrophe for Pennsylvania nursing homes after years of insufficient state Medicaid reimbursements for nursing care. Nearly 60 percent of all Pennsylvania nursing facilities have been categorized as “Facilities at Financial Risk.”
Two independent analyses were conducted by different groups researching separate topics. CliftonLarsonAllen (CLA), a national accounting firm, analyzed and reported on a variety of data –– including Medicare cost reports –– in their State of Skilled Nursing Facility Industry report to determine nursing facility financial risks, demographic impacts and rising costs.
In a 2022 simulation, 57 percent of Pennsylvania nursing facilities — impacting nearly 90 percent of Pennsylvania’s counties — had an operating margin of -7.5 percent or less (reaching further into the negative), increasing alarm for more closures and residents at risk of losing care. This simulation number is 10 percentage points higher than the national average, and a 35 percentage point increase from 2019. Nearly 75 percent of nursing facilities have an operating margin of -1.7 percent or less. The research also shows annual overall inflation has increased by 8.5 percent for nursing facilities, including 8.8 percent for food and 13.5 percent for energy services.
Additional costs have also come in the form of increased worker wages and contracting with expensive temporary staff to fill open shifts. Since 2020, wages for Pennsylvania nursing staff have increased by an average of 9 percent for registered nurses (RN), licensed practical nurses (LPN) and certified nurse aides (CNA), according to data gathered by Health Management Associates from the Bureau of Labor Statistics.
The Health Management Associates (HMA) conducted an impact analysis on the staffing crisis in Pennsylvania nursing facilities. The report concluded Pennsylvania Medicaid reimbursements have not kept pace with rising costs, staffing shortages have been exacerbated during the COVID-19 pandemic and there is an emerging need for nursing care due to a rapidly aging population. HMA also looked at the Pennsylvania Department of Health’s proposed increased staffing requirement. The analysis confirms an additional 10,000 workers would be needed (including employee turnover) for providers to staff at current census levels. The analysis also estimates the cost to fulfill this requirement is $444 million more than the state’s proposal of $90.1 million.
“We can’t overstate how alarming the financial situation has become for long-term care in Pennsylvania,” said Zach Shamberg, president and CEO of the Pennsylvania Health Care Association. “Years of insufficient funding for tens of thousands of seniors who rely on Medicaid has led to this crisis. Long-term care providers are voicing their concerns with state leaders in Harrisburg, calling on those leaders to prioritize funding for senior care in this year’s state budget. If Pennsylvania fails to act, hundreds of nursing homes will not just be ‘at risk’ of closing; rather, tens of thousands of our vulnerable seniors across the commonwealth will be ‘at risk’ for not receiving the essential care they need.”
PHCA is advocating for a $294 million increase in the state’s Medicaid reimbursement rate to support employee wages, workforce recruitment and operational costs. Since the start of the COVID-19 pandemic, Pennsylvania has had a net loss of more than 10 nursing homes, including a specialized ventilator facility as a direct result of Medicaid underfunding. Without investments in the 2022-23 state budget for long-term care, more closures are expected to occur.