The nursing home industry saw a slight drop in employment in its first full month under the new Medicare payment model, but the reason for the dip might not be as simple as cause and effect.
The nation’s nursing facilities lost 1,300 workers between September and October, according to a Friday update from the Bureau of Labor Statistics (BLS), declining from a seasonally adjusted 1,609,400 to 1,608,100.
At face value, the stats could seem like a validation of recent reports regarding therapy layoffs in the wake of the new Patient-Driven Payment Model (PDPM). But some industry voices suggested Monday that the data isn’t dire for nursing home employees or the financial health of the industry — and that the statistics may not reflect PDPM changes at all.
Since the arrival of PDPM on October 1, operators and staff have reframed how they provide therapy services. With volume no longer driving therapy reimbursements, reports of layoffs spread a wave of anxiety throughout the skilled nursing landscape. But for many operators, PDPM’s specific treatment-to-reimbursement pay structure. based on individual resident needs offers potential growth opportunities — even with some expected staff cuts.
Michael Carroll, an analyst with RBC Capital Markets who covers publicly traded operators and landlords in the space, said that the BLS’s reported decline for October is “not a big drop. A 1.3 (thousand) month-to-month change for employment on average is small, and most likely does not reflect PDPM,” he said.
As government numbers often come with delays, Carroll was hesitant to assume PDPM is a direct result of the October stats — and concluded that the data suggests a fairly small decrease for skilled nursing labor across all job types. Had there been a 1,300 drop in rehab jobs only, he said, then that might have been meaningful.
“A 1% decrease of 1.6 million isn’t anything sizable,” said Carroll.
It’s the second billing cycle, in early December, when the industry will see the “winners and losers — although I expect more winners because most operators seem prepared,” Carroll said.
Chad Vanacore, an equity research analyst with investment banking firm Stifel, also pointed to the fact that that the BLS data doesn’t break down how many therapists were cut relative to all other positions.
“You don’t know the percentage of CNAs, certified nurses , administrators, or therapists, so it’s hard to say if there were major therapy cuts due to PDPM,” Vanacore said. “Any cost savings you can garner has to come from therapy employment, and it should be expected that there is a certain reduction in therapists. It all boils down to supply and demand, and there’s a bigger demand for nurses because there’s still a nurse shortage.”
Beth Burnham Mace, chief economist at the National Investment Center for Seniors Housing & Care (NIC), acknowledged that the numbers represent some decline in employment, but argued that it’s not significant — and that she “usually looks at data over a year to see changes.”
“For perspective, the data point in October 2018 was 1,607,600, so employment was down 500 jobs,” Mace said. “I wouldn’t read too much into the one-month data point of -1,300 jobs, but there has generally been a downward trend for the past year.”
The BLS reports the data in two primary ways: seasonally adjusted and not seasonally adjusted, using an algorithm to determine if certain months of the year are seasonally affected — such as retail jobs in the months leading up to the holiday season.
Mace thus believes it’s important to look at the non-seasonally adjusted data for SNFs in the chart, which reveals layoffs for less than 400 employees.