Nursing Homes Face Closures Due To Long-Standing Financial Challenges Exacerbated By The Pandemic

Long term care facilities are facing a financial crisis. The industry is expected to lose $94 billion over a two-year period (2020-2021) due to the skyrocketing costs to fight the pandemic. In 2020, nursing homes spent roughly $30 billion on personal protective equipment (PPE) and additional staffing alone. Declining occupancy has compounded financial challenges. Nursing home occupancy declined by 16.5 percent between January 2020 and January 2021. Occupancy rates for assisted living communities dropped to a record-low 77.7 percent in the fourth quarter of 2020. 

Many long term care providers faced financial struggles even before the pandemic, but the situation is becoming more dire, with the industry anticipating record closures. The American Health Care Association and National Center for Assisted Living (AHCA/NCAL) conducted an analysis that estimated that more than 1,600 nursing homes could close in 2021 without financial assistance. 

For example, ABC affiliate WFTS in Tampa Bay, Florida reports that the state’s long term care industry has been hit with losses over $650 million a year into the pandemic. Kristen Knapp, spokesperson for the Florida Health Care Association (FHCA), warned, “I think if we don’t see us starting to rebuild occupancy, I think you could see some challenges where we might see some facilities close.” 

FHCA Executive Director Emmett Reed said that the pandemic has resulted in a 181 percent increase in staffing costs in 2020 versus 2019, in addition to historic costs for PPE and testing. Occupancy rates are down 15 percent across the state’s nursing homes, leaving many operating at a profit margin of less than one percent. 

Closures are devastating to residents, staff and family members. Long term care residents require a high level of specialized care that family members are often unable to provide. When a nursing home is forced to close, vulnerable seniors are uprooted and forced to find new care options, sometimes far away from loved ones. 

Legacy Lodge, an assisted living community in Jackson, Wyoming, closed unexpectedly last month due to financial challenges, leaving families uncertain about where their loved ones would go and how they would get care. Stories like these are becoming too common, as facilities in California, Indiana, Connecticut, Massachusetts, Kansas, Nebraska, New York, and Rhode Island have also closed their doors in recent months. 

AHCA/NCAL is urging Congress to rally around America’s long term care residents and staff by: 
  • ​Continuing to make long term care residents and workers a top priority for vaccine distribution. 
  • Allocating $20 billion to the long term care industry either through an enhanced Federal Medicaid Assistance Percentage for long-term services and supports, or through a dedicated portion to the Provider Relief Fund. 
  • Continuing to prioritize long term care facilities’ access to testing and proper equipment. 
The long term care industry needs help now, and providers hope to work with lawmakers on another relief package. Facilities need adequate funding and assistance so they have the proper resources to provide the high-quality care so many seniors depend on. 
 
ABOUT AHCA/NCAL 
The American Health Care Association and National Center for Assisted Living (AHCA/NCAL) represents more than 14,000 non-profit and proprietary skilled nursing centers, assisted living communities, sub-acute centers and homes for individuals with intellectual and development disabilities. By delivering solutions for quality care, AHCA/NCAL aims to improve the lives of the millions of frail, elderly and individuals with disabilities who receive long term or post-acute care in our member facilities each day. For more information, please visit www.ahcancal.org.