Despite seeing adequate census to remain open, Medford-Okla.-based Servant Living Center, owned by the Diakonos Group, was forced to close earlier this year due to not having enough staffing to take care of its residents.

Diakonos Group CEO and President Scott Pilgrim hopes it will be the only one of his facilities that will close due to staffing challenges, but worries what the current shortage could mean for the rest of the state.

Diakonos Group currently operates nine skilled nursing and rehabilitation facilities, three assisted living communities, one independent living community and three intermediate care facilities, according to its website.

With admission holds at 60% of his facilities, Pilgrim thinks it’s time for the federal government to step up to better support SNFs. The release of the Provider Relief Fund will help “temporarily,” but Pilgrim wants to see more long-term commitments in the way of Medicaid reimbursement increases.

He sat down with Skilled Nursing News to discuss what he wants to see for the industry moving forward and why mandates for things like infection prevention and control officers are great additions for SNFs, but need to come with a source to fund them.

What led to the decision to close?

Pilgrim: The interesting thing I’ve seen in the press about the Maine closures and some others is that nursing home closures are usually tied pretty heavily to census. But that’s not really the case right now.

We had adequate census but the problem was we were killing our staff.

What do you think needs to be done for the industry to get it through the staffing criss and move forward?

The new Provider Relief Funds are long overdue and we certainly appreciate it.

Maybe that allows us to compete, at least on a very temporary basis, with the restaurant industry with retail, which is where we compete primarily for CNAs.

This has been the straw that broke the camel’s back on the workforce crisis and everything has piled on to turn what has been a bad situation into a crisis.

Do you think the PRF will be enough to at least temporarily help with the staffing crisis and how long do you think that will last?

That will probably, on a temporary basis, help some buildings, but you have to be really careful with this.

There’s restaurants paying $17 to $18 an hour in some areas and when you raise wages so much without a long-term funding source for those wages, then we’ve got a problem after this PRF money runs out because our traditional payment streams will not allow us to continue to pay those higher rates.

It’s so difficult to go backwards on a wage rate. We have to be careful as providers if we get them so high that it’s not tenable going forward then we are just creating a trap for ourselves once funding returns to normal levels.

What we have to do is fundamentally change the funding model for long-term care and it’s going to take a whole lot of money to do it.

Is there a concern that more of your facilities will be forced to close?

I think there’s huge danger, especially in rural Oklahoma, of other providers closing.

On the state level, I sit on the board of our state association, which is called Care Provides of Oklahoma, and we’ve made great progress over the last few years in getting our Medicaid rate increased.

In spring of 2019, we got a once in a generation type of rate increase, but with COVID and workforce issues, we’ve used all of that up. We’re way underwater again with our Medicaid rates.

Even though it is 20% higher than it was in the spring of 2019, we’ve burned through all of that. Our legislature knows that and can see that and I anticipate that they’re going to support our Medicaid rate to our level of costs in the next legislative session, which will be very helpful.

We’re still starting from a base that is so low and the expectation of the number of staff and what we pay that staff that is low so that whole model is broken and we’ve got to figure out a way in which to have the funding both on a state and federal level.

We have an opportunity here, presented by this crisis, to remake how we do funding for long-term care. What does that turn out to be, is that federalizing Medicaid, is it making long-term care a Medicaid benefit?

We know one thing, what we have been doing is broken so let’s try to fix it.

Where do you think the state’s Medicaid rate needs to be for you to be successful?

Every state is going to be different. In Oklahoma you can buy a nice, three-bedroom, two-bath house for $140,000, and you can’t buy a hobble for that in the coasts.

So every state is going to be different. For us, we’re probably talking about a 20 to 25% higher rate from what it is now in order to stabilize our workforce, and our ongoing higher expense level.

What’s your level of confidence in being able to get to that point?

At this point, it’s a 50/50 proposition in Oklahoma.

What are you keeping your eye on at the federal level?

There are some things that I think would be helpful for us to be better. For example, there’s some requirements that each building have an infection prevention and control officer. That makes perfect sense, but we need to fund it.

Whatever is put on us, from here and on out we can’t have any unfunded mandates.

One of the things that we’re really working hard on in Oklahoma is using some of the Federal Rescue Funds that are provided to the state to completely rework health care education, to increase the number of aides and the number of nurses that are available to us.

In today’s world, if somebody wanted to go to nursing school and agreed to work in the industry for X number of years, they shouldn’t have to pay a penny for tuition or anything like that.

What kind of investment is that going to take, you think?

I think in Oklahoma we’re asking somewhere between $100 and $150 million, primarily for healthcare education, out of the billions of dollars that is available to the Federal Rescue Fund.

Staffing is all-consuming for everyone in our business. 

We’ve always said staffing is a top-three issue, but now it is everybody’s absolute number one issue. 

You can’t just go out and say we’re going to pay CNAs $25 an hour from here on out without a long-term funding source because you’re just setting yourself up for catastrophe in 12 or 18 months.

How the PRF monies work is that you have to show a revenue loss or additional expenses. We can show both of those. [My question is] what about expenses from today’s escalated leve? What are we going to have to pay staff for the next 12 months? There’s nothing in the PRF on that.

The PRF money is going to be a nice band-aid and we do appreciate that, but throwing one time money at this issue is not going to work.

We’re at $15 an hour for our aides and I’m concerned that I can’t continue to do that in the future. We’ve got to have a long-term change in the funding level and mechanisms in order to even keep the staff that we have now. It’s not tenable.