Marcum’s Three-Year Nursing Home Review Reveals Staffing Mandate Implications and More

As the nursing home industry emerges from the challenges of the pandemic, Marcum’s 2024 Three-Year Nursing Home Statistical Review reveals additional challenges and trends of concern. It also sheds light on the potential implications of the Centers for Medicare & Medicaid Services’ (CMS) federal staffing mandate.

Matthew Bavolack, national leader of Marcum’s Healthcare Services practice

“We stand at a pivotal moment in the history of long-term care,” says Matthew Bavolack, the national leader of Marcum’s Healthcare Services practice. “Our analysis reveals the undeniable perseverance of the nursing home industry amidst trying times and the formidable challenges ahead. As we navigate the intricate balance between regulatory requirements and the financial realities of care delivery, the priority remains to ensure the highest quality of care for our aging population. The insights from this report underscore our commitment of that goal and to advocating for policies that support the sustainability of the industry.”

Review Data and Findings

The review uses data downloaded from the CMS Healthcare Provider Cost Reporting Information System, and rates are grouped into six regions. The 2024 review encompasses data from 2020 through 2022, reflecting the nursing home industry during the height of the pandemic.

The review findings across several key areas highlight widespread challenges in the industry, as well as opportunities for new approaches and improvements.

Occupancy

The report notes that occupancy rates started to return to their pre-pandemic levels, which were in the low 80% before 2020. In 2022, the occupancy percentages throughout the country began to rise for the first time since the downturn of the pandemic, and in 2022, the average occupancy rate was 75.76%.

It’s also important to note the payor mix percentage changes. According to the report data, the Medicare payor mix climbed to 12.48%, up 1% compared to the previous year. At the same time, Medicaid and other payor sources decreased by 0.41% nationwide each.

The average length of stay also declined, decreasing 2.97 to 108.99 days in 2022. The most significant decrease in average length of stay occurred among Medicaid payors, and was a deduction of 18.32 days. The downward trend partially reflects the increased average length of stay in 2019 and 2020, which was primarily caused by the COVID-19 pandemic. Additionally, as nursing facilities become more efficient and return to pre-pandemic operations, residents who are having elective procedures performed may be recovering in nursing homes for short periods of time before returning home.

Wage Inflation

Wage inflation is also significantly impacting the industry. Given that competitive wages are key in attracting and retaining talented staff, and as nursing homes face staffing shortages, it’s important for operators to understand the average hourly wage statistic for the industry. Between 2020 and 2022, the average hourly wage increased by 15.71% nationwide. In 2022, the national average for nursing home hourly wages reached $25.00. As demand for staff increases, that wage should continue to climb, also.

Decline in Nursing Homes

The report notes the many challenges that have led to nursing home closures, including the COVID-19 pandemic; increased costs of PPE, testing, and staffing; and decreases in occupancy leading to lost revenue. According to the report data, by October 2023, there were 202 fewer nursing homes operating in the United States than in October 2022. Additionally, 36 out of 50 states saw a 2023 decline in the total nursing homes compared to the numbers in 2022. Iowa featured the largest decline, with 23 fewer nursing homes in 2023 than in 2022. In total, 583 nursing homes have closed since 2019.

The loss of so many nursing homes is particularly concerning given the increased need for nursing home care that the country will see as the Baby Boomer population continues to age. Fewer nursing homes exist to accommodate that growing demand, which is already predicted to exceed the country’s capability to provide skilled nursing care.

Compliance

The CMS staffing mandate is a hot topic in the nursing home industry, and the report includes data on how the mandate is poised to impact facilities. The mandate requires RN hours per patient day to be at least 0.55, and CNA hours per patient day to be at least 2.45. Nursing homes also need to have a RN staff available 24 hours a day, seven days a week. The report indicates that 75.46% of providers do not meet the minimum hours for RNs and CNAs.

Additional challenges abound in meeting the mandate’s requirements. Sas revenues only increase 3% nationally year over year, and hourly wages have increased by 15.71% nationwide, hiring additional staff will be a financial burden on many facilities. The staffing shortages facing the industry make hiring and maintaining required staffing levels extra challenging, even if nursing homes have the funds to bring on additional staff.

The report raises the question of where residents will go if nursing homes are not able to meet the mandate requirements, posing that nursing homes will start to turn away residents because they don’t have the staffing to care for them. From 2017 to 2019, 8,510 fines resulted in $182 million in fines nationally. However, that increased significantly; from 2020 to 2022, 36,370 fines amounted to $560 million in fines nationally. The volume of fines quadrupled, though individual fine cost decreased; the report indicates the trend will likely increase if the mandate goes into effect.

The Future of the Nursing Home Industry

While the report indicates that the nursing home industry is recovering from the pandemic, as occupancy increases, new challenges emerge. Increased wages, staffing shortages, and a growing senior population are further straining the already strained industry. The CMS staffing mandate puts more pressure on nursing homes to hire additional staff or potentially reduce their resident occupancy. Given that nursing home closures have already increased before the mandate, the industry will need to promptly identify a solution to accommodate the increasing care needs of the growing senior population.

Paige Cerulli

Paige Cerulli is a contributing writer to i Advance Senior Care.