Richard Gamache was armed with a plan to save his nursing home this spring. The question was if he had enough time to put it into action.
Gamache, CEO of a nonprofit that operates Linn Health & Rehabilitation in East Providence, says the three-story, 73-bed facility on Alexander Avenue has been losing $100,000 a month since early 2023. And hampered by staffing shortages, rising operating costs and stagnant Medicaid reimbursement rates, the financial picture wasn’t improving.
The plan: Convert the second floor and its 42 beds into an affordable assisted-living unit specializing in memory and dementia care – a remodeling that would create 22 private studio apartments and a less-intense level of nursing care more in line with insurance reimbursement rates.
By Gamache’s initial calculations, that change might have been enough to keep the doors open, allow another 33 nursing home residents to remain in place on the second floor and save the jobs of more than 100 staff members.
“Right now is a scary time,” he acknowledged in early May as workers were putting the finishing touches on “The Lofts at Linn” – the moniker given to the assisted-living unit – as Linn administrators were waiting for state health officials to approve the conversion plan.
It turns out Gamache was right to feel anxiety.
By the last week of May, Linn could hold out no longer. The nursing home announced it was closing its doors, the latest of more than a half-dozen nursing homes that have shuttered in Rhode Island in the last four years.
“It’s crushing,” said Gamache, CEO of Aldersbridge Communities, which also operates a neighboring assisted-and-independent-living high-rise in East Providence that will remain open. “It’s very painful, especially knowing we’ve done everything we possibly can, and it hasn’t worked.”
But Linn’s effort to switch things up might be a path that other nursing homes will have to take in the near future.
Indeed, the financial situation across the industry is putting facilities under pressure to make drastic decisions, in some cases contemplating an overhaul of their traditional business models to survive at a time when the region’s elderly population is growing.
Changes are already underway at some nursing homes.
Scandinavian Home Inc., which does business as Scandinavian Communities, has already cut the number of beds at its nursing home on Broad Street in Cranston and is in the process of mapping out a redesign of the facility.
At other places, such as Linn, the changes are further along. While the nursing home is in the process of relocating all its patients before closing, Aldersbridge is still seeking permission to open The Lofts at Linn.
For still other facilities, the road ahead remains uncertain. Medical Homes of Rhode Island Inc., the owner of Briarcliffe Manor Skilled Nursing and Rehabilitation in Johnston, operates assisted-living properties, too, but earlier this year Medical Homes President Akshay K. Talwar wasn’t quite sure what the future would hold for Briarcliffe, where he serves as administrator.
“I have racked my brain to come up with a different idea, but I have not come up with a magic wand so far,” Talwar said in May.
The decision by state officials to increase Medicaid reimbursements in October has allayed some of the financial fears of Talwar and others.
Still, many believe the industry will undergo an evolution in part because of the money woes, but also because of how the aging – and their families – want to live out their years. It’s a change in attitude that, in some cases, may lead to a transition to models that provide forms of a “continuum of care” in which residents move seamlessly from independent living to assisted living, skilled nursing and memory care services.
“The last nursing homes have been built,” Gamache said. “That model has failed. … It has grown obsolete.”
[caption id="attachment_470084" align="aligncenter" width="1024"]
FEELING AT HOME: Akshay Talwar, president of Medical Homes of Rhode Island Inc., which operates Briarcliffe Manor Skilled Nursing and Rehabilitation in Johnston, stands in a community room at the nursing home.
PBN PHOTO/ELIZABETH GRAHAM[/caption]
ON THE BRINK
John Gage can’t remember a time when nursing homes were ever flourishing. But when he started in the industry more than 30 years ago, the situation was much more stable than it is now.
“In the past, we’ve said the sky’s going to fall and it didn’t,” said Gage, CEO and president of the Rhode Island Health Care Association, an industry advocate that represents more than 60 nonprofit nursing homes. “Now it’s happening and it’s happening routinely.”
He points to the statistics: Around 1990, there were 113 nursing homes operating in Rhode Island, Gage says. Now there are 79, including Linn, which is on track to fully close in July.
And the pace of closures has picked up in the wake of the COVID-19 pandemic, when the virus ripped through facilities, preying upon aging, vulnerable residents, leaving hundreds dead.
Nursing facilities were locked down, staff fled from burnout and families were reluctant to place loved ones. Making matters worse now is that COVID-19 relief subsidies have evaporated.
Since the pandemic, seven homes have closed, displacing about 150 residents. Another three facilities have gone into receivership while others have been sold.
There are several more teetering on the brink, observers say.
The General Assembly recently approved legislation to create a 13-member advisory board to keep state leaders informed about the conditions of Rhode Island’s nursing homes.
Other government agencies have taken note of the situation. In May, a Federal Reserve Bank of Boston report outlining the state of nursing homes in New England found that the rate of closures is higher in this region than anywhere else in the U.S., with the number of homes declining 15% since 2010 even as the share of the population over the age of 75 has climbed to 7.9% from 6.9% in the same period.
Most observers place much of the blame on low reimbursement rates from Medicaid and Medicare, combined with difficulty recruiting and retaining staff.
Industry estimates show state Medicaid pays an average of $275 a day per nursing home patient, while daily costs per Medicaid patient range from $350 to $400, or greater depending on how high staffing ratios are.
Linn, where 80% of nursing home patients relied on Medicaid, received $255 per day for a Medicaid recipient while its average cost was about $411, according to Gamache.
Now state leaders are planning the first rate increase in more than a decade. The fiscal 2025 state budget contains allocations that would increase reimbursement rates by 14.5% in October, a hike based on the 40th percentile of nursing home expenses in 2022.
To help bridge the gap between July – when the next fiscal year begins – and October, the budget also includes $10 million in State Fiscal Recovery Funds for nursing homes, 80% of which must go to direct-care workers.
Gage acknowledges this marks a dramatic increase in reimbursement rates and is a welcome change, though it’s the first time the state has followed its own requirements.
“Obviously, more would be better,” Gage said. “But at some point, you need to be realistic that money is never flowing in this industry.”
A TEARDOWN?
Thoughts of the future weigh heavily on Talwar.
Briarcliffe Manor Skilled Nursing and Rehabilitation in Johnston lost $1 million in 2023. Talwar says he’s been able to prop up his nursing home with revenues from his three other assisted-living properties, and the coming Medicaid reimbursement hike has given him hope he can keep the nursing home open.
But a crisis is never far off.
He recently hired consultants to guide him on how he should navigate the financial situation. One recommendation: Close the nursing home, tear down the building and use the real estate for independent-living units, which would rely on out-of-pocket payments from elderly residents instead of government reimbursements.
But Talwar struggles with making that decision. Of the 122 residents at Briarcliffe Manor, around 118 are on Medicaid or Medicare, Talwar says. That means those people wouldn’t be able to afford to move into Briarcliffe’s assisted-living facilities, The Preserve at Briarcliffe and Briarcliffe Gardens & Cottage, which offers memory care.
“The [nursing home] residents that I’m serving right now are not going to disappear,” Talwar said.
Plenty of other nursing home owners face similar dilemmas as they look to the months and years ahead, observers say.
James Nyberg, executive director of LeadingAge Rhode Island, another industry organization that represents about 15 nursing homes, recalls attending a national conference last year where about one-quarter of the breakout sessions were about shifting to different care models or getting out of the business altogether.
“The future is a big question for a lot of nursing homes,” Nyberg said.
For most right now, the answer to survival appears to be either downsizing or converting to assisted living. Or both.
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TRANSFORMING: The Cranston nursing home operated by Scandinavian Home Inc. has downsized by 50 beds and a redesign of the facility is in the works.
PBN PHOTO/MICHAEL SALERNO[/caption]
In Cranston, Scandinavian Rehabilitation & Skilled Nursing recently relocated 38 of its residents as its license for 50 of its 74 beds was put “on hold.”
“The challenges of managing around the wholly inadequate Medicaid reimbursement rate forced us to consider [downsizing] for a number of months before we first discussed it with the R.I. Department of Health in February,” Colette Silverman, Scandinavian Communities executive director, said in an email.
The remaining 24 beds will be dedicated to short-term rehabilitation and respite care. Meanwhile, Scandinavian’s assisted-living facility “continues to thrive, as has been the case all along,” Silverman said.
Architects are working on a new redesign of the nursing home, but Scandinavian administrators aren’t saying what their plans are.
“This is a lengthy, detailed process, and we are taking great care to make certain it is done right,” Silverman said.
AGE IN PLACE
Also changing are the preferences of the elderly and their families.
The report from the Federal Reserve Bank of Boston notes that as the number of nursing homes in New England has declined, so have patient counts, sinking in Rhode Island to 6,738 from 8,027 – or about 16% – between 2010 and 2023. The report attributes that to improvements in the health of older adults and the desire for older people to “age in place” in their homes.
Marianne Raimondo, the dean of Rhode Island College’s School of Business and formerly the director of the college’s Health Care Administration program, says state and federal governments have been trying to provide alternatives to nursing home care where seniors stay in their communities to save costs, but officials haven’t invested enough into the effort.
There’s a lack of independent-living housing and access to things such as transportation, and families often have to rack up lots of out-of-pocket expenses for home care, she says.
“If we want to keep people in their home, in their community, then we have to provide resources [and] support to help people stay at home,” Raimondo said. “There’s not enough of that.”
Raimondo says her family took care of her mother at home for years until she broke several bones and started to suffer from dementia. When the family couldn’t care for her anymore, they placed her in an assisted-living facility, paying more than $6,000 a month, plus more for a 24-hour private-duty certified nursing assistant.
“If my parents had not saved their entire life, I could not provide her the quality of care,” Raimondo said. “They sacrificed. They saved.”
Age Friendly Rhode Island – a coalition of community and state agencies and health care service providers based at RIC – is trying to find viable alternatives that reflect changing preferences on aging.
The group cites the model used by the PACE Organization of Rhode Island, a Medicaid-funded nonprofit that offers long-term services and support so participants can remain in their homes and community settings.
Still, as people grow old, many will at some point need a nursing home.
“Sometimes, you don’t have a choice,” Raimondo said.
Joan Kwiatkowski, CEO of PACE-RI, agrees that there will always be a need for good nursing homes. But, she adds, nursing homes and other elder care providers also need to evolve with the times. The problem, she says, is that many of them are afraid to risk the revenue they’re generating now to make changes that would pay off in the future.
“Some providers have operated under really dated business models,” Kwiatkowski said. “It’s time for all of us as providers to take a second look at how we perform, how we behave, what are reasonable changes to our operational structure to better respond to the consumer and maybe get better outcomes.”
CONVERSION ISSUES
At the moment, Nyberg says, conversions to assisted-living models are usually the first choice among struggling nursing homes because much of the needed infrastructure is already in place.
At the same time, assisted-living residents tend to only need help with daily activities such as getting dressed and don’t need as much medical attention.
Often, a registered nurse is only required for eight-hour shifts, five days a week, representing significant cost savings. And regulations governing these facilities are less stringent.
But overhauling a nursing home still can be difficult.
Renovations and adjustments can be costly and there is limited funding available, especially for for-profit nursing homes that don’t qualify for grants, according to those in the industry.
Gamache says The Loft at Linn would cost about $500,000 to complete, and the nonprofit Aldersbridge has raised the money through grants and donations. It has also received a grant to retrain staff members to properly care for patients in the new unit.
Now the project is at a standstill.
Gamache says Aldersbridge submitted a license application for assisted-living memory care to RIDOH in March. But the process is taking far longer than expected.
Even if approved by the state, the application would go to the Centers for Medicare and Medicaid Services, and it’s unclear how long that could take.
Gamache would like to offer a “continuum of care” at the East Providence property, in which residents can move from independent living to assisted living at the high-rise, then into memory care if needed at The Loft at Linn, then onto a nursing home care at the same location.
Such a model is good for not only residents, who are able to transition from one level of care to another with little disruption, but it can be advantageous for the facilities because they’re paid differently based on different kinds of care, observers say.
Along those lines, a so-called Green House Model of nursing home design has gained traction nationwide in recent years – a model that implements small residential-style houses of 10 to 12 residents who have private rooms and operate alongside a “legacy” nursing home. Saint Elizabeth Home opened Green House homes in East Greenwich in 2017, the only example of this model in Rhode Island.
One way or another, Gamache says that with the nursing homes struggling – and closing, in many cases – their modes of operation and the way they’re funded will have to change soon.
“The system we have now is a failure,” he said. “It’s failing the people it’s designed to protect and care for.”