Fans of TV medical dramas are familiar with the term “code blue” — when doctors and nurses frantically scramble to resuscitate a patient.
Today, Pennsylvania’s 700-plus skilled-nursing facilities need that same life-saving support as they have gone from the bedrock of our state’s long-term care continuum to a profession on life support. Yet, despite this grim script, few are scrambling to resuscitate a profession that every day cares for 80,000 of our frailest, sickest and most elderly loved ones.
Two new studies underscore this crisis facing Pennsylvania’s seniors and their providers of care.
One, from Avalere Health, a respected Washington, D.C., research company, revealed that operating margins for the commonwealth’s nursing homes have dropped 63 percent from 2007 to 2012 — to 1.2 percent from 3.2 percent. For centers with 75 percent or higher Medicaid populations, those margins fell 80 percent, to 0.3 percent, over the same period.
As a result, nursing centers are losing money, when adjusted for inflation, or returning margins so low that they can’t afford what they need to ensure quality care.
Skilled-nursing centers historically have the lowest margins among health-care companies, and that gap is widening. According to 2012 numbers, pharmaceutical companies reported average net margins of 25.8 percent; medical device companies, 19.6 percent; managed care plans, 5 percent; and hospitals, 4.5 percent.
Pennsylvania nursing-home margins are half of the national nursing-home margins.
Another study from Eljay LLC, a national leader in health-care consulting, showed that Pennsylvania reimburses nursing facilities an average of $26 a day less per resident on Medicaid than the true cost of care, meaning nursing homes today lose $9,500 annually for each Medicaid resident in their care. Two-thirds of all residents are in the Medicaid program. Unreimbursed Medicaid costs to these facilities will exceed $470 million this year alone.
Over the past three years, the commonwealth’s nursing homes have done all they can to reduce costs without impacting care. They’ve cut staff, reduced wages and benefits, renegotiated contracts, canceled renovations and delayed technological purchases that could enhance patient care. Some now have reached the point where they have no choice but to deny admission to seniors on Medicaid because they cannot afford to care for them.
The mission of all skilled-nursing centers is to provide the best care and best quality of life to their frail and elderly residents. Despite falling margins, Pennsylvania centers achieved major milestones this past year in their reduction of urinary tract infections, pressure ulcers, use of antipsychotic medication, resident pain and more.
Additionally, Pennsylvania centers have a lower average number of deficiencies than centers nationwide, and our centers rank second best for their very low number of serious deficiencies. But, because of low margins, nursing centers are forced to pay lower wages than other health-care providers, which leads to higher turnover. Staff recruitment and retention has a direct impact on the quality of care and residents’ quality of life.
Despite serious financial pressures on the state, Gov. Tom Corbett, in his budget proposal, made the elderly and disabled a priority, calling for increases in funding for seniors who receive care at home, in the community and in skilled-nursing centers. The General Assembly should fully support his plan, as should the Democratic candidate for governor.
But more must be done, especially for our most vulnerable residents. Legislators once again should fund a program they created last year to aid nursing centers that care for a higher-than-average percentage of residents on Medicaid so they can continue that care.
Pennsylvania skilled nursing centers already have reached a point where they’ve had to tell some of their staff, “We’re sorry, but we simply can’t afford to keep you.” Now, they’re at a point where they have no choice but to tell some seniors, “We’re sorry, but we simply can’t afford to admit you.”
Unless payments for senior care keep pace with cost increases facing all providers, the skilled nursing center profession is not going to be able to meet the needs of current residents — let alone the growing demand for care as baby boomers age.
Stuart H. Shapiro is president and CEO of the Pennsylvania Health Care Association.