WNY nursing home operators say industry is on the verge of collapse

WNY nursing home operators say industry is on the verge of collapse

Buffalo Next

The founders of Post Acute Partners, which operates the Elderwood chain of nursing homes, believe New York’s nursing home industry is on the brink of collapse.

“If we don’t do something soon, we’re looking at a crash,” is how Post Acute co-founder Dr. Jeffrey Rubin described it.

His business partner, Warren Cole, put it this way: “We’re living on vapor, and the vapor is evaporating.”

Rubin and Cole, the co-CEOs of Elderwood, which operates several nursing homes in Western New York, are among a broad group that includes facility owners, labor unions and politicians pushing Gov. Kathy Hochul and state officials to provide a 20{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} Medicaid rate increase for nursing homes in the fiscal year 2023-2024 budget.

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A couple visits with a nursing home resident at Elderwood Assisted Living in Tonawanda in this July 23, 2020, file photo. Elderwood is among the nursing home operators calling for a 20{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} Medicaid rate increase in the 2023-24 state budget.

While not 20{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b}, Hochul’s recently unveiled budget plan includes a proposed 5{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} Medicaid rate increase to hospitals, nursing homes and assisted living providers. 

Nursing home owners, however, are looking for more, arguing that years of flat Medicaid reimbursement rates have created a series of substantial shortfalls that can only be solved with a much larger boost that covers the actual cost of care.

That means they will keep pressuring state power brokers in advance of the state budget deadline of April 1. 

And there is much to consider.

LeadingAge New York, which represents nonprofit nursing homes, said it has been 15 years since the state’s nursing home Medicaid rates have been updated to reflect current operating costs.

The 2022-23 budget provided just a 1{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} Medicaid rate increase. Meanwhile, inflation soared.

That’s why Jim Clyne, CEO of LeadingAge New York, said Hochul’s proposed 5{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} rate increase is only a “first step.”

“After a decade and a half of no investment,” he said, “it’s really not going to solve the problem in the community, so we’re going to keep pushing for more.”

An operator’s perspective

Bob Mayer, president and CEO of the nonprofit Weinberg Campus in Amherst, said it gets more difficult every year to run a quality nursing home operation that is financially sustainable.

“Covid was the beginning of a significant challenge, and our biggest challenge is really staffing,” he said. “It’s finding people and being able to pay what people require today. It’s just very competitive.”

For example, Mayer said the average total pay per hour for a Weinberg certified nursing assistant is now $21.56. Ten years ago, it was $14.43.

The problem with that is the majority of Weinberg’s revenue comes from Medicaid, with rates dictated by the state that have long remained flat. For Weinberg, Mayer said the Medicaid reimbursement rate is currently $100 per day less than the cost to care for a resident, which translates to an annual reimbursement shortfall of $4.5 million.

“I think some facilities aren’t going to survive, and there will be less beds for people, which creates a huge problem for the health care system because the hospitals then get backed up,” he said.

A potential problem with all of this, of course, is that not every nursing home operator is Weinberg, which has the four-star, or above average, Rosa Coplon Living Center.

Some low-rated facilities have gotten quite skilled at taking taxpayer money and diverting it quietly into their own pockets via complicated related-party transactions while resident care suffers. State Attorney General Letitia James laid out this scheme in a detailed lawsuit in the fall against The Villages of Orleans Health and Rehabilitation in Albion.

So the question becomes: How does the state prevent any increase in Medicaid reimbursements from further lining the pockets of the bad actors?

That is why it’s important for the state to fully enforce two nursing home reforms that went into effect last year, said Grace Bogdanove, vice president for 1199SEIU’s Western New York nursing home division.

While the staffing law calls for the state’s more than 600 nursing homes to provide 3.5 hours of nursing care per resident per day, a minimum investment law requires a nursing home to spend at least 70{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} of its operating revenue on direct resident care, of which 40{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} must be on “resident-facing staffing.”

1199SEIU supports the 20{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} Medicaid rate increase request so operators can invest in resident care, staffing and infrastructure.

“The reform in the legislation is a crucial part of that,” Bogdanove said. “In order to ensure that the Medicaid reimbursement rates, if increased, are going where they ought to go, which is to workers, to the residents, to the buildings, then the 70/40 has to be enforced, three and a half hours of resident care per day needs to be enforced.”

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