As the Biden Administration works to develop and implement a standard for minimum nurse staffing levels in nursing facilities,[1] facility owners and executives attempt to derail this progress by arguing that almost all facilities would need to increase their staffing levels and that the costs would be enormous. The American Health Care Association, the national trade association representing the business interests of facility owners and executives, cites a report by the consulting firm CliftonLarsonAllen[2] to make their case. The report finds that a 4.1 hours per resident per day staffing standard identified in a federally-mandated staffing report more than 20 years ago – which actually found that nurse staffing thresholds between 4.1 and 4.85 hours of nursing care per resident per day were necessary to avoid “critical quality of care problems”[3] – is not currently met by 94% of nursing facilities nationwide.[4]
Think about that admission – the major national nursing home trade association admits that the overwhelming majority of nursing facilities in the country do not have enough staff to meet a standard that was recognized more than 20 years ago as the minimum staffing level needed to provide residents with appropriate care.
Clearly, more nursing staff are necessary in 2022 to meet the greater health care needs of today’s nursing home residents. AHCA, however, argues that meeting the 20+-year old staffing standard would require hiring 187,000 nurses and nurse aides, at a cost $10 billion a year.[5] Even if that estimate were true,[6] $10 billion is just over 5% of the $196.8 billion in national nursing home expenditures in 2020.[7] Moreover, the $10 billion price tag for nursing staff, identified by CLA and AHCA, does not mean that facilities need $10 billion more than they receive now.[8] Nursing facilities divert a considerable amount of their revenues to profits, management fees, related party contracts, and other expenses unrelated to resident care.
A case filed by 238 of New York State’s 615 nursing facilities makes this point. Challenging a 2021-2022 state budget law that both requires nursing facilities to spend designated portions of their revenue on resident care and limits facility profits, New York facilities allege in their Complaint that if the budget law had been in effect in 2019, facilities would have had to return $824 million to the state.[9] In other words, the facilities admit that nursing facilities in New York State were paid $824 million in 2019 for excess profits and spending not related to resident care, as those terms are defined by the state’s budget law. One state, one year, close to one billion dollars.
A recent report by the Empire Center finds that for-profit nursing facilities in New York State hide profits in related-party transactions.[10] Analyzing in-depth a 17-facility state nursing home chain, the Center finds that the chain’s two owners “netted at least $13.8 million in profits and salaries from their combined nursing homes businesses,” more than eight times the $1.7 million officially reported as profits. Seventeen facilities, two owners, nearly $14 million in profits. In 2018, The New York Times reported that nursing facilities’ contracts with related companies “accounted for $11 billion of nursing home spending in 2015 – a tenth of their costs – according to financial disclosures the homes submitted to Medicare.”[11] Nursing facilities doing business with related companies employed fewer nurses and aides and were more likely to have serious health violations.
Conclusion
Decades of research document that nursing home residents cannot receive high quality of care and enjoy high quality of life, as promised by the 1987 Nursing Home Reform Law, unless nursing homes are appropriately staffed by sufficient numbers of well-trained, well-compensated, and well-treated staff.
The nurse staffing needs of nursing facilities are considerable, the challenges of recruiting nursing staff are significant, and undoubtedly, there will be some additional costs to pay for more staff. Addressing these challenges in a meaningful and comprehensive way must be the country’s public policy goal. The nursing home industry must be part of the solution, not a hindrance to better care for residents.
July 21, 2022 – T. Edelman
[1] White House, “Protecting Seniors and People with Disabilities by Improving Safety and Quality of Care in the Nation’s Nursing Homes” (Feb. 28, 2022), https://www.whitehouse.gov/briefing-room/statements-releases/2022/02/28/fact-sheet-protecting-seniors-and-people-with-disabilities-by-improving-safety-and-quality-of-care-in-the-nations-nursing-homes/; see Charlene Harrington, et al, “Appropriate Nurse Staffing Levels for U.S. Nursing Homes,” Health Serv Insights. 2020; 13: 1178632920934785, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7328494/
[2] CliftonLarsonAllen, “Staffing Mandate Analysis In-Depth Analysis on Minimum Nurse Staffing Levels and Local Impact” (Jul. 2022), https://www.ahcancal.org/News-and-Communications/Fact-Sheets/FactSheets/CLA-Staffing-Mandate-Analysis.pdf
[3] Abt Associates, Inc., Appropriateness of Minimum Nurse Staffing Ratios in Nursing Homes. Report to Congress: Phase II Final, Overview of the Phase II Report: Background, Study Approach, Findings, and Conclusions, p. 15 (2001), https://www.justice.gov/sites/default/files/elderjustice/legacy/2015/07/12/Appropriateness_of_Minimum_Nurse_Staffing_Ratios_in_Nursing_Homes.pdf. See also Charlene Harrington, Christine Kovner, Mathy Mezey, Jeanie Kayser-Jones, Sarah Burger, Martha Mohler, Robert Burke, David Zimmerman, “Experts Recommend Minimum Nurse Staffing Standards for Nursing Facilities in the U.S.” The Gerontologist (2000) Vol. 40 (1): 5-16
[4] AHCA, “Report: Increasing Nursing Home Staffing Minimums Estimated at $10 Billion Annually” (Press Release, Jul. 19, 2022), https://www.ahcancal.org/News-and-Communications/Press-Releases/Pages/Report-Increasing-Nursing-Home-Staffing-Minimums-Estimated-at-$10-Billion-Annually.aspx
[5] AHCA, “Report: Increasing Nursing Home Staffing Minimums Estimated at $10 Billion Annually” (Press Release, Jul. 19, 2022), https://www.ahcancal.org/News-and-Communications/Press-Releases/Pages/Report-Increasing-Nursing-Home-Staffing-Minimums-Estimated-at-$10-Billion-Annually.aspx
[6] A study published last year by AHCA and Brown University estimated that meeting federal minimum nurse staffing levels, as proposed in Congressional legislation, would cost $7.25 billion. Terry Hawk, Elizabeth M. White, Courtney Bishnoi, Lindsay B. Schwartz, Rosa R. Baier, David R. Gifford, “Facility characteristics and costs associated with meeting proposed minimum staffing levels in skilled nursing facilities,” Journal of the American Geriatrics Society, 2022; 70(4):1198-1207 (2021), abstract at https://agsjournals.onlinelibrary.wiley.com/doi/10.1111/jgs.17678
[7] Amy Stulick, “National Nursing Home Spending Reaches $196.8 Billion in 2020,” Skilled Nursing News (Dec. 15, 2021), https://skillednursingnews.com/2021/12/national-nursing-home-spending-reaches-196-8-billion-in-2020/ (citing a December 2021 analysis by the Office of the Actuary, CMS)
[8] Elizabeth Halifax, Charlene Harrington, “Nursing home financial transparency and accountability are needed to assure minimum staffing levels,” (Commentary) Journal of the American Geriatrics Society, https://doi.org/10.111/jgs. 17931 (2022), https://agsjournals.onlinelibrary.wiley.com/doi/10.1111/jgs.17931
[9] Home for the Aged of the Little Sisters of the Poor v. Mary T. Bassett, No. 1:21-cv-01384 (BKS/CFH) (N.D.N.Y., filed Dec. 29, 2021), https://medicareadvocacy.org/wp-content/uploads/2022/01/Nursing-homes-NY-nh-case-21-cv-1384-BKS-CFH-complaint-U.S.-District-Court-NYND-2.pdf. “How Do Nursing Homes Spend the Reimbursement They Receive for Care? (CMA Report, Jan. 26, 2022), https://medicareadvocacy.org/how-nursing-homes-spend-public-money/
[10] Bill Hammond, Empire Center, “Following the Money: An analysis of ‘related company’ transactions in New York’s nursing home industry” (Jul. 5, 2022), https://www.empirecenter.org/publications/following-the-money-2/l
[11] Jordan Rau, “Care Suffers as More Nursing Homes Feed Money Into Corporate Webs,” The New York Times (Jan. 2, 2018), https://www.nytimes.com/2018/01/02/business/nursing-homes-care-corporate.html