US: up to 50% of nursing home providers may go out of business in wake of COVID-19

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Howard Gleckman, a Senior Contributor for Forbes and senior fellow at The Urban Institute with its Tax Policy Center and Program on Retirement, has warned the coronavirus pandemic will drive unprecedented change for the United States’ skilled nursing facilities (SNFs) and long-term care facilities.

You can read the full piece here.

With both business models already struggling to secure enough funding and average occupancy at 83% before COVID-19, Mr Gleckman says the exodus of residents and “exploding” costs will mean operators must change their care models.

“Many facilities will have to redesign interior space to maximise infection control,” he writes. “They may lose beds if they must close shared rooms. Labor costs, already under pressure, could increase substantially as facilities have to both increase staffing and raise pay. Increasingly, nursing aides are unwilling to do this difficult and now dangerous work at the current average wage of about $13/hr.”

Providers will also be under massive regulatory and consumer pressure to maximise infection control post-pandemic.

“So far, facilities have been doing that by effectively keeping residents in their rooms – no visitors, few activities, no community dining. The challenge: No one wants to live like that. And social isolation is itself dangerous. Facilities must find a way to strike a balance between safety and a comfortable, engaging, and social community. It will not be easy.”

Older people and their families will also be looking to stay at home.

“Unless they can fundamentally change the way they deliver care, facilities will have a hard time marketing around those attitudes.”

“These enormous pressures are likely to result in significant losses for facilities unable to adapt, and a massive ownership shakeout. Some analysts predict that as many half the current operators may go out of business, unable to find the capital they need to keep going. Industry analysts disagree on whether this will result in ownership consolidation or a net decline in beds – or both.”

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