What is the outlook for nursing homes and home health care industries? There has been a trend toward home health care and away from nursing homes in recent years. The former is less expensive and permits seniors to remain in the community, promoting better social health. The COVID-19 pandemic has dramatically accelerated these trends and put the long-term viability of the nursing home industry in doubt, spurring innovation of new care models for the elderly. Ensuring a stable care system for seniors is essential, as the US elderly population will nearly double in the coming decades.
The Pre-Existing Trends
There has been an ongoing shift away from nursing home care in the United States for many years now. Since 2016, over 500 nursing homes have closed their doors, as aging at home becomes more preferred with increasing care options. Many people are motivated to seek alternative care, such as home healthcare which encompasses personal aides assisting with daily tasks as well as more specialized aides who can provide in-home medical care. The Bureau of Labor Statistics projected that the home health aide profession will grow by 34 percent from 2019 through 2029 as the baby-boom generation ages. As of 2015 4.5 million patients were receiving home health care while 1.3 million received nursing home care; this is unsurprising, as roughly 93 percent of the population aged 65 and older lives in the community rather than long-term care facilities. Despite the majority of elderly living in the community, nursing homes made up a 5 percent share of the national health expenditures in 2019, while home health care accounted for only 3 percent, illustrating just how expensive nursing homes are in comparison.
This alludes to another pressing concern with our long-term care systems: financial fragility. The mechanisms that fund the majority of nursing homes have proven to be incredibly delicate making the nursing home industry economically unstable. Medicare does not cover the cost of long-term care facilities, only short-term skilled care under certain circumstances. Instead, the majority, around 60 percent, of nursing home funding comes from Medicaid. However, Medicaid only covers around 70 percent of the true cost of care for these patients. Subsequently, 55 percent of nursing homes reported that they are operating at a loss, according to a survey conducted by the American Health Association in August 2020. Of these facilities, 72 percent cannot continue operation for another year if the current conditions of decreased revenue and increased cost (associated with PPE, increased cleaning, social distancing measures) continue. These financial issues have led to outdated facilities and lack of adequate staff training, which consumers consider when making their care decisions. While many Americans may not pay attention to nursing home quality and stability until it is a service they need, the US elderly population will double from 2012 to 2050, so a well-functioning long term care system is essential.
The Impact of COVID-19
These trends were all in motion prior to the pandemic, which hit nursing homes notoriously hard and caused an acceleration of the aforementioned concerns. The Center for Medicare and Medicaid Services reported over 112,000 deaths among nursing home residents and 1,300 deaths among nursing home staff as of January 17th. While only around one percent of the US population lives in nursing homes, they saw around 40 percent of COVID-19 deaths, prompting interest in the quality of care at these facilities and questions about the best way to care for the nation’s elderly, especially as these care sites become the focus of US vaccination efforts. These statistics highlight the tangible consequences that funding issues create, with staff shortages and lack of training impacting the ability of these facilities to respond to the virus.
The main response by nursing home facilities included COVID-19 prevention procedures such as not admitting new patients and no visitor policies to prevent virus exposure. However, these measures only sped the shift to home care as nursing homes became more inaccessible. Further, these long-term care sites become even more undesirable as concerns arise related to vaccination trends. While the vaccination of elderly residents has been promising, with a median of 78 percent vaccinated as of mid-January, caregivers who work in these facilities are rejecting the vaccine at alarming rates. Only 38 percent of workers had received the vaccination. Though it was offered to them at the same time as resident vaccination, many workers opted out, which may undermine efforts to control virus spread among these most vulnerable populations. Driven by these concerns, the home health industry saw rapid demand increases, with the National Association of Home Care and Hospice reporting that demand for home health aides had increased by 125 percent since March of last year.
The Future of Long-term Care Sites
The demand shift suggests that people, especially throughout the duration of the pandemic, may reconsider their care choices for elderly family members. The tragedy of nursing home deaths during the pandemic sheds light on some of the weaknesses of the system and the regulations on these care sites. For example, while commonplace in hospitals, infection protection programs were not mandated in nursing homes until the Fall of 2019, meaning staff may not have been familiar with the policies. 82 percent of nursing homes were found to have issues with infection control and prevention from 2013 to 2017.
Adding to the troubling financial outlook, nursing homes may anticipate an influx of lawsuits in the coming months, brought against them by patients and patients’ families for their handling of the pandemic. With federal regulations enacted for the management of COVID-19, many facilities faced monetary penalties for failing to adhere to federal regulations, totaling $15 million charged in nursing home noncompliance penalties as of August 2020. The Provider Relief Fund, established by the CARES Act, included $5 billion specifically for nursing home relief; yet the majority of nursing home facilities say they will face significant budgeting issues once the federal funds are exhausted.
There have been calls to restructure the funding models for nursing homes and impose increased oversight as the financial viability of many of these facilities depends on widespread reform and increased quality of care. Proposed federal reform plans include regulations that would require more highly trained nurses at these facilities, lower staff to resident ratios, and smaller facilities overall. President Biden’s nursing home safety plan includes regulations on staff levels and training, required disease specialists, and increased penalties for noncompliance. To address financial concerns, advocates for nursing homes have called for Medicaid reimbursements to be readjusted and have even suggested adding it as a benefit under proposed Medicare expansions.
Alternatively, a shift to home health could be a more cost-effective solution as it keeps more elderly residents in independent living rather than skilled nursing care. The Biden Administration’s plan discusses efforts to expand Medicaid to cover home care services, which are significantly cheaper than nursing home care. The reform needed to create a safe and stable nursing home industry is extensive and costly, suggesting the switch to home care may be a welcomed alternative that takes pressure off the long-term care systems.