Lauren Coleman-Lochner and Martin C. Brown | Bloomberg

The beds of the Chippewa Manor manor could be full. The nursing home and rehabilitation are in high demand from potential patients after two nearby facilities recently closed. But there is one problem: there is no one to take care of the residents.

Staffing has always been a challenge, but over the past six months, “it has reached a boiling point,” said Jill Gengler, president of the company in northwest Wisconsin. The house had difficulty finding nurses, laundry workers, service workers, housekeepers and caterers. Raising salaries for certified paramedics to $ 17 an hour from $ 12 has led to some new employees, but the pay rate is “unsustainable”.

As a result, Chippewa Manor is giving up other potential customers who could increase revenue, which will help fund higher pay.

All of this means disaster for nursing homes in the U.S., an industry that was under financial pressure even before the pandemic. Declining entrants and rising labor and supply costs have forced 327 nursing homes to close by 2020, and more than 400, or about 3% of certified homes in the U.S., are threatened with closure this year, according to the American Health Association. , an industrial lobby group.

“The industry itself is on the verge of collapse,” said David Gordon, who heads healthcare practice at law firm Polsinelli.

The upcoming coups will also affect the so-called generation of sandwiches, those who are between caring for their children and aging parents, often juggling their own careers. More than half of adults over the age of 65 will need care due to severe limitations, according to a government report, and the U.S. Census Bureau estimates that by 2034, there will be more older people than children by 2034.

Thin fields

According to a March AHCA report, the average occupancy rate of qualified nursing homes, historically about 90%, will be 77% per year. And most homes are losing money, with an expected average operating margin of negative 4.8%.

This is a huge difference from the strongest nursing homes with financial figures that earned up to 10% before the pandemic, said John Tischler, who specializes in operations involving troubled and bankrupt medical facilities at Nashville law firm Waller Lansden Dortch & Davis.

According to an April report from the National Academy of Sciences, the pandemic has identified and exacerbated long-standing deficiencies in more than 15,000 nursing homes in the U.S., such as inadequate staffing, poor infection control and regulatory disruptions. According to the Medicare and Medicaid Centers, more than 150,000 nursing home residents and 2,362 workers died from Covid-19 last month.

While shoppers in space are coming “thinking they can build a better mousetrap,” complexity and economic pressures along with the move to more home maintenance are likely to lead to more restructuring and closures similar to the post-recession wave 2008 – of Most problems are concentrated in private facilities, said Ted Wilson, a restructuring lawyer for King & Spalding.

Even in ordinary times, experts say, it is necessary to reconsider how the facilities are financed.

“All compensation systems are inadequate in all areas,” said Susan Koenig, an expert on nursing home recommendation and head of SAK’s managing service, acting head and head of 11 in bankruptcy cases. The 4.6% cut proposed by the Medicaid Centers for Health Services and Medical Services next year will affect payments covering short-term rehabilitation patients who make up a significant portion of the elderly family. At the same time, Medicaid funds most long-term care.

About 70% of nursing homes in the U.S. are owned by commercial operators, including large chains, small groups of investors, moms and dads, and increasingly private investment companies, which have been a driving force in consolidating the still fragmented industry.

Government facilities – and their creditors – also have their problems. According to data collected by Bloomberg, municipal bonds issued to nonprofit homeowners for the elderly, including nursing homes, account for nearly 75% of the municipal bond default of $ 560 million this year. Last year, $ 1.1 billion of these bonds defaulted, accounting for 60% of defaults in the municipal bond market.

The situation is complicated by the diversity of bondholders, when state-funded facilities need to be restructured, said Gordon of Polsinelli, which complicates negotiations and reaching an agreement, even if there are willing buyers. This means that some objects that could have been saved eventually close.

The purpose of bankrupt objects, as a rule, – to sell to the new operator, but it is not always possible, or the buyer does not want all places.

Exodus workers

As nursing homes are working hard, the White House’s proposed rules to improve care include new staffing requirements that could be another hurdle for an industry that is already struggling to find workers.

Approximately 236,000 caregivers, or 15% of the workforce in nursing homes, left the sector from the start of the pandemic to February, according to the Bureau of Labor Statistics. Scorched workers are not tempted to raise. Their wages jumped 19% from January 2020 to January 2022, according to BLS. But other industries have also raised wages.

“You can go work at Walmart down the street and get more and not have to deal with Covid all day,” Gordon said.

The situation is even more urgent for rural facilities. Like rural hospitals, they are often located in areas with stagnant or declining populations.

“It will take more than a salary,” said David Grabowski, a professor of health policy at Harvard Medical School. “We are talking about working conditions. It’s about culture. “

Experts from the Academy of Sciences say the nursing home industry needs a complete overhaul from emergency preparedness to new standards for staff and better control and regulatory compliance. The nonprofit’s report also suggests that the federal government explore a new long-term care benefit. The current system, according to the report, is “inefficient, inefficient, fragmented and unstable.”

Until then, operators are just trying to find nurses and support staff to support the work of their facilities. But even with incentives – some centers offer free leave for every three weeks worked, said Kelly Arduino, head of health practice at consulting firm Wipfli – job seekers are not nominated.

“We can’t even remember a situation when it was harder,” she said.