Analysis: Long-Term Care Industry Expected to Lose $94B By End of 2021

Feb. 17, 2021
More than 1,600 nursing homes could close in 2021, the analysis revealed

No aspect of the care delivery ecosystem has been spared during the pandemic, with long-term care residents and staff having been at the epicenter since the beginning. A new analysis conducted by the American Health Care Association and National Center for Assisted Living (AHCA/NCAL) now estimates that the long-term care industry is expected to lose $94 billion over a two-year period ending in 2021.

The organization noted that from increased routine testing to hiring additional staff and purchasing personal protective equipment (PPE), providers have dedicated extensive resources to fight this virus. These additional costs have magnified the financial shortfalls facilities faced for years prior to the pandemic, and now many are at risk of shutting down for good, according to the analysis. Last year, nursing homes spent roughly $30 billion on PPE and additional staffing alone, it revealed.

The same AHCA/NCAL analysis estimated that without immediate assistance, more than 1,600 nursing homes could close in 2021—more than 10 times the number of facilities that closed last year. The average nursing home has the capacity to serve approximately 100 residents.

Tragically, while less than 1 percent of America’s population lives in long-term care facilities, as of February 11, this tiny fraction of the country accounts for 36 percent of U.S. COVID-19 deaths, according to The COVID Tracking Project.

In addition to increased expenditures, long-term care facilities have suffered a sharp decline in occupancy, which AHCA/CNAL President and CEO Mark Parkinson called a “business nightmare.” In a recent interview with McKnight’s Senior Living, Parkinson said, “In three short months, we’ve gone from 71 percent to 67 percent … We need census to recover at a rate of about 1 percent a month, and while that doesn’t sound like a lot, it’s not as easy as it might seem … If the census doesn’t recover at all, or recover slower than that, the sector has a real problem.”

Emmett Reed, executive director of the Florida Health Care Association, also noted in a committee hearing before the Florida State Senate that, “If we don’t start to see occupancy increase over the next six or seven months, maybe even less, you’re going to start seeing nursing homes in a very dire situation financially. It’s just, the margins are razor-thin.”

The analysis pointed out that many long-term care providers across the U.S. have already closed their doors permanently. As AHCA/NCAL put it, “The country cannot afford to wait for more closures and force seniors to search for new care options before providing assistance. We must act now. AHCA/NCAL is urging Congress to prioritize long term care residents and staff by allocating $20 billion in funding, either through an enhanced Federal Medicaid Assistance Percentage for long-term services and support, or through a dedicated portion to the Provider Relief Fund.”

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