The Pinnacle Group of Hudson Valley has grown since the start of the pandemic, expanding from one facility to four in the state of Maine, but with the staffing shortage significantly impacting the industry, CEO Israel Nachfolger worries occupancy recovery will be stalled.

After purchasing two new buildings in southern Maine in February 2020 and one in Portland, Maine in July 2020, the staffing shortage has become a leading priority for Nachfolger.

It’s not just a matter of competing with other operators, as Nachfolger has seen the wages for certified nursing assistants (CNAs) rise to nearly $20 an hour this year, but against other industries as well as the pandemic continues to exacerbate the labor workforce crunch.

McDonald’s has proposed offering child care and tuition assistance, in addition to higher hourly wages, according to the Wall Street Journal, and the Transportation Security Administration, Lyft and Uber have started offering hiring bonuses as a push to add more workers.

Nachfolger spoke with Skilled Nursing News about why he could be back to pre-pandemic occupancy levels based on referrals, but isn’t due to staffing, what he’s doing to fix the crisis and how he sees the industry moving forward.

This interview has been edited for length and clarity.

How are you looking to grow in 2021 and beyond?

We’re looking at new acquisitions of course, like everybody is, but right now, I would say 90% of my time is spent on staffing.

I’ve been in this business for 15 years and I’ve never seen it like this. It was a crisis and now it’s an absolute flaming crisis. It’s very concerning to me because I’m not seeing any government involvement to solve the issue.

As a smaller operator, how were you able to not only survive but thrive during COVID?

We invested in technology pretty early on. We were actually one of the first facilities in Maine to do full telehealth for medical direction back in 2017. The reason why we did it is because Maine is a pretty rural state. It’s a huge landmass. Many of the buildings are just very isolated from city centers. You simply don’t have the access to care and they will never have access to the specialties and doctors that city centers have.

How are you trying to address the staffing shortage?

Obviously, we’re doing the bonuses, and we’re increasing our pay rates. We’re doing as much as we can on a financial level to incentivize them. I’m seeing that it’s not necessarily only about that.

Unfortunately, there are a lot of agencies who stepped in, and they’re sort of deincentivizing employees to work directly for employers. What ends up happening is that new employees jump around from job to job and they’re getting more money because the agencies are driving that wage up. At the end of the day, the labor pool is the same labor pool that exists whether or not there are agencies.

I feel that it’s detrimental to the industry because having a stable workforce [and having that] longevity of employees in the facility is very important. When you have elderly folks, change is not good for them. It’s much better when you have a practitioner, who’s there every day and [residents] are familiar with them. They become friends. That’s something that can only happen when you have somebody who’s working directly for the facility long-term.

I have had some calls with legislators and local elected officials to try to underscore the importance of increasing the workforce.

We partnered with local educational institutions. We actually became a training site for CNAs [certified nursing assistants]. We’re hopeful that by doing that we’ll be able to get the staff that we need. We’re paying for all the classes and we’re really just trying to get them in on the ground level so that we can create that relationship with them.

Do you find the staffing shortage is more critical in rural areas?

It’s interesting because you would think that it would be more difficult in the rural area.

Counterintuitively, it’s actually not been the case. The rural location, although it does have staffing challenges, comparatively speaking, it’s actually been a little bit easier out there. I think because the people who live there are closer to the facility. That’s where they’ve grown up. They also don’t have as many other options in terms of competitors.

Some of these people have worked there for 15 or 20 years and they’re not just going to leave. They enjoy being at the facility.

That’s actually something that surprised me.

It’s not to say that we don’t have challenges there. It’s just that the challenges in the other areas are extremely pronounced. We’re using a lot of agency and we’re trying as hard as we can with multiple recruiters and different incentive bonuses to try to mitigate the problem.

Does that put more pressure on these facilities for their employees not to leave or retire, because without them you’d be in trouble?

Absolutely. I have people working there for 40 plus years. This is their home.

You make a great point and I think that is something that can only be corrected by getting new people to come to those towns, and hopefully children of whoever are working at these facilities can take that mantle and continue the work that they’ve done.

How are doing in terms of occupancy recovery? Has the staffing shortage impeded your ability to recover?

You basically took the words out of my mouth. We are unfortunately having tremendous census challenges because of that and we have capped admissions because we simply don’t want to short staff the units.

It’s not a matter of not having referrals, the referrals are out there. I think we could fill our buildings if we had the staff, but we don’t. So right now, we’re definitely in a spot where not having staff is hurting us. No question about that.

What has exacerbated the staffing crisis?

Nobody really knows what the silver bullet is. Whether it’s the unemployment benefits are causing it or maybe people are just tired. There’s definitely a lot of burnout.

The last few days, we’ve seen a lot of reports of possible mandations of vaccines. People are a little bit nervous on the executive side about what would happen if there is a mandated order put into effect and if that’s going to make the labor market even more difficult than it already is.

There are some people who simply will not take the vaccine and there’s nothing that can be done to convince them and that’s their right. Their position is they worked through COVID for a year without a vaccine.

At this point, if they’re being mandated to take it, and they don’t want to do that, then they’ll look for jobs elsewhere, maybe not even in healthcare. That’s definitely a concern.

Where is the staffing shortage hurting you? What kind of federal or state involvement do you want to see?

What’s happening now is CNA wages, the entry level position in nursing homes, clinically speaking, the wages have risen dramatically.

When we started in Maine in 2016, there was a federal minimum wage and then the fight for 15 was happening in New York and other states were taking cues.

We ended up getting to [$12/hour], and now with COVID, I would say the rate is probably more like 15 to 16 median and it’s going up.

We have neighboring facilities that have already started saying that they’re going to be going to 20 so that means that for that segment of the workforce, that wages went up basically 100% in the last have three or four years, which is tremendous stress on facilities and they are not getting reimbursed anywhere near that level to compensate for that.

That’s not to say that the employees don’t deserve it, they absolutely deserve it. CNAs are the hardest working segments of the facilities and they deserve it.

But when you have Medicaid reimbursement paying let’s say $150 a day, or even less than that, there are some states that are in the low hundreds, then it’s not a viable business model anymore.

You also have wage compression for the next tier for LPN, who obviously need to be higher than that.

Where do you think the industry goes from here?

I think inevitably what will happen, and what I see happening already is that smaller, 40-bed facility and 50-bed facilities, and there are a lot of them in Maine in rural areas, those facilities will simply not be able to continue operating. So consolidation will occur, these facilities will either shut down or send off their beds.

This was a problem before COVID, but now that COVID happened and the industry has had so many deaths, unfortunately, the facilities that are 30-40% vacant, other facilities will absorb those residents.

That’s going to be the natural progression of how the flow of care will shift in my opinion.