Executive Outlook 2024: Inside the Headwinds and Opportunities That Await Nursing Homes

Nursing home leaders from across the nation, including the largest advocacy groups for the sector, plan to oversee efforts in 2024 to increase funding – both from the federal government and through improved revenue streams as operating pressures ease slightly.

At the center of these efforts is an attempt at influencing the political will and countering an unfairly negative public image of nursing homes. As Katie Smith Sloan, President and CEO of LeadingAge, put it to Skilled Nursing News: “Ensuring that the public understands how long-term care is delivered and paid for, in a patchwork, inefficient system, and that the public appreciates the support that is needed, is critical.”

Meanwhile, Mark Parkinson, President and CEO of the American Health Care Association/National Center for Assisted Living (AHCA/NCAL), said 2024 represents a milestone of sorts for the industry.

“There are so many reasons to be optimistic about the future of our work and the opportunities that lie ahead. At the same time, long-term care continues to face one of the biggest threats to our profession: the ongoing workforce crisis,” Parkinson told SNN. “A priority of AHCA/NCAL will be ensuring that the Administration, policymakers, and stakeholders understand the full consequences of the proposed mandate.”

In this second installment of SNN’s Executive Outlook for 2024, association chiefs, nursing home heads and financial leaders all provide their insights on ongoing headwinds – and discuss their plans to overcome the challenges. However, they also cite opportunities, including increases in reimbursement as well as initiatives to address staffing problems amid views that a better profit environment might be in the works.

Mark Parkinson, President and CEO, American Health Care Association/National Center for Assisted Living (AHCA/NCAL):

2024 will be a critical year for the future of long-term care.

This will be the year that we, as a nation, feel the significant impact of our aging population. We will see it in our census numbers: in 2024, occupancy rates will finally hit—and then exceed—our pre-pandemic numbers. With the pandemic emergency behind us, we will also see a renewed interest in systemic quality improvement, like the AHCA/NCAL National Quality Award Program. We will continue our work with coalition partners, the Centers for Medicare and Medicaid Services (CMS), and Congress to find sustainable ways to ensure economic stability and regulatory policies that support quality care. For the 13th year in a row, long-term care providers will achieve a Medicare increase, and most states will continue to see improvement in Medicaid rates. There are so many reasons to be optimistic about the future of our work and the opportunities that lie ahead.

At the same time, long-term care continues to face one of the biggest threats to our profession: the ongoing workforce crisis. Our proactive efforts to grow the workforce and enhance resources for workforce efficiency are being threatened by bad policy through the proposed federal staffing mandate. An unfunded, unrealistic staffing requirement will not improve quality care. In fact, it threatens to close centers and reduce access to care for hundreds of thousands of Americans. We cannot allow this to happen. A priority of AHCA/NCAL will be ensuring that the Administration, policymakers, and stakeholders understand the full consequences of the proposed mandate. As such, we will continue to promote more meaningful solutions, like the AHCA Care for Our Seniors Act reform agenda and additional quality improvement programs for the Administration and Congress that are realistic, timely, and achievable.

I am confident that we will emerge from these challenges with a clear path forward in 2024. AHCA/NCAL will continue our mission to deliver solutions for quality care, and there isn’t a day that goes by that I don’t witness providers across the country putting in the passion, time, and energy required to make this happen. We have never backed down from the chance to do what’s right, and we won’t back down now.

Leigh Ann Barney, President and CEO, Trilogy Health Services:

Trilogy Health Services turned the page on the COVID pandemic in 2023, returning to our core vision, which includes being the best health care company in the Midwest, being the best place to which our employees have ever belonged, and becoming a leader in clinical excellence in long-term care. We made significant strides in all three areas – with improved employee retention, an expanded footprint into Wisconsin, and improved quality metrics with as many as 56 Trilogy communities earning the coveted AHCA/NCAL Bronze Quality Award.

As we head into 2024, our focus is on hardwiring the actions that drive our vision with three big initiatives.

The first is utilizing data to drive outcomes. Artificial Intelligence (AI) changes more every day – transforming from industry buzzword to what very well may drive us into the future. We know artificial intelligence will not replace hands-on care, but if it can reduce paperwork and guide clinicians to better outcomes, then the quality of care will improve. We are also looking at how AI can enhance our financial team’s ability to analyze our portfolio, assist in the centralized intake process, and help optimize operations. The commitment to integrating AI reflects Trilogy’s dedication to elevating the level of care we provide our residents.

Secondly, we’re focused on the continued increase in clinical competency among our staff. To do this, we will enhance our apprenticeship programs and continue to drive our internal CNA courses to grow talent. In 2024 we will introduce a QMA program to our continued education plans. This program, unique to Trilogy, is just one more way, along with scholarship, tuition reimbursement and Nurse Director in Training (NDIT) programs, that we invest in retaining and growing our clinical team.

Third, we work to combat the staffing issues plaguing our industry. Companies must continue to focus their efforts on diversity, equity, and inclusion not only to attract more employees with a servant’s heart to the industry but also because our resident population is changing – and our staff must reflect those changes. Trilogy is rolling out a new Employee Experience Manager role to assist in campus-level communications and engagement. We have laid out a new Diversity, Equity, Inclusion, and Belonging (DEIB) learning plan and agenda for all company leaders and enhanced our Employee Resource Group offerings to ensure employees from all backgrounds find support.

Headwinds may come, but with firm footing in our vision, Trilogy will continue to grow, assuring the best care to the residents across our portfolio.

Katie Smith Sloan, President and CEO of LeadingAge:

Payment policy and workforce support, with the aim of ensuring access to quality care, pretty much sum up our focus in 2024. Both topics will be addressed in numerous ways and through a range of activities.

Reimbursement rates that do not cover the cost of providing high-quality care and services, including operating costs such as supplies, food, infrastructure needs, wages and training, must be addressed, along with the ongoing challenges in recruiting and retaining the staff needed to ensure older adults’ access to quality care.

At the same time, CMS’ proposed nursing home staffing mandate looms over the sector, causing many providers to question their ability to continue serving older adults and families should the requirements be implemented as proposed.

That said, even in this challenging environment, opportunities exist. Congressmembers, recognizing the impact of staffing shortages on their constituents, are taking action. The House and Senate Protecting Rural Seniors’ Access to Care Act, which would halt the proposed minimum staffing rule and instead establish an advisory panel on the nursing home workforce, if enacted, is a perfect example.

Overall, America is experiencing a massive demographic shift with implications for every aspect of society. Accessing quality long-term care is very often challenging, for many reasons. There is little political will to address these issues systemically but policy makers are quick to criticize. Too often, aging services, and those who provide nursing home care, are the scapegoat. It’s a compelling tactic to address a complex situation. But it’s just not accurate. All providers are not the same. Our nonprofit members operate with transparency and share the public’s and the Biden Administration’s goal of providing quality care. Ensuring that the public understands how long-term care is delivered and paid for, in a patchwork, inefficient system, and that the public appreciates the support that is needed, is critical. And so, we’ll be advocating for long overdue change. We’re committed to doing everything we can to achieve that goal.

Steve Kennedy, Executive Managing Director, VIUM Capital:

While some lenders in the seniors housing and health care space may look at 2024 as glass half empty due to higher interest rates, continued labor pressures, and threats of counterproductive policies from the federal government, we view 2024 as not only half full, but filled to the brim. With SNF Medicaid rebasing that has occurred throughout the country, we are starting to see net operating income (NOI) flow through the trailing 12-month financials to support Housing and Urban Development (HUD) permanent financing. Assisted living facility (ALF) occupancy and margins are returning to pre-pandemic levels but are about a year behind SNFs. And so, expect 2024 HUD LEAN production to be largely weighted on the SNF side.

At VIUM, we are laser focused on becoming the number one HUD health care lender in the country in 2024. Full stop. We have already achieved a top three HUD health care lender status within the first few years of our launch in 2020, and we are arguably the only HUD/GNMA health care focused lender that has proprietary direct bank bridge capital to facilitate future HUD-insured loans. We have funded over $4 billion of projects since our founding. We are specifically targeting 100 HUD loan application submissions in 2024.

A few other 2024 initiatives for VIUM include those related to capital markets, advocacy efforts, and expanding our team.

In capital markets, to facilitate our bridge loan capacity, which currently totals over $2 billion, we plan to complete another health care bridge loan securitization similar to the $1.1 billion Credit-Linked Note structure we closed in 2023 – it’s a first of its kind securitization in the health care space.

Towards advocacy efforts, we will double the number of VERSED podcasts in 2024, as well as increase the frequency of advocating alongside AHCA/NCAL, and others, at the state and federal levels.

Also, We will continue to add to our team in 2024, as we are currently slated to add a half dozen new analysts in 2024, including a new position on our servicing and asset management team. We’ll also continue to lean into our community service and culture building initiatives, which are authentic, impactful, and grassroots driven by our team.

2023 was a year of us “working in the dark.” And, 2024 will be a year of execution and proving out our leading business model and brand.

Stuart B. Almer, President and CEO, Gurwin Healthcare System:

The nursing home industry is at a crossroads. With chronic underfunding, burdensome regulatory requirements and the residual damage caused by the COVID-19 pandemic, many nursing homes are closing or considering their options as 2024 nears. Today, New York State has 5600 fewer nursing home beds than in 2019, limiting access to quality care for all New Yorkers, and overburdening our hospital system. That trend will continue without relief.

Recruitment and retention will remain a focus for the industry in 2024, as we compete with all health care sectors for quality caregivers. At Gurwin, we’ve committed to further embracing our staff members, going the extra mile to show them how important they are to us, with a goal of recruiting and retaining the very best talent. This includes simple things, like staff barbecues and lunches, special celebrations with unexpected treats and gift cards and staff recognitions. We’ve also committed to initiatives that are more resource-intensive, including an additional paid holiday, historic increases in salaries across the board, enhanced benefits with no additional contribution increases, the addition of an employee assistance program and a year-end payout for unused sick leave. Referral and sign-on bonuses as well as our education reimbursement benefits have been doubled to further invest in our staff.

We are hopeful that 2024 will see fewer caregivers leaving the health care profession entirely, with an eye on career opportunities that provide increased compensation, flexible work hours and remote options. The impact of this ripples beyond the long-term care industry. Lack of adequate health care workers means a lack of adequate health care options for our community. And with an aging population, this has the potential to be devastating. New opportunities must be developed and funded to encourage young people to pursue careers in health care, especially in long-term care. We’ve already begun bolstering relationships with local schools, from high schools through the university level, to not only encourage young people to pursue careers in health care, but also to complete their internships and clinical training in our facilities. Having exposure to long-term care at an early age, with mentors at the ready who can attest to the rewarding work that we all do, is critical to developing an affinity for the field as well as realistic expectations about the work involved.

Technology will continue to be a focus in 2024. Gurwin has already started a test trial for virtual bedside monitoring, and will look to find other technology to help staff provide the highest quality care while potentially reducing their workload. Although it is the personal touch that makes all the difference in our industry, supplementing with appropriate technology, including AI and virtual monitoring, can help raise the level of care. We will continue to look for possibilities, and also to apply for the various grants that exist to help offset the cost of implementing these new endeavors.

Last year, our state legislature finally heard our pleas and provided the first real increase in Medicaid funding in more than 14 years. In 2024, we will continue to lobby to encourage them to do more to ensure the long-term future of skilled nursing care, to rebase the Medicaid rate and make provisions for an appropriate annual cost of living increase. With predictable funding, long-term solutions to some of the most critical problems facing our industry can be addressed, and we can assure the quality care our seniors – and we – deserve.

Martha Schram, President and CEO, Aegis Therapies:

In 2024, a key focus of Aegis Therapies is care redesign, where specifically, we are focusing on our rehab teams, as part of the entire care team, embracing and executing a functional health model in skilled nursing facilities (SNFs). This is contrasted with the more usual practice of referring to rehab to address issues and events as they occur.

Data suggests that the industry reacts to events instead of successfully focusing on prevention. For example, according to CMS’s skilled nursing facility Care Compare data, emergency department utilization increased from 0.96 per 1,000 resident days reported in August 2020 to 1.17 per 1,000 days reported in October 2023. That is an increase of over 21%. During the same reporting periods hospitalizations rose from 1.7 to 1.83 per 1000 resident days.

Adopting a care and collaboration model that looks at early triggers of decline moves directionally to more timely and proactive actions across multiple members of the care team. Prevention and extending the wellness period for individuals is at the center of this approach. Our view is that rehab is uniquely capable of leading the functional care management plan where we rethink and adjust restorative and activity services to support each resident’s overall functional health and goals.

Aegis has deployed this approach in partnership with some providers, and especially with Institutional Special Needs Plan (I-SNP) members, with success in reducing falls with injury and hospitalizations. However, it is not a rehab program alone, and success with this model requires strong collaboration and commitment on the part of the SNF.

Additionally, part of Aegis’ care redesign model entails leveraging technology to standardize early identification of impairment that could lead to decline, followed by the right level of intervention, which may include activities, restorative care, caregiver support, and training and/or rehab.

Care redesign is critical to making progress on delivering value. It also allows for the deployment of skilled therapy services in a way that focuses on top-of-license care. This can help to ease the stress of the caregiver shortage faced by our industry while ensuring that needs are met in an efficient manner. The model can support reimbursement success as well. As the long-stay Medicaid reimbursement model moves to PDPM from RUGS, it is more critical than ever for facilities to understand the impact a strong restorative program can have on their Case Mix Index (CMI) in addition to the functional health of the individual.