550 Nursing Homes Closed from 2015-2019 — With Trend Accelerating Toward End of Decade

Nursing home closures are on the rise, regardless of geography and quality ratings, according to a recent report authored by industry trade group LeadingAge — raising the possibility of market-specific supply shortages in the near future.

In fact, more than 550 facilities have closed between June 2015 and June 2019, with a steady increase in shut-downs over the three years: 328 of those closures, or 59% of the total, happened since June 2017, according to the study.

LeadingAge analyzed statistics from the Nursing Home Compare database, a detailed national and state-based occupancy and geography comparison from the Centers for Medicare and Medicaid Services (CMS). The group’s report pinpoints the most troubled regions, the factors involved in the increased closures, and offers policy suggestions to reduce the consequences of fewer available nursing homes.

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In observing nursing home closures over the years, LeadingAge opted to put numbers and a research structure around the conversation — which had previously been missing, Brendan Flinn, director of Medicaid and home and community-based services policy at LeadingAge, said.

Even with augmented demand for nursing home care among the aging population, the avalanche of closures may leave many seniors with limited choices in the next 10 years, a problem further intensified by reduced Medicaid payouts.

“We’ve seen a steadily increasing stream of headlines in recent years highlighting skilled nursing providers’ closures. This is a concerning trend,” LeadingAge president and CEO Katie Smith Sloan said in a statement announcing the results. “Today’s report offers a frank assessment of the potential shortage of skilled nursing and caregiving options our country may well face in the not-too-distant future.”

Medicaid takes its toll

Although the closures can’t be attributed to just one factor, Medicaid is a driving force, Flinn said.

“Virtually no state Medicaid program reimburses at the actual cost of care. There’s often huge shortfalls,” he said, adding that Medicaid plays a significant role in making it difficult for nursing homes to keep their doors open, he said.

More specifically, if the proposed Medicaid Fiscal Accountability Regulation (MFAR) “were to move forward as written, there could be huge implications for nursing home funding on the Medicaid side that could really exacerbate this problem,” he said.

The MFAR proposal was created to carry out more stringent regulations on various state-level Medicaid supplemental payment programs, which many states count on to fill in declining reimbursements.

American Health Care Association CEO Mark Parkinson and American Hospital Association CEO Rick Pollack said that if the MFAR proposal becomes final, it would take “up to $50 billion nationally from the Medicaid program annually, further crippling Medicaid financing in many states and jeopardizing access to care for the 75 million Americans who rely on the program as their primary source of health coverage,” the trade-group CEOs argued last month.

More than six in 10 nursing home residents (62%) rely on Medicaid coverage, according to the study. Although each state works with different Medicaid parameters for reimbursement, underpayment for services may be up to $23,000 per nursing home resident per year, according to the study.

Older seniors feel supply pinch

The older tier of the aging population may be left out in the cold as supply dwindles. And over the next 10 years, the 75-plus population will skyrocket, with a 46% population increase in the 75 to 79 category, and a 55% increase in ages 80 to 84, Flinn confirmed. This population, unlike younger subsets of seniors, is known to prefer nursing home care if dealing with a cognitive disability and/or dementia/Alzheimer’s, according to the report.

The study slashed the misconception that only poorly run nursing homes with low star ratings aren’t able to make it in this complex time of coding and reimbursement fluctuations: More than 40% of the nursing homes that closed had either a four- or five-star quality rating, and 25% had a five-star rating before they shut their doors.

“It’s not just the ‘bad’ nursing homes that are closing, and close to half had pretty strong quality ratings before they closed,” Flinn said.

The nursing home closure wave hasn’t discriminated by geography either. Closures are “happening to states all across the country, regardless of geography,” Flinn said, adding that the top states for closures include Kansas, Nebraska, and Oklahoma — which are smaller-sized states that “have still seen some of the highest nursing home closures in the country.”

That said, more than half of the closures have come in nine states: California, Illinois, Kansas, Nebraska, Ohio, Oklahoma, Massachusetts, Texas, and Wisconsin.

The trend has also come as overall nursing home occupancy has been moving downward.

“Despite so many nursing homes closing, the national average occupancy rate decreased by 1.9 percentage points over those four years,” LeadingAge observed. “During that time, the number of occupied nursing home beds decreased at a rate almost triple that of decreasing certified beds. Occupied beds decreased by 43,000, while certified beds decreased by just over 15,000.”

But closures in smaller states, and even certain markets within those states, have more of an impact on the particular area’s aging services landscape compared to states with more nursing homes. Even though Hawaii, for example, only experienced four nursing home closures, the effects are felt more widely throughout the state as it only had 44 nursing facilities in June 2019.

“Closed nursing homes in rural areas have particularly troubling consequences,” LeadingAge noted in the report. “In many urban and suburban areas, there are likely other nursing homes in proximity that could take in residents of a closing nursing home. In rural areas, however, this is not always the case.”

In addition, closures in rural areas result in longer drives for family members, staff, and more isolation for patients, according to the report. In certain rural areas, as health care facilities may be the biggest employer in a given area, some clinicians and caregivers will be forced out of the field, Flinn proposed.

Pressure on caregivers

As seniors over 80 age, their family support will decrease compared to current seniors: By 2030, there will be four possible caregivers for each senior over 80 — a decrease from seven caregivers in 2010.

“Because we know that so much of the care for older adults is performed by family members, and if you see the lack of nursing home care available, particularly in these rural areas, that could increase the burden that we would see on family caregivers or folks who might otherwise be able to be served in nursing homes,” Flinn said.

Policy Recommendations

The trade group offered a series of policy proposals to alleviate the current and potential future consequences of these increasing closures:

  • Secure more adequate Medicaid rates to make sure reimbursements equal the total cost of care for both fee-for-service and managed care settings;
  • Revisit the regulatory environment and study the long-term care survey process and how it connects care outcomes, with an eye toward alternative strategies to assess quality care;
  • Create a program similar to the Critical Access Hospital (CAH) classification to assist rural nursing homes in geographies with high demand programs;
  • Integrate more community health care options, including home health and more services with multiple revenue streams, to meet the increasing population.

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