Why Nursing Homes Are Losing Against COVID-19

“U.S. Coronavirus Deaths in U.S. Nursing, Long-Term Care Facilities Top 10,000” read the headline. Wallstreet Journal published a story about how nursing homes and long-term care facilities seemingly can’t keep COVID-19 from decimating their residents. How can COVID-19 be spreading so aggressively from one nursing home to the other when the residents are all quarantined?

CDC and state public health departments have issued strict orders to nursing homes and long-term care facilities that should have stopped COVID-19 from even entering most nursing homes. No visitors. Everyone stays in their rooms.

These nursing homes are generally private-sector endeavors which depend on public sector funds. With prices for nursing home stays costing upwards of $8K per month, many elderly Americans depend on Medicare to subsidize their nursing home costs. In fact, only about 1/3 of long-term care spending comes from private money — the other 2/3rds is from government programs.

Because many long term care facilities are capital and labor intensive, and the government has been trying to rein in spending, the profit margins for long-term care (LTC) operators are quite low. If you look up some of the annual reports for publicly traded LTC companies, you’ll find some depressing numbers. Brookdale Senior Living, operator of 800 senior homes around the United States, has seen year-over-year declines in revenue since 2016 and lost nearly $300M in 2019 alone. Many senior living homes are privately owned, so we can’t see their finances — but many privately owned senior homes face the same headwinds.

These headwinds translate to aggressive cost-cutting measures at all levels of senior care. Instead of hiring multiple RNs, a nursing home might hire one RN to oversee an army of junior staff (to satisfy certain legal requirements, you must have a registered nurse on staff). To avoid paying more money to employees, nursing homes will aggressively limit employee overtime and even punish them for working overtime. Annual pay raises on already suppressed salaries barely keep up with inflation.

Resident-to-nurse ratios in some states’ Long Term Care facilities:

• 32:1 nurse and 16:1 CNA- Ohio
• 44:1 nurse and 44:2 CNA- Tennessee