The nursing home industry is at a breaking point.
Most nursing homes are operating on razor-thin margins. Revenue loss is skyrocketing. According to a study commissioned by my company, in 2020 and 2021, facilities lost between $2,656 and $7,771 daily, with projected losses for 2022 ranging from $2,330 to $5,882.
Staffing challenges, a concern for decades, became unsustainable during COVID-19 and have continued in its aftermath. Pre-pandemic, long-term care (LTC) facilities were already seeing an annual turnover of 128%. Since Feb. 2020, a reported 420,000 LTC employees, many of them nursing assistants, have left the profession. More than half of the nation’s 140,000 nursing homes have to limit admissions as a result of staffing shortages.
President Biden, in his State of the Union address on March 1, called for increased staffing ratios for nursing homes. While everyone is in agreement that’s the right thing to do, there is little agreement on how to pay for it—which adds more stress to an already tense situation.
The industry census average is now at 77%, instead of the preferred rate of 90% and above, but because the skilled nursing facilities don’t have the staffing, they can’t take on more people. The demand is there—hospitals across the country are creating new wings for people who should have been discharged and placed into a skilled nursing facility.
To solve this crisis, nursing homes must rethink how they manage staffing. Here are suggestions to get started.
Leverage technology to better understand trends and predict staffing needs.
Advanced analytics based on data science and AI can help determine ways to balance supply and demand for nurses, optimal rates, and predictable client occupancy requests. Nursing homes can make money by increasing their census and save money with better revenue cycle planning, avoiding cost bursts when demand for staff increases. This type of planning will also help alleviate the burden of significant spikes in recruitment costs, which increased by more than 40% from 2019 to 2020, our study disclosed. The trend is expected to continue in the next few years, with recruitment costs anticipated to reach approximately $27,820 by 2028.
Rethink staffing composition to ensure needs are met.
The staffing construct in long-term care is 80 years old. Nursing homes are staffed by full-time employees, float pools where people move in from different facilities or assignments, contract workers, per diem workers, and travel nurses, who became quite prevalent—and costly—during COVID-19.
To reduce costs, there is a big push by nursing facilities to reduce their payments to staffing agencies, which is how temporary staff are traditionally hired. Given typical staff-to-patient ratios, the average volume of unoccupied beds could be filled with relatively few additional employees, significantly improving the facilities’ financial performance. Without …….