$50M Nursing Home Bed Buy-Back Program to Incentivize Voluntary Capacity Declines Amid Shift to Home

Faced with a surplus of nursing home beds — and growing demand for private rooms and in-home care in the wake of the COVID-19 pandemic — nursing home operators may soon be able to voluntarily downsize their facilities in exchange for cash.

Ohio Gov. Mike DeWine proposed a $50 million fund that would allow the state to buy back bed licenses from nursing care providers in the state, the Dayton Daily News reported Wednesday.

The Buckeye State has an estimated glut of 11,000 nursing home beds, according to the publication; the buy-back program would seek to take about 5,000 off the market at a proposed price of $10,000 apiece, the publication reported, though the strategy would be tailored by region.


“One of the things we would be careful about is … we don’t want to reduce that in areas where there is already not adequate capacity,” state Medicaid director Maureen Corcoran told the Dayton Daily News.

The Ohio Health Care Association, a lobbying and trade group that represents the state’s nursing home sector, had proposed similar reduction strategies in the past, though it was not involved in the development of the DeWine plan, the publication reported.

The COVID-19 pandemic rapidly accelerated a shift toward in-home care and other nursing home alternatives that had already been brewing before 2020, as technological advances and consumer preferences drove home health providers to capture an increasing share of post-acute patients.


Post-acute care referrals to skilled nursing facilities sat at 83% of their 2019 levels in October of last year, while home health providers pulled in 109% of the volume that they had before the pandemic, according to recent data from care coordination software provider CarePort Health.

“It looks like it’s plateaued, and I suspect we’re going to continue, over the next few months, to see that creep up,” CarePort director of post-acute analytics Tom Martin said of nursing home referral rates. “But we’re still down 15% to 20% from what we saw in 2019 — and so it’s probably not surprising to anyone, but we are seeing that a lot of these patients that have typically gone to skilled nursing are now going to home health.”

Nursing home occupancy was also at 80% or below in all 48 of the continental United States at the start of 2021, professional services firm CliftonLarsonAllen reported at the end of January.

But even before those numbers dropped, health care consulting firm Zimmet Healthcare Services Group kicked off the new year by encouraging operators to consider the active decertification of beds. With occupancies at historic lows and many fixed expenses tied to licensed bed counts — regardless of actual census — voluntarily giving up capacity could help ease the financial strains of COVID-19, while also allowing the creation of the single-bed rooms that patients and referral partners are increasingly demanding.

“It’s all about a new way of thinking,” firm president Marc Zimmet said, acknowledging the seemingly counterintuitive nature of the strategy. “Nobody’s giving up a bed — but when you’re 50% occupied, there are a lot of reasons to give up that bed.”

Zimmet also predicted that states would be willing partners in the transaction.

“The state has a vested interest in having full nursing homes — not having too many that are struggling — because of the way they reimburse,” he said.

The $50 million Ohio plan only represents a starting point; as part of the governor’s two-year budget proposal, it must be debated by state lawmakers, the Dayton Daily News noted. But one official was optimistic that representatives from the state’s nursing home groups would embrace the concept.

“I’m hopeful that they’ll be supportive of it,” deputy Medicaid director Patrick Beatty told the paper. “I think it will have a positive impact on their reimbursement levels, as well as the quality of care that they can focus on individuals and their nursing facilities.”