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December 16, 2020 05:36 PM

Two-thirds of nursing homes risk closure in 2021, survey shows

Ginger Christ
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    As many as 66% of nursing homes say they could close in 2021 due to COVID-19 costs, according to a new survey of nursing home providers.

    The American Health Care Association and National Center for Assisted Living, which represents more than 14,000 nursing homes and assisted living facilities across the U.S., found 90% of the 953 nursing homes that responded said their profit margins are 3% or less, and 65% said they are currently operating at a loss. The biggest increase in cost was staffing.

    "Our nursing home providers are facing the worst financial crisis in the history of the industry due to increased costs related to COVID (testing, personal protective equipment, staffing) and chronic Medicaid underfunding," AHCA/NCAL President and CEO Mark Parkinson said in a prepared statement. "We need Congress to prioritize our vulnerable seniors and their caregivers in long-term care facilities, by passing another COVID relief package right away."

    Likewise, John Sauer, president and CEO of LeadingAge Wisconsin, a state association of aging service providers, said during a recent press conference that he expects to see many facilities fail in 2021 unless the industry receives federal relief.

    Margaret Johnson, the director of senior living for Fitch Ratings, said skilled nursing is "in a precarious financial position." They are facing low occupancy rates, a greater share of Medicaid patients and higher staffing demands and costs. On top of that, they've taken a hit to their reputations over their response to the pandemic, she said.

    The financial pressure is less acute for facilities that are part of life plan communities, where independent living and other options help shore up skilled nursing losses, she said. Independent living has remained more stable because its occupancy rates haven't been as affected by the pandemic.

    The emergency use authorization of a COVID-19 vaccine and the prioritization of long-term care staff and residents should help the nursing home sector, Johnson said.

    "Overall, we think it's going to be stabilizing," she said.

    Vaccinations should help increase confidence in nursing homes and improve admissions and reduce staffing expenses incurred for quarantining employees, Fitch Ratings said in a recent report.

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