Assisted living communities in more danger of closing than nursing homes

Table of Contents Wages increasedBipartisan commitment called for (Credit: franz12/Getty Images) Almost 20% (19.5%) of assisted living providers in Minnesota responding to a recent poll said they may be forced to close or sell facilities due to “dire financial conditions.” The number represents almost 400 assisted living locations across the […]

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(Credit: franz12/Getty Images)

Almost 20% (19.5%) of assisted living providers in Minnesota responding to a recent poll said they may be forced to close or sell facilities due to “dire financial conditions.” The number represents almost 400 assisted living locations across the state. By contrast, 11% of nursing home respondents said they were in danger of closing facilities over the next year, which equates to 40 nursing homes.

The survey, conducted by the Long-Term Care Imperative in April, with results released Thursday, also found that more assisted living communities than nursing homes have increased employee wages by more than 10%, although the “quite challenging” overall financial performance of assisted living communities is not as “gloomy” as the financial performance of nursing homes.

“While they [assisted living providers] are more able than nursing facilities to raise charges to stabilize their financial performance, the ability to do so will be limited by market realities, and in many cases, it has already been limited,” said the Long-Term Care Imperative, a collaboration of LeadingAge Minnesota, which is the state partner of the national LeadingAge association and also of Argentum, and Care Providers of Minnesota, which is the state affiliate of the American Health Care Association / National Center for Assisted Living.

Altogether, 28.6% of assisted living respondents said they have reduced capacity to maintain financial solvency, an additional 3.6% said they are beginning to reduce capacity, and another 4.2% said they are planning to reduce capacity even further than they already have.

“If numerous locations close, that will cause huge access problems for this service, at a time when alternatives like nursing facilities are also under stress and may not be able to take the clients who are unable to access assisted living sites,” the Long-Term Care Imperative said.

Forty-five percent of assisted living respondents said they are facing an immediate cash shortage if revenue declines. More than half of the assisted living respondents (58.7%) said they will be able to operate for only a month or less without Medicaid revenue to cover payroll and other expenses, and an additional 16.2% said they would be able to operate only for two more months without such revenue.

The median operating margin for assisted living respondents in March was –1%, and 39.6% of respondents said they had margins lower than –10%. The median provider loss was $1,943 for the month, which equates to an annualized loss of $23,316. Rural providers were struggling more, on average.

Wages increased

More than half of the participating assisted living providers reported increasing base hourly wages for certified nursing assistants by more than 10% in the past two years despite a lack of permanent funding; others said they have increased wages for the position by up to 15%, while some have not increased wages or have increased them by a smaller amount. Many providers reported increasing wages by up to 15% for registered nurses, licensed practical nurses and dietary staff members as well. In many cases, reserves are being used to cover those and other cost increases.

An October survey by the Long-Term Care Imperative found that more than 12,000 positions in Minnesota assisted living communities were unfilled, and almost a third of assisted living providers reported that they were limiting census due to staffing levels. Staffing remains at similar levels today, the group said.

In late April, the state Senate passed a bill aiming to address the state’s long-term care workforce situation by including a $1.3 billion surplus priority to increase rates for the state’s long-term care, personal care and disability waiver rate service industries. The bill passed the state House May 3. The amount would be in addition to an earlier $322 million package introduced to address staffing issues in the facilities.

Bipartisan commitment called for

With results from the April survey in hand, the Long-Term Care Imperative is calling for a bipartisan commitment to supporting providers, first by adjusting the state Medicaid rates to support competitive wages. “Without sufficient staff, senior care providers cannot admit residents, and that has resulted in revenue losses for organizations throughout the state,” the group noted.

With only a few weeks left in the state legislative session, the group has asked providers to “flood” the office of Gov. Tim Walz (D) with calls beginning today, requesting that he and state lawmakers prioritize older adults and their caregivers in assisted living communities and nursing homes.

The April survey by the Long-Term Care Imperative drew responses from 179 assisted living settings and 156 nursing facilities. For details of survey results involving nursing homes, see McKnight’s Long-Term Care News.

Assisted living communities in more danger of closing than nursing homes

pevita pearce

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