Recent nursing home restructurings have often involved additions of other segments of the care continuum.
The example of Linn Health & Rehabilitation bears this out. The Rhode Island-based provider of skilled nursing, therapy services and long-term care has opted to shift its operating structure, adding assisted living and memory care, after suffering enormous financial losses as a provider solely of skilled nursing services.
Part of the problem is the waiting period for approved government funding. While providers in states like Rhode Island await rebasing to kick in for approved Medicaid funds, they aren’t provided bridge money – and their dwindling funds from private efforts are simply not enough.
And so, restructuring was a difficult decision to make for Linn Health, with anticipated resident transfers and staff layoffs over time, but a necessary one given the delays in government funding. Now, the facility, which is licensed for 84 beds, might have some relief due to this restructuring effort.
About $10 million in gap funding was approved for nursing homes in Rhode Island as legislators decide on Medicaid rebasing. However, for Linn Health, it will have been too late, said Richard Gamache, CEO of Aldersbridge Communities, which owns Linn Health along with several other long-term care properties in the state.
The gap funding isn’t due to reach providers until July, and a vote on Medicaid won’t happen until October, he said. Meanwhile, Linn Health had been operating at a $100,000 monthly loss, with costs skyrocketing since March of 2020. Linn Health’s loss for 2023 was more than $2 million, Gamache said.
Linn Health’s leadership has for months been talking with staff, residents and their families about the facility’s financial dire straits as a result of inadequate Medicaid funding, with residents even organizing multiple bake sales to help.
“When I first heard this, I thought, wow, that’s really heartwarming, but it’s also heartbreaking. You’ve got residents prior to Thanksgiving making breads and pies, they sold them to everyone who came into the building,” said Gamache. “They raised $2,000, which is a lot for a bake sale, but for a business that’s losing $100 per person per day it’s not enough.”
Gamache feels it’s an indictment of how broken the whole nursing home payment system really is. The U.S. spends less than half of other civilized countries on long-term care, he said, and that’s an indictment of society as well, with our values reflected in the people we elect.
“I think it speaks to ageism, it speaks to how disrespected you are when you’re old, and when you’re sick, and quite frankly, when you’re female, because most people who live and work in nursing homes across the country are female. The nursing home business is the only business that I can think of where ageism, ableism, racism and sexism all impact public policy.”
Medicaid, gap funding, and grassroots efforts
Perhaps unsurprisingly, the cost of labor has been the most draining for Linn Health, with nursing homes having to compete with hospitals and home health care agencies for the same pool of people.
Medicaid rebasing in Rhode Island is supposed to take place every three years, but the state hasn’t made any adjustments to the rate since 2012, according to Gamache.
It’s a story not unique to Rhode Island and Skilled Nursing News has published stories regarding nursing home downsizing and closures in other states, with providers in states such as Texas also not seeing a Medicaid increase in a decade.
“This is not a story about Linn Health & Rehabilitation. This is a story about a lot of nursing homes across the country that are in a very similar situation,” said Gamache. “I think the ones that have been hit especially hard are the independent not-for-profits like us – the independent owners and rural nursing homes.”
About 80% of Linn Health’s residents are on Medicaid, said Gamache – the facility largely doesn’t get paid at cost of care.
The differential between the Medicaid rate and cost of care has grown from a $40 difference to more than $100 per day, a gap in reimbursement that has been unsustainable for years, he said.
Rhode Island legislators agreed the Medicaid rate must be adjusted to account for post-pandemic cost of care, but for October of 2024. The state is currently conducting an analysis to determine how the rate should be changed.
Gamache is concerned legislators will opt to spread any sort of increase over multiple years, since the state hasn’t rebased Medicaid in over a decade and may say they can’t afford to reimburse nursing homes at the rate they should have been paying them all along.
“We said okay, that’s great, but we’re not going to be open by October of 2024. We need some kind of gap money … Kentucky did this very same thing. They provided bridge money while they’re waiting for their rebasing to kick in for Medicaid.” said Gamache.
The recently revealed state budget did have $10 million for nursing homes as a hold over until Medicaid can be adjusted, but it won’t take effect until July 1, he said.
“Our money’s just about gone. We have a very thin endowment and that’s the only thing standing between us and closing our doors,” said Gamache.
Aside from resident bake sales, Linn Health has told its story numerous times in the past year, and people have responded positively. Former staff members and their families have donated funds, and even strangers have donated after hearing Linn Health’s story.
But, it’s still not enough to stay open, Gamache said, which led to the tough decision to shift operations.
Weighing the odds
Linn Health created a task force to figure out how to stay open, made up of staff and Aldersbridge board of trustees. The solution was to add an assisted living and memory care component to the facility, and re-educate the staff so they could become certified medication technicians (CMTs) instead of certified nursing assistants (CNAs).
The team received a grant to train 15 CNAs to become CMTs so they can stay with Linn Health as staff for an assisted living for memory care program. Linn Health is slowly converting its units to have private rooms too.
“We’ve asked the state to come in to recertify for residents and see if they qualify for assisted living, and if they can stay. If they can, that’s fewer people that have to find a new place to live,” said Gamache. “Staff that we have can stay and take care of them, the same staff that have been taking care of them for years. They know them, they have a relationship with them, they know the families.”
It’s a cumbersome process with many moving parts, but the potential alternative – sudden closures – has been seen in St. Louis and New Jersey where operators failed to pay staff and shutdown, resulting in a midnight rush to get residents placed at nearby facilities.
“I’ve been told many times it would be easier to shut down, lay everyone off, move everyone out, renovate and reopen,” said Gamache. “It may be easier, but we want to do this the right way. Let’s try to save as many residents and as many staff members as we possibly can.”
Gamache and other leaders at Linn Health are working to minimize the number of staff they’d have to lay off, or the number of residents they’d have to move.
Coupled with the wait for Medicaid rebasing and debilitating staffing challenges, Rhode Island also in 2021 implemented the highest ratio of mandated staffing in the country, at 3.81 hours per patient per day, said Gamache.
There were fines charged if nursing homes were noncompliant, he said, but Rhode Island Gov. Dan McKee just last week decided to suspend fines, with the staffing crisis making it virtually impossible for people to find enough help.
But, the suspension is still too late – most of Linn Health’s increase in expenses comes from hiring agency personnel to meet the state’s staffing requirements, he said. Agencies that operate in the state have been charging exorbitant rates for years.
Now, providers in the state also face a federal minimum staffing mandate, intended to be finalized by the Centers for Medicare & Medicaid Services (CMS) at 0.55 hours of care from a registered nurse per patient per day and 2.45 hours from a nurse aide.
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