The stability of nursing homes is a big issue for the health and human service field. Since 2015, more than 1,000 nursing homes have closed and over 44,000 residents have been displaced—punctuated by 30% jump in closings during the pandemic (see Of More Than 1,000 Nursing Homes That Closed Since 2015, One-Third Closed During COVID-19).

For facilities that have managed to keep their doors open, the financial picture isn’t pretty—65% of nursing homes were operating at a loss in 2020 (see 65% Of Nursing Homes Are Operating At A Loss As Of December 2020) and are projected to have a 4.8% negative operating margin this year (see Nursing Home Margins Projected At Negative 4.8% In 2022). This is coupled with last month’s proposal by the Centers for Medicare & Medicaid Services (CMS) to reduce skilled nursing facility (SNF) payments to nursing homes for fiscal year 2023, which includes a 4.6% cut related to the Patient-Driven Payment Model (see CMS’s Proposed $320M Decrease In Nursing Home Medicare Funding Could Be ‘Ruinous’ For Struggling Operators). The expectation from all of this is that another 400 nursing homes are predicted to close this year (see 400 Nursing Home Closings Projected For 2022: 3 Notes).

Not surprisingly, the number of residents and census in nursing homes is declining. There are 1.2 million consumers residing (temporarily or long-term) in nursing homes—down almost 1.4 million in 2015 (see Total Number Of Residents In Certified Nursing Facilities). The median occupancy rate for U.S. nursing homes fell from 85% in January 2020 to 68% in January 2021 (see Initial Observations of SNF Trends Data Illustrates COVID-19 Challenges and Average Nursing Home Census Down 12% Since End Of 2019, But Nursing Homes Remain Understaffed By 16%).

The fate of nursing homes has important implications for consumers with disabilities. About 16.5% of nursing home residents—almost 200,000—were younger than age 65 (see Nursing Home Facts And Statistics). And there are roughly 500,000 consumers with mental illnesses living in nursing homes (see Mental Illness In Nursing Homes: Variations Across States) and the prevalence of serious mental illness (SMI) in nursing homes increased 77% between 2007 and 2017, from 10.5% to 18.6% (see Trends In Serious Mental Illness In US Assisted Living Compared To Nursing Homes And The Community: 2007-2017). This reliance on nursing homes in the support services system for consumers with mental illnesses is problematic—particularly since the 20% of nursing homes with the lowest margins (-7.5% or worse) currently house 40% of residents, a dramatic jump from the 15% of residents who were in at-risk nursing homes in 2019.

While most executives in the field would agree that no consumers with behavioral or cognitive conditions should live in nursing homes, the field and the service delivery system is unprepared to serve an additional half a million people in the community. CMS is encouraging more use of home- and community-based services (HCBS) (see CMS Launches ‘One-Stop Shop’ For States’ HCBS Investment Plans and Strengthening And Investing In Home And Community Based Services For Medicaid Beneficiaries: American Rescue Plan Act Of 2021 Section 9817 Spending Plans And Narratives). Many states are expanding their funding for HCBS—South Carolina Receives CMS Approval Of Temporary HCBS Rate Increases, Arkansas Medicaid Allocates $112 Million For HCBS Workforce Stabilization Incentive Program, and Delaware Releases Seventh RFP To Build HCBS Capacity For Individuals With I/DD. In this fluid market landscape, there is an opportunity for entrepreneurial provider organization management teams to grow by being part of the solution and develop new models for supported living in the community.

For more on nursing homes and market research for new service line development, check out these resources from The OPEN MINDS Industry Library:

• Nursing Home Closures: By the Numbers
• New York’s Momentum At South Bay For Rehabilitation & Nursing Expands Consumer Monitoring Capabilities With Vios Monitoring System
• Florida Law Provides Nursing Homes With Staffing Flexibility To Meet Minimum Direct Care Hours Per Resident
• Florida Passes Resident Visitation Rights Law For Senior Health Care Settings
• Rehabilitation At Home: A Viable Alternative To SNF For Frail, Complex Older Adults
• CMS Planning New Staffing Requirements & Value-Based Reimbursement Plans For Nursing Homes
• Justice Department Finds that Colorado Violates the ADA By Segregating People With Physical Disabilities In Nursing Facilities
• California Medicaid To Eliminate Asset Tests For Long-Term Care Benefits By January 2024
• ConcertoCare Opens Its First PACE Program
• Colorado Medicaid Pauses Prior Authorization Requirements For Long-Term Home Health Services

And for more, join me on June 15 and June 16 for The 2022 OPEN MINDS Strategy & Innovation Institute. On June 15, don’t miss the session Do Complex Care Needs Require An Inpatient Stay? Evaluating Skilled Nursing Facility-At-Home Models with Mark Treat, Chief Strategy Officer of Upward Health and June 16 for my keynote, The Sustainability Challenge – Strategies For Capitalizing On Emerging Market Opportunities For Serving High-Needs Consumers.