The long-term financial viability of nursing homes will be seriously challenged as operators face the fallout from the complete wind down of public health emergency (PHE) funds. This is especially true for nonprofit organizations, with many facilities unable to fund existing staffing levels.

According to a report published in Health Affairs Covid-19 PHE funds allowed nursing homes to remain profitable through 2021. However, by 2022, for-profit nursing homes had overall net incomes of $1.68 per resident day, while nonprofits saw a $31.18 loss per resident day as PHE funds were rolled back.

“Our data shows that many nursing homes do not have enough funds to cover existing staffing levels, let alone the higher staffing levels that [the Centers for Medicare & Medicaid Services [CMS] is mandating with their minimum staffing standard,” said John Bowblis, co-author of the study and professor at Miami University in Ohio.

Robert Applebaum with Miami University, and Christopher Brunt with Georgia Southern University, were also co-authors of the study.

Since its inception in March 2020, the PHE introduced a wide array of policy changes, waivers and funding support for the sector, but tThe PHE came to an end on May 11 last year.

Nursing homes aren’t going to be able to afford the staffing mandate, Bowblis said, without significant increases in Medicaid and Medicare payment rates. This is something CMS states is beyond the scope of their staffing standard, he said.

Without the PHE funds, for-profit and nonprofit nursing homes would have had losses of $7.47 and $42.35 per resident day, respectively. When non-patient revenues, including donations and gift shop funds, along with PHE funds were added to revenues, costs were covered through 2021 for nonprofit facilities, and for-profits through 2022.

The study found that without these funds, nursing homes lost money during 2020 through 2022. Preliminary data for 2023 indicates that while occupancy rates have been increasing, they remained below pre-pandemic levels, and nursing homes continued to suffer financial losses.

The study confirmed that nursing homes suffered deteriorating financial performance because of the pandemic. By 2022, nursing homes reported losses on patient services, about $67.96 per resident day among nonprofits, and $15.34 among for-profit properties.

A higher use of agency staff, reduced occupancy rates and increased labor costs were key contributors to financial challenges, authors said.

“The financial pressures faced by nursing homes leave them with limited options,” the authors said. “Although there may be ways for nursing homes to be more efficient, figuring out a sustainable long-term care financing system will be critical to achieving persistent solvency within the nursing home industry.”

While the question of financing long-term services is not a new policy challenge, the study confirmed the nursing home industry is financially unstable.

“If policy makers do not address the current funding challenges, access to high-quality nursing home care could be severely restricted,” the authors concluded.