Understanding Nursing Home Spending And Staff Levels In The Context Of Recent Nursing Staff Recommendations

United States' Nursing Home Finances: Spending, Profitability, and Capital Structure

Little is known about nursing home (NH) financial status in the United States even though most NH care is publicly funded. To address this gap, this descriptive study used 2019 Medicare cost reports to examine NH revenues, expenditures, net income, related-party expenses, expense categories, and capital structure. After a cleaning process for all free-standing NHs, a study population of 11,752 NHs was examined. NHs had total net revenues of US$126 billion and a profit of US$730 million (0.58%) in 2019. When US$6.4 billion in disallowed costs and US$3.9 billion in non-cash depreciation expenses were excluded, the profit margin was 8.84 percent. About 77 percent of NHs reported US$11 billion in payments to related-party organizations (9.54% of net revenues). Overall spending for direct care was 66 percent of net revenues, including 27 percent on nursing, in contrast to 34 percent spent on administration, capital, other, and profits. Finally, NHs had long-term debts that outweighed their total available financing. The study shows the value of analyzing cost reports. It indicates the need to ensure greater accuracy and completeness of cost reports, financial transparency, and accountability for government funding, with implications for policy changes to improve rate setting and spending limits.

Nursing home finances associated with real estate investment trust and private equity investments

In 2021, real estate investment trusts (REITs) and private equity (PE) held investments in 1915 (16%) and 1569 (13%) US nursing homes (NHs), respectively. We created a database of REIT and PE investments in NHs, merged it with Medicare Cost Report data (2011-2019), and used a difference-in-differences approach within an event-study framework to compare NH spending and financial performance before and after REIT or PE investment to NHs that did not receive REIT or PE investment. REIT investments were associated with higher total wages (3%), total nursing wages (3%; both logged, per resident day [PRD]), and current ratio (81%). PE investments were associated with lower net patient service revenue (7%), total expenses (7%), and total wages (8%; all logged, PRD). The impact of REIT and PE investments in NHs may vary in different market conditions, as may occur in the current environment of low, falling NH profits, potentially higher minimum staffing requirements, and rising interest rates. Therefore, it is important for stakeholders to understand the impact of these large, growing investments on the financial performance of NHs.

Nursing Homes Increasingly Rely On Staffing Agencies For Direct Care Nursing

When nursing homes experience a shortage in directly employed nursing staff, they may rely on temporary workers from staffing agencies to fill this gap. This article examines trends in the use of staffing agencies among nursing homes during the prepandemic and COVID-19 pandemic era (2018-22). In 2018, 23 percent of nursing homes used agency nursing staff, accounting for about 3 percent of all direct care nursing hours worked. When used, agency staff were commonly present for ninety or fewer days in a year. By 2022, almost half of all nursing homes used agency staff, accounting for 11 percent of all direct care nursing staff hours. Agency staff were increasingly used to address chronic staffing shortages, with 13.8 percent of nursing homes having agency staff present every day. Agency staff were 50-60 percent more expensive per hour than directly employed nursing staff, and nursing homes that used agency staff often had lower five-star ratings. Policy makers need to consider postpandemic changes to the nursing home workforce as part of nursing home reform, as increased reliance on agency staff may reduce the financial resources available to increase nursing staff levels and improve the quality of care.

Beyond Nursing Staff Levels: The Association of Nursing Home Quality and the Five-Star Quality Rating System's New Staffing Measures

Recently, the Centers for Medicare & Medicaid Services (CMS) introduced staffing measures related to staffing variability and turnover in the Nursing Home (NH) Care Compare Five-Star Quality Rating System. While the consensus within the literature is that reduced variability and turnover are associated with higher NH quality of care and life, no existing studies have evaluated the relationship between CMS's newly introduced staffing measures and quality. This study uses regression analysis to estimate the relationship between 13 quality measures (used in Care Compare) and CMS's new staffing measures (i.e., weekend nursing staff levels, total nursing and registered nurse staff turnover, and administrator turnover) as well as a measure of daily staffing variation recently introduced in the literature called the coefficient of variation. Regressions analysis finds strong evidence of an association between quality and these staffing measures, though some measures (e.g., nursing staff turnover) are highly correlated and may be duplicative.

Association of Receipt of Paycheck Protection Program Loans With Staffing Patterns Among US Nursing Homes

Importance

Staffing shortages in nursing homes (NHs) threaten the quality of resident care, and the COVID-19 pandemic magnified critical staffing shortages within NHs. During the pandemic, the US Congress enacted the Paycheck Protection Program (PPP), a forgivable loan program that required eligible recipients to appropriate 60% to 75% of the loan toward staffing to qualify for loan forgiveness.

Objective

To evaluate characteristics of PPP loan recipient NHs vs nonloan recipient NHs and whether there were changes in staffing hours at NHs that received a loan compared with those that did not.

Design, Setting, and Participants

This economic evaluation used national data on US nursing homes that were aggregated from the Small Business Administration, Nursing Home Compare, LTCFocus, the Centers for Medicare & Medicaid Services Payroll Based Journal, the Minimum Data Set, the Area Deprivation Index, the Healthcare Cost Report Information System, and the US Department of Agriculture Rural-Urban Continuum Codes from January 1 to December 23, 2020.

Exposure

Paycheck Protection Program loan receipt status.

Main Outcome and Measures

Staffing variables included registered nurse, licensed practical nurse (LPN), and certified nursing assistant (CNA) total hours per week. Staffing hours were examined on a weekly basis before and after loan receipt during the study period. An event-study approach was used to estimate the staffing total weekly hours at NHs that received PPP loans compared with NHs that did not receive a PPP loan.

Results

Among 6008 US NHs, 1807 (30.1%) received a PPP loan and 4201 (69.9%) did not. The median loan amount was $664 349 (IQR, $407 000-$1 058 300). Loan recipients were less likely to be part of a chain (733 [40.6%] vs 2592 [61.7%]) and more likely to be for profit (1342 [74.3%] vs 2877 [68.5%]), be located in nonurban settings (159 [8.8%] vs 183 [4.4%]), have a greater proportion of Medicaid-funded residents (mean [SD], 60.92% [21.58%] vs 56.78% [25.57%]), and have lower staffing quality ratings (mean [SD], 2.88 [1.20] vs 3.03 [1.22]) and overall quality star ratings (mean [SD], 3.08 [1.44] vs 3.22 [1.44]) (P < .001 for all). Twelve weeks after PPP loan receipt, NHs that received a PPP loan experienced a mean difference of 26.19 more CNA hours per week (95% CI, 14.50-37.87 hours per week) and a mean difference of 6.67 more LPN hours per week (95% CI, 1.21-12.12 hours per week) compared with nursing homes that did not receive a PPP loan. No associations were found between PPP loan receipt and weekly RN staffing hours (12 weeks: mean difference, 1.99 hours per week; 95% CI, -2.38 to 6.36 hours per week).

Conclusions and Relevance

In this economic evaluation, a forgivable loan program that required funding to be appropriated toward staffing was associated with a significant increase in CNA and LPN staffing hours among NH PPP loan recipients. Because the PPP loans are temporary, federal and state entities may need to institute sufficient and sustainable support to mitigate NH staffing shortages.

Financial Performance is Associated With PPE Shortages in Chain-Affiliated Nursing Homes During the COVID-19 Pandemic: A Longitudinal Study

Many nursing homes operated at thin profit margins prior to the COVID-19 pandemic. This study examines the role of nursing homes' financial performance and chain affiliation in shortages of personal protection equipment (PPE) during the first year of the COVID-19 pandemic. We constructed a longitudinal file of 79 868 nursing home-week observations from 10 872 unique facilities. We found that a positive profit margin was associated with a 21.0% lower probability of reporting PPE shortages in chain-affiliated nursing homes, but not in non-chain nursing homes. Having adequate financial resources may help nursing homes address future emergencies, especially those affiliated with a multi-facility chain.