Implementing staffing standards for nursing homes, like what the White House has called on the Centers for Medicaid & Medicare Services to initiate, is projected to increase operating expenses for 59.1% of nursing homes – at an average cost of $500,000 per facility.

While it would likely result in improved staffing levels, any new staffing benchmark is going to need a significant revenue offset and its cost to operators would also differ widely by state.

That’s according to a report published last week by Oxford University Press on behalf of The Gerontological Society of America. A new staffing benchmark, based on staffing data from the 1990s, would increase operating expenses for the industry by at least $4.9 billion, which is not feasible at current Medicare and Medicaid reimbursement levels, author John Bowblis noted.

Bowblis is an economics professor and research fellow in the Scripps Gerontology Center at Miami University in Ohio.

The report used a hypothetical acuity-adjusted benchmark for staffing levels based on the “1995/97 staff time measurement studies.” Considering how the level of acuity has increased since then, it’s likely the economic fallout would be even greater.

Bowblis used nursing home archive data and compared the benchmark to staffing levels reported by the facility and whether nursing homes received a nursing staff deficiency. He also used financial information from the Medicare cost report to calculate additional annual operating expenses required to staff to the benchmark for each state and nationwide.

The mean and median additional expenses for nursing homes were $538,090 and $388,178, respectively, according to the study. For comparison, the mean and median net patient revenue in the analytic sample was $9.7 and $8.1 million per facility, respectively, as 72.4% of nursing homes would be losing money caring for residents at these standards.

While CMS intends to establish a new minimum staffing standard that nursing homes must meet, based on new research that will be conducted over the next year, the timing of the proposal continues to frustrate operators, and this study does little to alleviate those concerns.

President Biden isn’t the only lawmaker looking to establish new staffing standards for nursing homes. However, Virginia, Rhode Island and New York have already delayed legislation to change staffing minimum requirements within their borders due to current shortages.

In fact, New York Gov. Kathy Hochul has extended the order multiple times, now delayed through the end of March, which has irked some industry officials in the state.

“There is no reason to further postpone long-overdue reforms that hold nursing home operators accountable for ensuring adequate standards of care,” Milly Silva, executive vice president of 1199 SEIU, one of the unions that fought for the staffing legislation, said in a statement to Gothamist.

As this study indicates though, implementing new staffing standards – which under the New York legislation would be an average of 3.5 hours of clinical care per resident a day – may be easier said than done.

Some states would fare worse than others

If a new staffing standard would come into effect, each state would likely be affected differently as increases in operating expenses varied widely across states, according to the report.

For some states the increase in operating expense was as low as about $85,000, for others it was over $1.67 million annually per facility.

For example, 5.6% of nursing homes in Delaware incurred an average operating cost increase of $760 per resident year, or about $85,000 per nursing home. Louisiana nursing homes, on the other hand, saw much higher costs increases with 91.6% nursing homes in the state incurring an operating expense increase of $6,588 per resident year or about $663,000 per nursing home.

States that saw the largest increases in operating expenses were generally associated with higher nursing staff wage rates, lower per diem Medicaid reimbursement rates and lower or no state regulations mandating a minimum nursing staff level.

The top five states with the highest additional operating expenses per nursing home were New York ($1.67 million), the District of Columbia ($1.1 million), Illinois ($793,327), Texas ($731,490), and Pennsylvania ($674,444).

The gap may only be getting wider as well.

A recent report from the Long-Term Care Community Coalition (LTCCC) using data from CMS provided by nursing homes, shows that staffing levels dropped 7.8% since the first quarter of 2021.

National staffing averages for Q3 2021 were 3.63 total nurse staff hours per resident day (HPRD) and 0.63 for registered nurse (RN) staff (HPRD). That falls short of what LTCCC says is the amount of time needed to ensure that residents receive quality clinical care – 4.10 hours total care staff HPRD and 0.75 RN HPRD.

At 2.98 nurse staff HPRD, Illinois nursing homes ranked last in the country, according to the report.

Staffing benchmark will come at a cost

In addition to having a licensed nurse on-duty at all times with at least eight consecutive hours being staffed by a registered nurse, federal nursing home regulations require nursing homes to have “sufficient nursing staff” to care for residents.

While federal guidelines do not currently provide a specific quantitative definition or benchmark to determine the nursing staff level associated with being sufficiently staffed, one of Biden’s main goals in his nursing home reform is to ensure that every nursing home has the appropriate level of staff to provide high-quality care moving forward.

Since the White House released its fact sheet on Feb. 28 outlining the proposed reforms, little is known about what the staffing requirement might look like in its final form.

However, as Bowblis explained, implementing the staffing benchmark used in the study would cause most nursing homes to increase nursing staff levels, while at the same time causing their operating expenses to balloon.

In fact, the vast majority of nursing homes he observed did not staff to the benchmark he used; 80.2% for registered nurses and 60.0% for total nursing staff, based on the nearly 30-year-old data.

Bowblis thinks policy makers need to weigh the potential benefit of improved quality against the financial cost of paying for additional nursing staff moving forward.

They must also consider whether the acuity measure used to construct the benchmark reflects the actual staffing needs of residents or is driven primarily by reimbursement incentives.