65% of Nursing Homes Operating at a Loss — and Just 34% Will Survive 2021, Industry Survey Suggests

A December survey of more than 900 nursing home providers —conducted by one of the largest trade groups in the sector — found that 65% of providers are operating at a loss or negative margin, while just 34% believe they can sustain operations for more than a year.

The December survey was conducted by the American Health Care Association (AHCA) which represents more than 14,000 primarily for-profit nursing home and assisted living providers; a total of 953 operators participated in the poll.

Just 10% of providers indicated they were operating at a total margin of greater than 3%, while 25% said they were operating at either break-even margins or margins of less than 3%.


“Staffing has been the top cost in response to COVID with nine out of 10 nursing homes hiring additional staff and/or paying staff overtime,” the group observed in the survey results. “Fifty-eight percent of nursing homes said additional staff pay and hiring new staff were their top cost incurred due to COVID. Seventy percent of nursing homes have hired additional staff, and nine out of 10 have asked current staff to work overtime and provided hero pay.”

Ninety-four percent of respondents said they had asked staff to work overtime or double shifts, while 86% reported providing supplemental “hero pay.” Sixty-eight percent reported hiring additional staff.

The survey comes after a separate AHCA poll, released in August, found 40% of nursing homes could shut down in six months or less at their operating cost levels of the summer. At that time, 55% of 463 nursing home providers said they were operating at a loss.


But over the summer, personal protective equipment was the top cost for 95% of survey respondents; in December, just 26% of respondents listed PPE as the top cost.

The news came the same day that the Department of Health and Human Services (HHS) released an additional $1.1 billion in direct aid to nursing homes as part of a general increase in its Phase 3 distribution to health care providers.

The federal government has distributed billions to nursing homes through the Provider Relief Fund and other mechanisms, including Medicare payment advances and the Paycheck Protection Program (PPP). The industry continues to argue that more aid is needed as the sector faces long-term cost increases associated with PPE and testing, along with reduced revenues due to significantly lower occupancy — the main driver of income for most facilities.

A separate analysis from Fitch Ratings this past week determined that, based on the recent performance of top providers, many facilities can continue to make rent without future government assistance, though lease payments represent one of many expenses for nursing home operations.

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