The Tax Cuts and Jobs Act adds to the financial headwinds already rattling skilled nursing facilities by removing a key deduction without any kind of offsetting mechanism, American Health Care Association (AHCA) president and CEO Mark Parkinson argued in an op-ed published in Bloomberg Tax.

Specifically, the tax law limits deductions on loan interest payments for all but certain types of businesses, including so-called “real property trades or businesses.”

“Nursing homes and assisted living communities have long relied on deducting loan interest payments before paying taxes,” Parkinson wrote in his op-ed, which was published April 10. “This interest deduction is vital because our businesses are capital-intensive. A nursing home can’t exist without a significant real estate investment. Every business owner knows that large capital investments require financing, which generates large interest payments.”

The American Health Care Association represents nursing homes and other long-term care operators across the United States.

The Internal Revenue Service issued a proposed rule that banned long-term care providers from taking the interest deduction, a move that Parkinson said would be “devastating” for such providers. They cannot offset the limitation by using other benefits, he argued, noting that most providers can’t use recent decreases in the corporate tax rate or the new deduction for pass-throughs.

Paying more taxes will raise the already intense pressure on skilled nursing operators, which face median operating margins of zero and have turned to supplemental programs to combat a Medicaid shortfall that spans the country, from Washington state to Massachusetts. Parkinson pointed to the Medicaid shortfall for SNF reimbursement in South Dakota as one example.

“Even providers that are doing well face significant financial challenges under the new tax law,” he wrote. “When it becomes necessary to find money to cover additional expenses like higher taxes, you take away the ability to do the things that keep businesses strong and help them grow. It impacts employees when you cannot provide decent wages for much-needed jobs or offer pay raises for outstanding employees. It means the appropriate and necessary capital improvements cannot be made.”