Faced with labor shortages and rising costs, many long-term care facilities are closing

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In the 66 sunny miles between Tucson and Nogales on the Arizona-Mexico border, there is only one place capable of providing the intensive, convenient care that so many patients need after they are discharged from the hospital: Santa Rita Nursing and Rehabilitation Center.

But ever since the COVID-19 pandemic hit, providing that kind of care has been an uphill battle, Amy Malkin, the facility’s chief operating officer, told ABC News. Since March 2020, Santa Rita has faced a staff exodus as dozens of employees have fallen ill, burned out, or left to care for children or other family members.

Now, as inflation has taken a toll on employee travel costs, that exodus has only intensified, Malkin told ABC News.

To fill vacancies, the facility has had to rely on recruitment agencies that charge several times more per worker than they previously paid, while insurers’ reimbursement rates have remained virtually fixed.

As a result, Santa Rita is “losing money every month,” Malkin told ABC News, forcing the facility into a vicious cycle of cost-cutting that prevents it from hiring badly needed staff.

“We’re not making a profit anymore,” Malkin told ABC News. “It’s just not sustainable.”

Result: For months, Santa Rita was forced to turn away patients, leaving them to travel miles to find the care they needed.

Santa Rita is among hundreds of long-term care facilities nationwide — from large chains to family-run operations — fighting for survival. Many are forced to close their doors, while others have to turn away patients to survive.

According to the American Health Care Association and National Center for Assisted Living (AHCA/NCAL), which represents more than 14,000 long-term care facilities, more than 75% of operators had to limit admissions in 2021. And more than 300 retirement homes have closed since the start of the pandemic.

Officials say hundreds more facilities are set to close this year — and if the federal government’s emergency COVID-19 funding expires in July, advocates say, the situation will only get worse.

The AHCA/NCAL calls the current staffing shortages “historic”. The long-term care industry as a whole was already dealing with shortages of millions of workers before the pandemic, according to PHI National, a nonprofit research organization. And according to the Service Employees International Union (SEIU), more than 400,000 workers – almost 10% of the workforce – left the long-term care sector between March 2020 and January 2022.

“It won’t be long before the system is overwhelmed,” April Verrett, president of 2015 SEIU, which represents more than 400,000 workers in California, told ABC News. “We are run out of time.”

The human face of shortages

For Fernanda Carley, staffing shortages aren’t just an abstract number.

Carley, who was born and raised in Nogales, is a certified nursing assistant at Arroyo Gardens, Santa Rita’s sister facility. She has long aspired to be a caregiver; at 16, Carley was already taking courses in medical terminology.

But the pandemic has tested that call — and the past few months have only pushed Carley further to the brink. As spring turns to summer, her electric bill goes up and gas costs her more than $150 a week. To pay her bills, she had to pick up scrambles while washing cars.

During that time, she’s seen countless co-workers leave for less strenuous, safer, and better-paying jobs at retailers like Amazon, Walmart, and Target.

“I’ve been thinking a lot about my life,” she told ABC News. In the coming months, she plans to quit her job and return to nursing school.

If and when that happens, “hopefully more great caregivers will be hired,” Carley said.

But, she said, “at this point, I don’t see an end to the pandemic or inflation — and I don’t think either is helping the situation. I don’t know. when people would be ready to work in this industry anymore.”

The high cost of shortages

Like Santa Rita, many long-term care providers are battling labor shortages by relying on staffing agencies to fill their vacancies.

“Provider organizations have few options to ensure they have the necessary staff,” said Colleen Knudsen, spokeswoman for LeadingAge, an association of nonprofit aging service providers.

But this approach has its own consequences. Labor is the largest line item for long-term facilities, accounting for about 70% of expenses, AHCA/NCAL spokeswoman Christina Crawford said in a statement. And agencies are charging two to three times more than pre-pandemic staff rates, according to AHCA/NCAL.

For many installations, these costs are completely unaffordable.

Aria Healthcare, which operates three facilities in Wisconsin, simply won’t hire agency providers. By their calculations, in order to fully staff an agency provider unit, they would have to keep more beds completely full of patients all day, every day, than is possible based on the number of admissions that they receive.

“The math just doesn’t work,” Aneillo Lindsay, chief innovation officer at Aria, told ABC News.

Similar patterns are unfolding across the country.

In Florida, the use of placement agencies by long-term care facilities has increased by nearly 300%, according to the Florida Health Care Association. The facilities have seen a $275 million per year increase in personnel costs resulting from overtime pay, contract labor and other costs associated with hiring additional in-house staff, Kristen said. FHCA spokesperson Knapp told ABC News.

And yet, the median salary for certified practical nurses in 2020 was $14.82 per hour, according to the Bureau of Labor Statistics.

Robert Oronia, a certified practical nurse in Los Angeles, says that’s not enough. And while Oronia says some of her colleagues have seen increases after switching to agency work, those increases often come at the expense of benefits.

Slightly higher wages, in the absence of benefits, are still “unlivable,” Oronia told ABC News.

“It’s just a vicious, vicious cycle going on now,” he said. “People are starting to get fed up, they don’t want to do this job.”

Forced closures

All of these financial constraints have weighed on facilities across the country. Some, like Aria in Wisconsin, remained open at reduced capacity. During the pandemic, Aria was forced to leave more than 100 beds empty at her facility, Lindsay told ABC News.

Others have been forced to close completely.

According to a recent AHA/NCAL report, the more than 300 nursing homes that closed during the pandemic displaced nearly 13,000 patients.

400 additional facilities are expected to close in 2022.

“Ultimately, these economic and staffing challenges translate into limited access to care for our nation’s seniors,” Crawford, with AHCA/NCAL, told ABC News.

The situation will likely get worse when Medicare reimbursement rates drop when the public health emergency declaration by the Department of Health and Human Services expires. The declaration of emergency is due to expire on July 15.

The resulting 5% funding loss would put another third of long-term care facilities at risk of closing, according to a recent audit by CliftonLarsonAllen, a financial advisory firm. That could leave as many as 417,000 patients and families scrambling to find the care they need.

“The financial pressures are just too great,” said Malkin, in Arizona. “Places will close…places will definitely close.”

But so far, Santa Rita and Arroyo Gardens are weathering the storm, Malkin told ABC News.

“For now,” she said.

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