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Historically bad: Nursing homes strained by workforce shortage

Heritage Health sign
Emily Bollinger
Heritage Operations Group owns 53 senior care facilities in Illinois, including one at 700 E. Walnut St. in Bloomington.

It's a tough time for long-term care facilities right now. Two of them in Springfield recently announced they are closing. Others around the nation are not in great shape. One of the Springfield nursing homes belongs to Bloomington-based Heritage Enterprises.

Ben Hart, president and CEO of Heritage, said times are historically bad.

“I've been in this business for 25 years. And I would have to say, I've never seen a more challenging time. And even, you know, in discussing this with my father, who is the founder of Heritage, he goes back 58 years. And he would have to agree with that,” said Hart.

There are several reasons for the crunch. Labor supply is a cause that has a compounding effect. There is a shortage nationwide in many sectors, particularly of women who are not re-entering the workforce because of prohibitively high childcare costs. Historically, women also have dominated the nursing field and skilled health care positions.

“I'll say it's worse for health care, said Hart. “Folks are choosing to leave health care altogether. They're having opportunities (in) other industries. And certainly, the stress of what's going on with the COVID pandemic is playing a big role in that.”

Heritage is 300 to 500 staff members short in a workforce of about 4,000, said Hart, with most of the vacancies in clinical positions — the hands-on caregivers for residents and patients. Those are licensed nurses and nurse's aides. And the nation went into the pandemic with a shortage of nurses that has only become worse.

The issue is not wages alone. Hospitals are full right now, Hart said, and that has increased demand for nurses and nursing assistants. That in turn has led to the rise of newer issues that threaten the cost structure of long-term care facilities.

“The biggest one is what we call nurse agencies, or you might call them temp agencies in the hospital world, they would call them traveling nurses,” said Hart.

If a nursing home cannot fill a shift, it calls an agency to fill it with a temp worker who is licensed. That carries a cost premium.

“We're under statutes and regulations with the state of Illinois where we have to have minimum staffing standards. We can't just arbitrarily choose, 'Well I want one nurse on this shift or two nurses,'” said Hart.

And the overall staff shortage means nursing homes and other skilled care facilities have increasingly relied on agencies for a larger and larger portion of the workforce.

Raw numbers from Heritage’s soon-to-close facility in Springfield showed labor costs are up 41%, largely driven by agency cost, said Hart. The labor expense to care for a patient for a day was $144 in 2020. Hart said the year-to-date cost at that home is $203.

That nursing home is the second largest in Sangamon County. Hart said that closure and the closing of another non-Heritage facility in Sangamon County may force placement of patients in more rural areas surrounding Springfield, but there is still bed capacity to absorb those.

He said Heritage is not considering closing any of its facilities in McLean County.

“Our Bloomington-Normal facilities are strong, They're very healthy. And they're very much needed. We're an important part of the local health care community,” said Hart.

Yet, the agency staffing trend is nationwide.

“And it's becoming very problematic for providers. Because the nursing agencies are unregulated, unlicensed, and they largely are unchecked by any kind of governmental or regulatory body. They're just not held to the same standards providers of health care must meet,” said Hart.

He said other than making sure they have a valid license, long-term care facilities cannot vet or train agency hires. The demand curve puts long-term care facilities at a disadvantage in another way as well.

“The rise of the agencies has become almost predatory. We find them camped outside of our buildings and they recruit our staff as they're leaving their shifts. They give them the promise of being able to work for higher wages,” said Hart.

He said he does not blame workers for wanting to pursue a pay increase, but he said it creates an extra layer of expense in the health care system that gets passed on to insurance companies and patients who can pay their own way.

Among residents at Heritage facilities, 50% to 55% cannot pay the daily rate. They are on Medicaid, and Hart said that further squeezes providers.

“Those are fixed rate reimbursements to us. Their payment to us doesn't flex upward as our expenses go up. In Springfield, our labor costs went up 41% year over year. Our total cost went up 35% year over year, primarily because of wages. And our payment from the Medicaid system went up 7%,” he said.

Hart said it now costs Heritage $279 per day. Medicaid pays $194 for a daily loss of $84 per Medicaid patient per day.

Hart said health care providers owe society the ability to equally care for everyone, regardless of the ability to pay.

“But the Medicaid system should recognize that, and they should pay providers what (it) at least costs them to provide that care,” said Hart. “And that's where the state of Illinois and the Medicaid system has fallen short.”

He said sooner or later more providers will exit skilled nursing care if that issue is not addressed, suggesting it needs to happen at both the state and federal levels — at the state level in emergency pandemic aid and at the federal level, with higher reimbursement rates.

“Our state of Illinois and our General Assembly members need to wake up and realize what's going on in long-term care before it's too late,” said Hart, adding to preserve system capacity, governments should reimburse facility operators for periods of low occupancy.

For now, low occupancy may be driven by staff limits. Since the pandemic began, occupancy in skilled nursing facilities is down about 10%. At first that was because families may have kept loved ones at home rather than expose them to COVID risk. Since the vaccine became readily available, Hart said one would think there would be a rebound. Not so.

“There are several factors at play in probably the biggest one being the lack of available workers. We have a number of facilities within our system that are not taking new admissions because we simply don't have the available staff members to care for them,” said Hart.

Hart said that limit is true of the majority of long-term care facilities in the nation, meaning hospitals may be more full than they need to be because they can't place patients in skilled care facilities, rehab or long-term care.

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