In 1993, nursing home owner Angelo Rotella paid $89 a day to care for the average patient at one of his homes. Today the cost is $100 per patient-day.
That annual increase of barely 1 percent is well below the inflation rate, which is a rarity in any health-care business today. But even while keeping costs in check, Rotella says his nursing homes — Berkshire Place in Providence and The Friendly Home in Woonsocket — are struggling financially.
Building a Strong Data Foundation in the Age of AI
Artificial intelligence (AI) has become a key priority in the boardroom and across management —…
Learn More
So what’s the problem?
“Reimbursement by the state and federal governments has not kept pace,” Rotella said. “We simply do not have enough money to do the job.”
He’s not alone. Eight of Rhode Island’s 105 nursing homes have filed for bankruptcy over the past two years. Two more have closed, another two have been taken over by the state and likely dozens more are losing money.
The problem is worse elsewhere. More than 1,600 nursing homes in the United States, or roughly 10 percent, are operating under bankruptcy protection, according to the Health Care Financing Administration, which oversees the federal Medicaid, Medicare and children’s health insurance programs.
A panel of state and federal officials, nursing home executives and patient advocates met April 19 at the Warwick office of U.S. Rep. James Langevin (D-RI) to discuss the plight of the state’s nursing homes. It quickly became clear that there would be not clear-cut solution to the industry’s problems.
One thing, however, became abundantly clear: “There isn’t a solution out there that doesn’t require more money,” Lt. Gov. Charles Fogarty said.
Nursing home executives say the industry is plagued by structural problems that require more than additional funding to rectify: an influx of older, sicker patients, burdensome federal regulations and the runaway cost of liability insurance.
But they say that funding remains the key issue and that state lawmakers have turned their back to the problem of reimbursement.
Much of the problem stems from sweeping health-care reimbursement reforms passed by Congress as part of the Balanced Budget Act of 1997. The revamped regulations changed the system of reimbursement for Medicare payments to nursing homes. The end result has been smaller Medicare reimbursements, which also are tougher to get.
Officials say it’s the cutbacks in Medicare funding — which pay higher reimbursement rates than Medicaid — that have eroded nursing homes’ profit margins. Nursing homes are forced to rely more heavily on the lower-paying Medicaid payments: As much as 80 percent of nursing home patient-days in Rhode Island are paid for by Medicaid.
“A lot of nursing homes had been living on that Medicare margin,” said Ron Preston, an administrator for HCFA. “Often that was determining whether a home was operating in the black or the red.”
Of course, the funding issue cannot be separated from the industry’s other major problem: a shortage of nurses. In Rhode Island, roughly 20 percent of certified nursing assistant jobs are vacant.
“It’s really not a shortage of workers but a shortage of quality jobs,” said Stan Israel of the New England Health Care Employee’s Union. “In nursing homes, you’re lucky if you can make a dollar more than you would flipping burgers. The state has to pony up the money so these people can make a living wage.”
Some state officials are looking to do just that. Fogarty earlier this month called on Rhode Island lawmakers to allocate $14.1 million to increase CNA salaries. The funding, if approved, would be matched by more than $16 million in federal funding.
Nursing home executives have said they’d welcome the proposed funding to increase wages. But many maintain that the state still needs to adjust the Medicaid reimbursement system.
“It’s no secret that the two biggest problems are staffing and reimbursement,” said Al Santos, executive vice president of the Rhode Island Health Care Association. “And those problems can be fixed by the people in this room,” Santos told the panel.
Langevin announced that he has co-sponsored legislation in Congress that would provide federal grants for nursing homes to implement programs to reduce nursing staff turnover and improve quality of care.
