The clinical effects of COVID-19 on the skilled nursing world have been apparent since the start of pandemic, and roughly a year into the public health emergency in the U.S., firm data about the financial health of the space is emerging — particularly as stimulus funding for providers remains uncertain.
For the Georgia-based operator PruittHealth, which has more than 180 locations across the Southeast region and spans the care continuum from skilled nursing to home health to hospice, those effects included a $137 million decline in revenue in 2020.
That decline came from its skilled nursing, therapy, pharmacy, and hospice business lines, according to a report released by the operator last month, with a drop in skilled nursing census from 9,286 before the COVID-19 pandemic to 7,567 at the end of the year. In addition, 1,800 employees departed, leaving PruittHealth with a staff of approximately 13,000.
The operator also saw a 22% increase in home health census, and made a total of $23.3 million in COVID-related clinical investments throughout the COVID-19 pandemic, according to the report. And some aspects of those investments — and the increase in home health demand — will shape how it responds to the aftermath of the emergency, CEO Neil Pruitt Jr. told Skilled Nursing News in an interview late last month.
That includes expanding its home health options in states where it has certificates of need (CONs); the company does not offer those services not in every county in which PruttHealth operates. But it also includes “a robust building expansion plan” to add private rooms, which Pruitt sees as critical to the SNF sector’s recovery.
The declines detailed in PruittHealth’s report around total patients served by the skilled nursing division matches what we’ve heard anecdotally from other operators about the effects of COVID. For PruittHealth, how lasting do you expect those SNF declines to be, and have there been any signs of recovery on the SNF side?
There has been some improvements in our skilled nursing. Essentially since COVID began, we’ve seen our SNF census drop by 18.5%, while our home health … and patient services increased by 22%. So we’ve seen a dramatic shift from the skilled setting into the home health setting.
The good news is we are able to meet patients where they want to be served, and so we’re very pleased with our increase in home health.
The SNF side has been tough, obviously. For the first time since April, this past weekend, we saw no new cases of COVID among our residents and staff, so I consider that a hopeful sign, and we’ve seen our active cases steadily decline. We’re now kind of the same levels that we saw in November, which we’re pleased about.
Do you expect that census drop to be lasting? And what do you think the recovery will look like?
We do expect that [on] the census, people are going to demand private rooms. An operator’s ability to shift and meet those needs will depend how quickly they are able to recover. To give you an idea, we currently have 14% of our inventory that is dedicated to private rooms. We think this will increase to 17% of our inventory within the next 12 months. Within two years, this will be 25% of our inventory, and it’ll be 32% within five years.
We’re moving very quickly to open up new wings and create all-private-room facilities, and I think this will impact our ability to recovery. I’ve said all along that there’s a 15% to 20% contraction in the skilled nursing industry that’s going to occur.
I don’t think that’s providers necessarily closing, but I think you’ll see providers convert semi-private [rooms] to private, and really trying to make their facilities more attractive, to make patients feel safe and secure in their facilities.
In terms of the increase on the home health side, do you expect that to continue going into this year? How are you thinking about that line of business in light of the demand during COVID-19?
We are really doubling down on our home health business. We’ve brought in an outside consulting firm, Accenture Consulting, to help us look at our processes and evaluate our overall operations to make sure that we can handle the surge that we’re seeing. We really have the building blocks down for a very powerful home health company, so we are geared up and ready to continue this trend into the future.
What I think is going to happen is you’re going to see a compression of stay in the SNF — so where we used to serve someone for anywhere between 18 to 22 days, you might see that compressed down to eight to 10 days, followed by a home health stay. What we’ve really concentrated on is being able to make sure that patients can leave our facility with the same medication packaging that they received while under our care in a SNF. We have really taken the corporate office and our parking lot of our corporate office and are building a state-of-the-art medical warehouse, so we’ll be able to drop-ship supplies directly to the patient’s home.
That, with the telemedicine technology, we’re really able to offer much more than we were, pre-COVID, to our patients at home. It’s not perfect for every patient, but we know the patients’ desire to be serviced in their home, and we want to be able to meet that need. At the same time, there are plenty of patients that will always require a skilled nursing stay; we want to make sure that we offer them a safe, clean, and comfortable environment, and that includes private rooms. We’re really embarking on a very robust building expansion plan to help us achieve our goals of more private rooms.
Are there plans to expand in terms of adding staff to home health or growing the counties where PruittHealth @ Home is offered?
Oh, absolutely. We are applying for every CON that we can to expand our services. We have revamped our compensation package to be one of the most attractive places to work in the home health health profession. We have really upgraded our technology. So we are very excited about the home health, and I definitely see it as a part of our future.
What do you mean by ‘revamping the compensation package?’ What are some of the things you put in there to draw workers?
We’re now providing company cars to our registered nurses in some areas to attract staff. We’ve completely revamped our compensation program, increasing the rates that we pay our nurses to make sure that we are toward the top end of the market. We have hired dedicated home health recruiters to beef up our staff. Really, [we’re] trying to make sure that we have a very, very competitive product.
Just like in our SNFs, in home health, staff is hard to come by, and we offer what a lot of bigger providers do not; we’re a family organization that has a family feel and culture. We’ve been around for 50 years under the same ownership, and we plan on being around for a lot longer, so it’s a very stable work environment, and we think that’s going to going to attract some of the best people in the profession.
Speaking of staffing, PruitHealth saw a decrease in the number of partners over the course of 2020. What were some of the causes of that, and what are the plans to address that particular issue?
We dropped from around 14,800 employed staff members in our facilities prior to COVID to about 13,000 now. In almost every case, it was people leaving the profession or seeking other alternatives, and in a lot of those we were seeing people that may have had their own underlying medical conditions, that may not have felt safe pre-vaccine in a facility.
You know, there’s distress associated with caring for COVID patients. Pre-COVID, we really didn’t use a lot of PPE [personal protective equipment] or handle a lot of infectious patients, and now that’s all that we do. It’s a very different work environment, and not everyone transitioned as well as others. In almost no cases were there layoffs. We are actively recruiting and hiring across the board.
The numbers that you’re seeing are not because we want less staff. We actually want much, more more, and have amped up our recruiting department. We’ve really been very creative in some aspects that we’re trying to do to recruit staff, including a $12 minimum wage for all CNAs [certified nursing assistants] across the organization. While this isn’t the $15 dollars that you hear nationally, it’s $12 this year that we implemented, and it’s not phased up. And we operate in the South, which is rural areas, which has a much lower cost of living.
So that’s pretty significant in the areas that we operate, that $12 minimum wage, so we’re pretty excited about that, and it’s been well-received by our staff.
One thing the report mentioned was $23.3 million in clinical and environmental improvement. I assume that the private room conversions were part of that, but what are some other clinical and environmental improvements that were not private room conversions? How are you thinking about those investments going into 2021?
So that $23.3 million was not creating private rooms; that’s in a separate capital budget. What [the $23.3 million] included: We beefed up ordering our PPE, that’s $7.8 million for PPE. We had another $7 million in thermal imaging cameras, and basically, we were able to detect masks and read temperatures as you come in and out of our buildings. We did air ionization systems and STARC isolation walls that enable us to create separate units; that’s another $5 million, as an example of what comprised that $23.3 [million].
Do you anticipate similar figures in terms of that area of spending for this year, or are some of the investments in the $23.3 million things you won’t need to invest in again?
A lot of them are one-time investments. But the PPE, for example, I don’t see a time in the foreseeable future where that expenditure goes away. That’s a permanent change of what we’re doing, and obviously our labor costs, to attract staff, is permanent. It’s a much different field than it used to be, and so we’re going to have to be very competitive in our pay packages, or they’ll just go down the street and work somewhere else.
When we spoke in the spring of 2020, you talked about foreseeing the need for PPE stockpiles. How are you thinking about coming into 2021 in terms of the stockpiling and the purchasing?
I think our ultimate goal is to be able to have 90 days of PPE on hand at any given time, either in our medical supply warehouse or in the facilities. To our investment, we have a custom system that we built right aware so we can track by center how much PPE is on hand on inventory.
That’s useful for a couple of reasons. We want to make sure that we have adequate supplies and that there’s not leakage of PPE, plus we want to make sure that they’re using it an appropriate rate and not trying to conserve PPE when we’re now in a situation where we have plenty.
Early, early on in this pandemic, we took some bold moves in purchasing PPE that have served us well. We basically drew down on all of our credit lines to purchase it, and it was one of the best decisions that we made. So we have a commitment to PPE; we monitor it every single day and want to make sure our workers are safe.
In terms of testing, what role has that played amid the ongoing vaccine efforts? I think we’re at the point now — you can tell me if I’m wrong about this — where most of the clinics are probably wrapped up under the federal partnership, so can you talk about ongoing vaccine efforts and the role of testing in the vaccine process, and how that has been since it got started?
The vaccine process for us has gone fairly smoothly, although not perfect. The clinics have gone great. We saw slow penetration at first, but that has steadily increased, so for our entire company, our vaccination rate among our employees -–we’re now up to 45.3%, which I’m very happy about. It’s higher in some of our service lines than others.
As far as our patients, our vaccination rates — I’m just looking at the exact number, we’re up to 78.2% of our patients being vaccinated. Obviously it has not been perfect, but it has gone extremely well. In some cases, our pharmacy has administered the vaccine, and in others, we’ve partnered with CVS to administer the vaccine, depending on the state that we operate in.
In many cases, CVS — even in the third clinic — is allowing someone to get their first dose, which we’re pleased with, and we’re working in other states to have a third and fourth clinic if we have extra vaccine.
We are working extremely hard; those rates are not where I want them to be. I would love them to be for employees above 70%. But starting off at 20%, we’ve made a lot of progress.
Our ongoing questions are: How do we deal with new patients and new employees? And we don’t have those answers yet, but we’re hopeful to have those soon, and that will be a state and federal government decision.
The question of new admissions and new employees for the vaccine is something that has come up for others as well, in a recent podcast.
Absolutely. We’re going to be dealing with this for years, so we need to have ongoing supply chains that meet the vaccination needs not only of the patients, but our employees as well.
The PruittHealth report mentioned a target for infection preventionist hires, and that’s a position that has come under some attention amid the pandemic. How many infection preventionists is PruittHealth looking to have per facility, and how many have been hired so far this year?
Our goal is to have an infection preventionist in every single one of our centers. In most cases, they are full-time, but in other cases they are part-time.
[[Editor’s Note: A PruittHealth spokesperson indicated that 50 to 60 infection preventionists have been hired thus far, including 10 thus far in 2021]]
Has there been anything different about recruiting for this position during the pandemic?
Well, our whole recruiting strategy has changed. It begins with the online application process; we have a personality profile built into that. Then many of our interviews are conducted virtually at this time to not expose the applicant or our staff members. But there’s not a lot of people that specialize in this field out there.
We obviously prefer experience, but if not, we’ve developed a robust in-house training program for this position as well. Someone thinking about infection prevention 24 hours a day is pretty important, so we’re excited about it, and I think it’s making a difference in our ability to fight COVID.
The report from PruittHealth talked about the Medicaid shortfalls in some of the different states, and I was curious about how the increase in the Federal Medical Assistance Percentage (FMAP) was used in those states, since it wasn’t always a requirement that get passed on. Did any of the states where Pruitt operates pass that increase on to nursing homes in the form of increased Medicaid reimbursement? Are there any signs some kind of increase in that nature might continue this year?
Georgia was our slowest state to respond, but we did in the amended budget receive a cost-of-living increase. We’re hopeful that in the main budget, they will do a lot more than has been done so far.
South Carolina did give us a 4% increase, and one of our best states was North Carolina; they had a 5% increase, and then they had an additional increase in April, and then also an add-on for COVID-positive patients. It really varies by state, but overall as the report points out, Medicaid is chronically underfunded. As we sit back and Monday-quarterback what happened with COVID, there has to be a robust conversation around Medicaid underfunding. It’s something I think is one of the root causes of why folks were slow to respond.
So I hope there’ll be a conversation nationally about how we support post-acute and long-term care. I had the privilege to serve on the independent commission to evaluate COVID and nursing homes, and I think almost every single member on that commission would agree that staffing needs to be increased, and the financial model needs to change to provide the appropriate resources to care for our patients.
In terms of thinking about the future, is there anything you wanted to address, in terms of what happened and where things are going?
We talked a little bit about private rooms, and I think we need to rethink how post-acute care and long-term care is delivered. And that need comes with a rethinking of the way that we’re reimbursed. We’re really pleased with North Carolina and South Carolina; they’ve announced robust changes to the fair rental value system that encourages more investment in the capital plants. We are in discussions with the state of Georgia for something similar.
And I hope that any infrastructure plan that comes out as part of economic stimulus will have some thought of how we upgrade our skilled nursing and long-term care facilities. I think that’s going to be the topic of the year, and since it’s going to improve, we need massive amounts of investment in physical plants.