The skilled nursing industry is staring down a triple threat.

Providers are being challenged operationally, clinically and financially — at least in part due to rising labor and care costs, among other factors.

Not-for-profit senior care giant Evangelical Lutheran Good Samaritan Society has had to close or sell nine facilities in just the last eight months — the majority of which were in rural communities.

Good Samaritan also has nearly 2,000 job openings, amounting to roughly 14 openings per facility.

Despite the present obstacles standing in the way of the industry’s Covid recovery and future stability, CEO Nate Schema believes it would be a critical error to continue down the same path and allow more nursing homes to close — especially those serving the most vulnerable residents in underserved or rural parts of the country.

The American Health Care Association/National Center for Assisted Living (AHCA/NCAL) has projected 400 SNF closures in 2022, with nearly 240,000 job openings as a primary driver.

It’s a long-term plan, according to Schema, and significant change won’t likely occur for months if not years.

“While we’re large enough and we’ve got the resources necessary to navigate this, we’re going to continue to see additional challenges in our sector and in our space if we don’t see some changes within the sector,” Schema said recently on an episode of the Skilled Nursing News Rethink podcast.

Highlights of Schema’s podcast, edited for length and clarity, are below. Subscribe to Rethink via Apple Podcasts, Google Podcasts, or SoundCloud.

On the biggest takeaways from the annual Congressional Briefing hosted by the American Health Care Association/National Center for Assisted Living (AHCA NCAL):

I think one of the biggest takeaways I had was how engaged the staffers and the senators were up on [Capitol Hill].

I think you’re always hopeful that they’re going to have a really good handle on the issues that might be in your sector, but with everything that’s happening up on the hill right now you’re just always a little concerned that maybe it’ll be white noise or be lost because there’s just so many other topics. So I think what was really cool for us to see was they understood how challenging some of these workforce issues were, they understood the needs of the sector and how much we were hurting in long-term care.

I think what was really cool to hear, and see as a takeaway from our time there … I was talking with one of my team members and he said, ‘Hey Nate, one of the senators’ offices that we met with they signed on to the letter.’ So it was just so affirming that they heard us and they’re really invested in seeing everything that we do and seeing all the residents get the care and address some of the workforce challenges that we’re seeing. So that was probably one thing and then of course seeing Sen. [Joe] Manchin there in person talk through his firsthand account of all the different dynamics up on the hill and just how he’s lived that out firsthand.

The Good Samaritan Society, having some buildings in West Virginia, I think it just helped me better understand how to communicate and advocate for the different needs that we have within our sector.

On Schema’s confidence level regarding whether federal leaders better understand the challenges facing the industry:

100% feel better about it. I’ve had the unique opportunity to be in front of CMS Administrator Chiquita Brooks-LaSure and also Secretary of Health and Human Services [Xavier] Becerra over the last couple of months, and so I’ve been able to see how they’ve responded to our sector and listen to where we’ve been and where we stand right now.

I would say that initially I was thinking, ‘Gosh I’m not sure these folks really understand just what this looks like and how this is coming to life in our sector.’ All of us feel the pain of going to get a hamburger right now and spending $25 to get a burger and fries — I feel that acutely.

But what’s unique about our sector is we don’t have the ability to pass those costs on. So as our supplies are going up, as our labor costs are going up, we don’t have the ability to pass those on to our residents and their families when we’re serving 50 plus percent Medicaid population. So to hear the responses early on a month or two ago from the administrator to Secretary Becerra and then now to see the responses from the senators, it’s evident to me that they’re getting this. They’ve done site visits, they’re hearing from their members and they’re understanding just how real our issues are.

On how Schema has grown as a leader during the first six months in his role as CEO:

Instead of being the go-to guy for everything, being in the mix on every issue, I’m learning how to best use the gifts and talents of my team. I feel like I have an extraordinarily talented group of leaders and vice presidents around me and I’m figuring out that I don’t need to be the one that has the answer all the time. I’m getting better at asking the right questions to help them grow and to help best utilize all the gifts and talents. Nine times out of 10 they have all the answers, we’ve just got to make sure that we’re asking the right questions. I feel like with each passing month, with each passing board meeting, with each passing all staff meeting, I’m getting a little sharper at doing that.

On the future of Good Samaritan and the industry as a whole:

Without a doubt I feel more confident. I think the reason why I’m very optimistic about our future and being a really strong nonprofit organization: One, we’ve had tremendous support through our acute care partner at Sanford Health. What we’re able to do as an integrated health system, maybe differently than independent operators — and especially being in rural health — is we’re able to invest in some innovations that other organizations just don’t have the opportunity to do.

Most recently we’ve announced a virtual care strategy and initiative through the very generous gift of a philanthropist that has our organization’s namesake, T Denny Sanford. He blessed us with a $350 million gift. We’re going to be launching this game-changing initiative here in August and really standing up a virtual care hub with the idea of being that we’re going to be able to bring care closer to home. Whether you’re in a small rural community in North Dakota or maybe you’re in Minneapolis, we’re going to be able to bring those specialties to the bedside in maybe a new and exciting way. So I’m pretty darn excited about what the future holds and feel like we’ve got the talent and resources to make it happen here and be able to serve for another 100 years.

On why Good Samaritan changed its agency use strategy:

It’s always been part of our philosophy that … If one of our communities has needs, we’re going to do everything we can to get the resources there. One of the blessings as a large organization is that we have additional resources that we can find folks from across the country, whether that’s bringing in agency support or moving caregivers from one community to another that might have a few more needs.

We’ve been able to figure it out, but I think what we’ve learned now over the last year and a half, and probably more specifically even over the last six to eight months, one the people aren’t there and the people that we are able to find are costing us anywhere from two to three times what it would it did pre-pandemic. So now we’re paying physician wages for caregivers, we’re paying 100 plus dollars an hour for these folks. Quite frankly the math just doesn’t work anymore, it’s creating untenable situations. We’re not able to subsidize some of these locations in maybe a way that we were a year or two ago.

So we’ve decided to shift our strategy and say, ‘Look, we’re going to do everything we can to ensure that our people get the very best care and have an outstanding experience.’ But in some cases that means we’re going to have to limit admissions and we’ve done just that because it just doesn’t work anymore to continue to say at all costs we’re going to bring people in because what we’re seeing and feeling here in the upper Midwest and across our footprint in 22 states — it’s just too expensive.

On Good Samaritan’s strategy to recruit and retain staff:

I think that’s been another thing that’s evolved here over the better part of the last year. We talked about … Gosh we’re in an operational crisis, we’re in a clinical crisis and it’s quickly become a financial crisis. Right now … we’re seeing about 20% of our locations that have what I would describe as one of our key leadership positions open.

So one of the things we’ve done is we’ve been really intentional about standing up an administrator council and selecting a number of individuals across organizations so they have direct feedback with our executive leadership team, so they have a voice and so that we can be even more responsive than we had been in the past.

I think the other pieces that we’re really committed to is, and one of the passions of mine, is how do we continue to develop and invest in these young leaders. I just think that our young leaders have to be given the tools, resources and support that they need to develop and grow early on. Some of these folks, if you think about it, if they’ve started in the last few years all they know is how to operate a community within the pandemic.

I would hate to believe that some of them think that’s normal because it’s absolutely not … I’m just passionate about ensuring that we get these folks back to a new normal because the current new normal doesn’t work.

On how Good Samaritan will contend with the possibility of a staffing minimum and a potential $320 million decrease to nursing home Medicare funding in the next year:

We’ve demonstrated and figured out how to be an extremely resilient organization and, like everything, we’re going to figure it out. We’re going to get our really smart folks in the room and we’re going to navigate this thing.

Being a provider that is primarily rural … We need folks to understand the types of access issues that might exist if we don’t figure this out. While we’re large enough and we’ve got the resources necessary to navigate this, we’re going to continue to see additional challenges in our sector and in our space if we don’t see some changes within the sector. So short-term are we going to be fine? Yes, but it will ultimately lead to potentially some other difficult decisions both here at the Good Samaritan Society and I think throughout the sector.

On the relationship between Good Samaritan and its acute care partners:

I think the biggest thing we’ve learned is how much we need each other. I think we’re talking more across the health care landscape than we ever did before, and I don’t know that that’s specifically unique to Sanford and Good Sam. That said, I think we can do it more efficiently and more effectively.

What we’ve seen now is if a nursing home doesn’t have staff, they’re not going to take admissions and so then it’s backing up our hospitals. I think what we’re starting to see now … Is our acute care partners are really starting to feel that pain in a different way.

I think the other piece is, through the pandemic, we’ve learned how to become really agile.

On if Schema sees a place for heavily rural operators and not-for-profit operators:

I think it’s an overwhelming yes. Our rural locations are part of these communities, they’re often the fabric of these communities. In some places they’re the largest employer of these communities. Like many things, care looks very different today than it did 50 or 100 years ago. As an organization that has been serving that long … We’re committed to figuring out a way that we’re able to live out our mission for another 100 years.

We know that the industry has to change and we know that we’re able to figure out creative solutions to provide unbelievable health care in rural communities and how to do it at scale and in an efficient way. But we’re going to need help from our policy makers and we’re going to need the help of our state leaders to be able to figure this out. I don’t think it’s something that gets done in a matter of months, we’re talking years, but we also need everybody to understand the impacts that we’re going to see and experience if we do nothing or if we say we’re okay with 300 nursing homes closing because we have too many.

Unfortunately, they’re going to have people that are going a long way for care, and I don’t think that’s OK. Or you’re going to see a disproportionate impact, whether that’s in urban underserved areas or you’re going to see some rural disparity that I don’t think we’re OK with as a nation.