Parkinson: Even with Successful Vaccine, Census Recovery Will Take ‘A Couple Years’

While many sectors of the U.S. need a successful vaccine to truly recover from the effects of the COVID-19 pandemic, it is especially paramount for skilled nursing facilities, Mark Parkinson, president and CEO of the American Health Care Association (AHCA), said on Friday.

Parkinson made that point during a guest appearance on the third-quarter earnings call for the real estate investment trust (REIT) LTC Properties (NYSE: LTC). On the call, he provided an update on AHCA’s lobbying efforts and the current state of the long-term care field. AHCA represents more than 14,000 primarily for-profit SNFs and assisted living facilities across the U.S.

Censuses in SNFs and senior housing facilities have plummeted over the nearly eight months of the pandemic, dropping about 10% initially on the SNF side specifically, Parkinson said. While it has not gotten noticeably worse since the start of the pandemic, volumes haven’t improved, either. Most operators believe a vaccine will help prospective residents feel more comfortable about entering facilities, thus helping restore occupancy, he explained.


“If that’s true, we will be okay,” he said on the call. “That is because the federal funding will be sufficient enough to get us to a vaccine. If, once we get to a vaccine, we can start rebuilding census half a percent, or a percent a month, the numbers work out. On the other hand, if we get to a vaccine, and census doesn’t recover, we’ve got a real problem.”

One critical determinant will be whether discharges from hospitals start to rebound. Hospital referrals to SNFs dropped off in spring, when elective surgeries were halted to free up hospital capacity for COVID-19 patients. Since then, they’ve yet to recover, according to a study from the consulting firm Avalere Health that was released in late September.

That’s true even though admissions to hospitals and home health are rebounding, the report noted.


But with a vaccine, Parkinson believes censuses will recover, albeit slowly, he said on the earnings call.

“In a couple years from now, we’ll be back to where we were pre-pandemic, maybe even a little better because of a contraction in new development,” he said. “The specific situation that would create a problem would be if discharge patterns from hospitals were permanently changed.”

Stimulus amount, liability protections depend on election

For investors trying to get a sense of the sector’s overall health, Parkinson praised how the government has come to the aid of SNFs financially. He cited the waiver of the three-day stay rule, which lets SNFs “skill” a resident to a Medicare rate without a three-day hospital stay and the Medicare advance payment program as particularly notable examples.

The three-day stay waiver is tied to the public health emergency, which means that it has been extended until January 22, and Parkinson expressed optimism that AHCA can gain another 90-day extension on the waiver.

That said, it’s not clear whether there’s a path to getting the waiver permanently enshrined, as David Grabowski, a professor at Harvard Medical School, and Fred Bentley, managing director at Avalere, pointed out earlier this year at Skilled Nursing News’ Rethink conference. Both expressed the belief that the rule will return in some form after the pandemic.

But the waiver itself has been critical to helping providers keep revenue stable, Parkinson noted, despite the significant census declines. As such, many operators want to try to keep it around.

“There is a growing appetite among providers to put at the absolute top of our lobbying list for 2021 a permanent elimination of the three-day stay [waiver,] … but it’s too early at this point to give any sort of probability that will be connected to whether or not we can succeed with that,” Parkinson said on the call.

Other issues for 2021, naturally enough, include the election on November 3. Despite the outcome of the election, the consensus in Washington D.C. is that another stimulus bill is on the way, Parkinson said. However, the election will likely determine its size and scope.

“If Republicans retain one part of the apparatus, whether it’s the presidency or the Senate, the stimulus bill is very likely to be of the size that was being discussed when the discussions fell apart this week, somewhere around $1.8 trillion to $2.2 trillion,” he explained. “Of that, significant additional funds will be added to the CARES Act funding, that would then be available for both skilled nursing and assisted living.”

If Democrats have a sweep electorally, then a stimulus bill might be delayed in the lame-duck session, but when a bill does arrive, it would be larger than the $1.8 trillion to $2.2 trillion range, Parkinson said.

One key element that has been hotly disputed for stimulus inclusion is liability. Several states passed some form of immunity for health care providers in the early months of the pandemic, but there were some rollbacks and alterations after outcry over the summer.

Whether “a federal liability solution” emerges is strongly linked to the election, according to Parkinson.

“I think that the Republicans will continue to maintain that any future stimulus bill needs to have the kind of liability protection that all health care providers need to function going forward,” he said. “If there was a Democratic sweep next Tuesday there is the possibility that this liability discussion will be set aside.”

That remains a possibility, since some Democrats might be open to some kind of liability protection to move talks forward, he noted, but either way, there will be no certainty on liability protection until after the election.

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