What Biden’s $400B Plan to Shift Long-Term Care Home Could Mean for Nursing Home Operators

The shift to home was already a long-simmering trend in post-acute and long-term care, but the coronavirus pandemic kicked those prevailing patterns into a higher gear.

In the short term, that took the form of increased diversions from skilled nursing facilities on the acute-to-post-acute pipeline, with patients discharged directly from the hospital to the home in order to avoid the elevated COVID-19 risk in congregate living settings.

Whether or not those post-acute patterns continue or return to pre-pandemic levels remains an open question, but the desire to not revert to the past goes all the way up to the White House.


The Biden administration late last month unveiled a $400 billion plan designed to substantially expand coverage of home- and community-based services (HCBS). The proposal, part of the president’s $2 trillion infrastructure overhaul package, would seek to reduce the baked-in preference that many state Medicaid programs have for institutional nursing home care.

“President Biden believes more people should have the opportunity to receive care at home, in a supportive community, or from a loved one,” the White House observed in a fact sheet describing the plan.

It’s an undeniable fact that in many states around the country, the availability of HCBS options for seniors and people with disabilities lags far behind demand. Without greater development and support of such programs, that trend that will likely only worsen as the baby-boom generation continues to age over the coming decades.


But even before the pandemic, traditional nursing home operators have insisted that their services will always be necessary for some slice of the population, and concerns have grown in the wake of Biden’s announcement that the public support for HCBS will come at the expense of funding for skilled nursing facilities — which could end up becoming the domain of sicker and sicker people as healthier seniors take advantage of growing in-home options.

For the Lakewood, N.J.-based Ocean Healthcare Network, that continued need was apparent after the initial wave of the pandemic, according to chief strategy officer Joseph Kiernan: Area hospitals still needed a safe place to send patients, and the network’s skilled nursing occupancy saw an 11% boost as the operator stepped in to provide that support.

“Following the initial impact of COVID-19, our network of post-acute centers experienced an immediate demand for short-term care admission, most requiring advanced care and services,” Kiernan told SNN via e-mail. “Acute care hospitals continue to look to the post-acute segment for higher-acuity care.”

Kiernan isn’t a pure nursing home partisan. In addition to its 12 skilled nursing facilities, Ocean Healthcare provides a full continuum of services from home health to hospice to adult day support. As hospitals continue to face their own financial pressures to reduce length of stay — particularly under new payment models such as accountable care organizations (ACOs) and Bundled Payments for Care Improvement (BPCI) — Kiernan believes there will always be demand for SNFs that can care for patients with more complex needs.

“While we believe home- and community-based services will continue to be a preferred location for lower levels of care, we anticipate referral trends to return to pre-pandemic patterns,” Kiernan said.

Brian Cloch, a principal at the Chicagoland-based skilled nursing facility owner/operator Innovative Health, agreed.

“I believe that target for more HCBS is more about disrupting custodial or senior living,” Cloch said via-email.

But in Cloch’s view, HCBS can only go so far to solve the problem that many families face with older loved ones who are struggling to live on their own: How do you make sure that there’s someone around when the beneficiary needs assistance, such as with using the bathroom or preparing a snack?

“Seniors living at home, rich or poor, need about 10 to 15 minutes of care three to four times a day,” Cloch said. “Since those times have no predictability, how do you staff that in a person’s home? The only way I know is to have a 24/7 person waiting there, or a family member that will be there waiting.”

Even with hundreds of billions of federal dollars behind a push home, states could still potentially balk at the significant Medicaid expense such a model would entail.

Cloch pointed to affordable senior housing and supportive living properties as a potential way to square the circle of keeping residents who don’t require intense, around-the-clock care out of nursing homes without significantly increasing costs; he and several other partners have developed such communities across Illinois under the Victory Senior Living brand.

“There is no business model that is more cost-effective than bringing people to services versus services to people,” Cloch said. “I don’t see the [federal government being] willing to pay $15 per hour, plus benefits, for 24/7 care for one person.”

It’s also important to note that the post-pandemic push to send more care home isn’t necessarily revolutionary: As early as 2017, Sabra Health Care REIT (Nasdaq: SBRA) CEO Rick Matros was declaring the end of long-term custodial care within brick-and-mortar SNFs, as both consumer preference and technological advancements conspired to make home care a more viable business model.

“If you’re an operator continuing to take care of custodial patients, you’re going to get killed,” Matros said at the time.

Adapting to the new post-COVID world may then look a lot like the strategies that forward-thinking operators have been preaching since well before the nursing home disaster of 2020.

“Each provider serves a specific segment of the populace in a way the others cannot, and provides invaluable care at that point,” Cascadia Healthcare CEO Owen Hammond and director of corporate affairs Steve LaForte said in an e-mail. “COVID has shown us the importance of the skilled nursing provider in our communities. Going forward we need to take these experiences, create better partnerships in our communities to work together so that individually, each provider best serves the population’s needs.”

For the Idaho-based Cascadia, that means a variety of potential strategies, from diving deeper into value-based payment models, considering an in-house Medicare Advantage plan, and creating specialized units to care for residents with certain health issues.

“While HCBS serve as an important care model along the continuum, our feeling is that they are but one point along that continuum,” Hammond and LaForte noted.

And even with the support of the president and families across the country who’d prefer to see their loved ones receive care in their homes, providers of HCBS services may also need to expand their reach in order to succeed, Cloch noted.

“If someone can figure out how to provide on-demand home care services that can get there now, when I need to go to the bathroom, that is the winner,” Cloch said. “I can’t call an Uber-like service to get here now.”