The first cases of COVID-19 on U.S. soil were reported in a 100-bed Washington State SNF on January 21, 2020. In the weeks and months that followed, the pandemic spread around the country and around the world, infecting millions of people and causing mass deaths.
While impacts have been felt virtually everywhere, SNFs have borne an especially heavy burden. By July 2020, SNF residents represented as many as half of all COVID-19 deaths in several European countries; over three-quarters of deaths in Canada; and about 40% in the U.S.
Making matters worse, many SNFs lacked the necessary infrastructure, organization and workforce leading into the pandemic that could have lessened many of COVID-19’s harsh impacts. Low staff-to-resident ratios, low salaries and low skill mixes…high staff turnover…costly delays in testing staff and residents… all these helped create environments that lacked resilience in the face of an enormously formidable health crisis.
Add to that the issue of perception. Broadly speaking, COVID-19’s impacts on SNFs and residents have undermined public confidence in facilities around the country, which already experienced an array of operational and perceptual difficulties long before this crisis began.
All this paints a bleak picture moving forward. According to Mark Parkinson, AHCA/NCAL President and CEO, SNFs must generate a 1% increase in occupancy over the next 12 months or risk the very real possibility of closing their doors for good.*
Understanding the Impacts
The long-term effects of COVID-19 on SNFs can be viewed through three distinct lenses: clinical, financial and operational.
Long-Term Clinical Effects of COVID-19 on Skilled Nursing Facilities
Declining health and outcomes for current residents
COVID-19 has caused scores of infections and, ultimately, deaths in SNFs around the country. For residents who contracted the virus and survived, many continue to deal with an array of physical and mental issues—from pressure ulcers and cognitive decline to cardiac issues, depression, anxiety and more. Most SNF residents these days are older adults dealing with multiple underlying health conditions who require a high level of specialized care. As a result, many, if not most, residents aren’t likely to regain what they’ve lost.
More serious long-term complications appear to be less common but have been reported nonetheless. COVID-19 has been noted to affect different organ systems in the body and can include:
Cardiovascular: inflammation of the heart muscle
Respiratory: lung function abnormalities
Renal: acute kidney injury
Dermatologic: rash, hair loss
Neurological: smell and taste problems, sleep issues, difficulty with concentration, memory problems
Psychiatric: depression, anxiety, changes in mood
The long-term significance of these effects is not yet known. The Centers for Disease Control (CDC) will continue to monitor these and other issues over time, which, in turn, can inform COVID-19 clinical care as well as the public health response to COVID-19.
Declining health for future residents
Many newer residents – and those who soon may enter facilities – also have experienced declines as a result of isolation even before they ultimately are admitted. Consequently, these residents could likely have higher acuity issues and require more advanced care.
Psychological impact on caregivers
Residents aren’t the only stakeholders in SNFs who have experienced isolation, loneliness, sadness, emotional anxiety and even depression during COVID-19. Caregivers are expected to appear calm and professional in all they do. Yet, many nurses in particular have reported experiencing psychological effects such as uncertainty, hopelessness, work overload and role conflicts. Considerable stress is placed on top of all that when one considers the substantial and still-inadequately understood risks associated with contracting COVID-19. If they haven’t already gotten it, they work in an environment that is ripe with infection risks—COVID-19 and otherwise. All this exacerbates caregiver concerns for the well-being of themselves, residents and even their own loved ones back home.
A fundamental shift in infection prevention and control approaches
As skilled nursing clinical consultants with decades of experience in the industry, we at Richter firmly believe that infection prevention and control protocols post-COVID-19 will never be the same. There simply is no turning back. Too many SNFs were slow in adopting even basic protocols, which exacerbated enormous spikes in COVID-19 infections throughout many facilities.
Even today, more than a year into the pandemic, there remain significant gaps in the ways that facilities and staff at all levels practice infection prevention and control.
Long-Term Financial Effects of COVID-19 on Skilled Nursing Facilities
Significant short-term revenue losses
According to a forecast by the nation’s largest nursing home association, the American Health Care Association/ National Center for Assisted Living (AHCA/NCAL), the long-term care industry will lose $94 billion over a two-year period as a result of COVID-19-related costs and revenue losses. This report found that providers spent an estimated $30 billion in 2020 on COVID-19-related costs, including staff additions and personal protective equipment (PPE). AHCA/NCAL projects that number to be $30 billion once again for 2021.
From a pure revenue perspective, nursing home operators have lost $11.3 billion so far in 2021. Those losses are projected to rise to $22.6 billion by the end of 2021, according to AHCA/NCAL.
Finally, AHCA/NCAL’s report states that the combination of revenue declines and increased costs resulted in 143 facility closures and mergers in 2020. Should conditions not measurably improve, that could reach 1,670 closures/mergers by the end of 2021.
Even before COVID-19, consumers increasingly trended away from skilled nursing options toward assisted living and home-based care. The U.S. has the world’s largest number of SNF residents; but more and more, families and even some doctors have been reluctant to send loved ones and patients to facilities, fearing isolation, infection and worse.
With the surge in sickness and death throughout the skilled nursing industry, it’s perfectly reasonable to expect this trend to continue—possibly even accelerate. Indeed, SNF occupancy rates were 75.5% by the end of May 2020, which represented nearly a 9% decline from 2019, according to The National Investment Center for Seniors Housing & Care. This puts considerable pressure on margins, along with increased salaries and bonuses, training, PPE and testing. Collectively, these and related costs could simply be too much for some facilities to bear.
From dealing with PPE shortages to meeting challenges around infection prevention and control, staffing, decreased hospital admissions and more, LTPAC organizations everywhere are finding it harder than ever to collect revenue and keep cash on hand.
Other issues contribute to the challenge. According to a recent Leading Age report, some SNFs could face upwards of $15,000 per week in expenses related to testing staff for COVID-19 during 2021. This, combined with the previously mentioned trend toward more community home-based care, has caused long-term SNF census to drop sharply over the past several years as reimbursement is redirected toward incentivizing these community-based services and assisted living.
With occupancy and census expected to remain at current levels (or decrease even further), maintaining adequate cash levels will continue to challenge financial professionals at SNFs everywhere.
Uncertain stimulus/aid funding
Stimulus funds were made available to SNFs beginning in late March 2020 as part of the $2.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act. Intended to ease financial and regulatory burdens associated with this crisis, measures have included the Paycheck Protection Program (PPP), Small Business Administration (SBA) Economic Injury Disaster Loans (EIDL) low-interest disaster loans, Centers for Medicare & Medicaid Services (CMS) Civil Money Penalty (CMP) Reinvestment Program funds, Provider Relief Fund (PRF), Quality Incentive Payment Program (QIP) and more.
SNFs received about $13 billion in total from the Provider Relief Fund, as well as an additional $8 billion in support such as PPP loans and free testing equipment. This helped stem the tide for many facilities in avoiding severe cash flow issues during the second half of 2020. Yet, those monies won’t last forever. In many cases, programs have concluded, incentives have dried up or their continuation is pending or uncertain. Providers can still apply for the second round of PPP funding—however, requirements to qualify for this round are stricter than the original PPP funding. Furthermore, it is still uncertain whether more funding will be available in the future.
The bottom line: Stimulus funds and financial aid measures have been invaluable to SNFs across the country; but yours shouldn’t make financial assumptions or plan to leverage additional funds without first knowing what will be available in the months ahead.
Long-Term Operational Impacts of COVID-19 on Skilled Nursing Facilities
A continuing shift to private rooms
The shift from semi-private to private rooms was already underway before COVID-19 struck, largely driven by consumer preference. Under COVID-19 protocols – and certainly under similar infection protocols in the future – it’s completely unfeasible to house residents in double rooms, so many facilities have begun the transition, with more slated to do so throughout 2021.
If there’s a silver lining to all this, it could be argued that lower occupancy makes transitioning to private rooms much easier for SNFs, since it may not be necessary to add some or even any physical space to accommodate single-resident rooms at current occupancy levels—or likely future ones.
What’s more, states such as Ohio are expected to institute bed buyback programs whereby the state – as the name implies – buys back licenses for unused beds (in Ohio, the state proposed $10,000 per bed, which translates to approximately $50 million in total buybacks throughout the state), thus eliminating them from a facility’s certified number of beds per Medicare/ Medicaid—and saving a per-bed-per-day tax (again in Ohio, that’s $13.34 per day*). Given the difference between private and semi-private rates, buyback programs could enable facilities to charge more for private rooms, and utilize buyback revenues for capital expenditures, infection prevention efforts and other important initiatives.
Capital projects necessary to retrofit current facilities for post-COVID-19 needs
Beyond the shift to private rooms, SNFs must plan for additional capital projects that will aid in infection prevention and control efforts moving forward. Communal dining is a prime example; it simply doesn’t make sense anymore from an infection prevention and control perspective to serve meals to large resident groups in a large and open dining area. Depending on your current setup, you may need to retrofit spaces like this to facilitate smaller groups of residents. Some SNFs have adopted a “pod” or “household” approach whereby small, preset resident groups eat together, live in the same area within the facility, engage in activities together and more. This enables better infection control; but it also could necessitate restructuring parts of your facility to accommodate this arrangement.
Whether it’s installing air filtration systems, EHR solutions or other technologies that drive efficiency, existing SNFs must take steps now to remain relevant and attractive in light of increasingly popular alternative care approaches and new entrants in their marketplace. In the end, COVID-19 exposed nearly as many longstanding problems within SNFs as it created. Moving forward, providers and state and federal administrators and policymakers will need to take quick and decisive action to close these gaps and rectify issues so they don’t recur. Yet, action cannot be limited to outside parties; your SNF must take the lead in preparing itself for the next public health emergency and transforming your facility to enhance resident outcomes and preserve financial stability.