Fixing Nursing Homes: A Fleeting Opportunity


The US long-term care system, particularly in skilled nursing facilities, has been exposed as deeply flawed, chronically underfunded, and in need of reform. The sector now faces the scrutiny of Congress, as well as policy makers and regulators in every state of the nation. We are in a historic moment, presenting both an immense challenge—and a huge opportunity—to improve outcomes and quality of life for more than a million nursing home residents and more than a million frontline workers who care for them every day. But this moment will not last.

In the coming weeks and months, advocates will push for a wide variety of reforms; most have merit. While policy makers are focused on the sector, it is crucial that advocates from all corners see beyond traditional silos, listen to each other, and compromise. Failure to do so will likely lead to simplistic, fatally flawed quick fixes, or the favoring of one remedy over another. A multifaceted solution is needed. Skilled nursing is complex. Both advocates and policy makers must therefore dispense with out-of-date assumptions, acknowledge our problems, and align the many players involved, if we’re to achieve what we truly desire for all Americans: a system that works.

The Problems We Have To Acknowledge

Society undervalues the work that is done in the skilled nursing setting. Frontline care givers often earn little more than minimum wage for extremely challenging and important work. This is also reflected in chronic underfunding of skilled nursing, a reality that underlies many of the more visible problems in nursing homes across the country.

Recent stories on the Nursing Home 5-Star Rating System make clear the need to strengthen the system so that the ratings are meaningful for consumers and not misleading. In addition, we don’t know what, or how, to measure for quality of life. Existing metrics, which largely focus on physical care needs and process, do very little to help us understand quality from a resident’s perspective. Frail elders have aspirations and wish to be engaged in their lives, even as they struggle with significant mobility issues or the challenges of cognitive illness. Metrics must hold operators accountable both for quality of care and quality of life.

Revenues and costs are hidden from view in many of our skilled nursing chains. Policy makers, regulators, and payers, both public and private, lack confidence that financials truly reflect profit margins. How can the industry expect increased funding without delivering transparency into where the money ends up going?

Skilled nursing is still stuck in the old fee-for-service curative health model in which nursing homes are incentivized to send long-stay residents to the hospital. That’s a perverse incentive. We should be incentivizing nursing homes to deliver person-centered, whole-person care, and to keep residents out of the hospital. We must also stop subsidizing shortfalls on the care of Medicaid residents with the profit margins on short-stay Medicare residents. Reimbursement currently drives what type of care is delivered, and in what setting. We have a siloed and uncoordinated maze as a result.

Our regulatory system often burdens the better providers with process paperwork that is unnecessary. The system regularly fails to help poorer performers to improve and is too slow to remove those unwilling or unable to improve.

Our nursing home infrastructure is old and out of date. Fifty-one percent of our nursing home facilities in metropolitan areas are more than 40 years of age. Seventy-two percent are 30 years of age or older. They’re functionally obsolete in that they weren’t built for the very frail, medically complex residents of today. They certainly weren’t built, as we have painfully learned, for infection prevention and control.

Research, such as this May 2020 AARP study, reveals that we are experiencing a collapse in the availability of traditionally unpaid family caregivers. In 2010, there were seven potential caregivers between the ages of 45 and 64, to every 80-plus year old likely to need care. By 2030, there will only be four. As life expectancies increase, and fewer of those in need have family to help them, demand for caregiving services will explode and the cost of such services will soar.

Nursing facility providers are bracing for COVID-19-related lawsuits. Those not driven out of business will be forced to factor these additional costs into their business models—increasing costs for everyone. Beyond skilled nursing and assisted living communities, trial lawyers will likely go after the dollars that are now flowing to alternative settings, such as home care and home health care companies, particularly as they grow in size.

Finally, in failing to find a political solution to Medicare and Medicaid reform, we have outsourced change to managed care companies. This may be the only feasible path at this time, but do we understand the goals, priorities, and incentives of these companies and are they truly aligned with improved quality-of-life outcomes? 

Simplistic Solutions We Must Avoid

We are prone to favor obviously necessary but simplistic solutions. These quick fixes, even when they have the potential (in a coordinated strategy) to be effective, are insufficient if not interlinked with other necessary solutions. We need a comprehensive, and coordinated, set of reforms that are designed to work together.

More funding is necessary, but we should not assume that pouring money into a broken, flawed system will produce quality outcomes. We must critically reexamine the underlying assumptions upon which too many poor decisions are founded and invest with prudence.

We must address consistently poor performers, either to improve them or to actually get them out of the business, and we must prevent gaming of the system. But there’s no evidence that simply ratcheting up the degree of regulation and enforcement will lead to better outcomes.

 

We do need increased transparency and accountability. This will help address a major credibility issue for providers, whose claims that their overall margins are too thin to allow additional investment in staff ring hollow without evidence. Government payers are right to demand visibility to ensure dollars go directly to services, rather than into corporate coffers. However, transparency without liability reform or relief from lawsuits has led to closures as well as prohibitively high costs in the past. We must accept that we can only demand transparency when we provide some protection.

Some argue that it is time to abolish the institutional setting of skilled nursing facilities and move completely to a system of home and community-based services (HCBS). However, whether for reasons of physical frailty, cognitive issues, lack of a family, or lack of a home, there will always be those who will need 24-hour care in an appropriate setting. Of course, HCBS is preferable for those who don’t need 24-hour care. For growing numbers, however—including those with moderate to severe dementia—home-based care is not only problematic but dangerous. This argument also risks providing policy makers an easy way out when funds are scarce, particularly at the state level.

It is not realistic to assume that if less money is spent on institutional settings, enough money would consequently become available to meet the long-term services and supports needs that already exist. A surge in demand for HCBS would require significant additional investment to create an infrastructure that presently does not exist.

Another simplistic solution would be to get rid of private investment in, and for-profit ownership of, nursing homes. This view ignores the fact that private investors have stepped in as government and not-for-profit operators have sought to exit the market as they found they were unable to stop losing money. 

Some see an opportunity to shift postacute, rehab, short-stay patients out of the nursing home setting, either to inpatient rehab facilities or to home with home health care and skilled nursing at-home supports. However, until we have a new financing and care model for the long-term care population, simply removing short-stay residents will compound already acute funding and staffing problems for the mostly Medicaid population.

Solutions We Should Consider

There are no simple solutions. A complex multipronged problem requires a comprehensive solution, not a finger in the dike approach. Real solutions avoid creating unintended consequences and more severe problems in other areas. What follows are ideas that, taken together, comprise a practical approach that is more likely to succeed.

Tie Funding To Improved Wages And Accountability

Tie increased funding to improved wages, benefits, and training for frontline staff and addressing gaps in infection prevention and registered nurse coverage. This investment must be paired with meaningful transparency and accountability across providers’ ownership structures and finances. Care workers comprise the fastest-growing labor force in the US today. They also have some of the highest turnover rates in the country. Growing their wages will help to reduce turnover and thereby improve care. 

Liability Relief

Couple transparency with some degree of liability relief for providers so that increased transparency does not simply invite frivolous lawsuits seeking settlements mandated by insurers regardless of the merits of claims. Otherwise, financial disclosures will only lead to dollars going into the pockets of plaintiffs’ attorneys, defense attorneys, and liability insurance companies. Owners with a track record of poor quality should be prohibited from ownership in additional properties.

Regulatory Overhaul

Change the regulatory and oversight framework to allow freedom for staff decision making and creativity—particularly if we are serious about encouraging resident-driven, whole-person care and a focus on quality of life for the resident. Regulators must shift from punishment focused on failure to follow process to effective accountability for value-based, outcomes-driven care. This overhaul must address measures of resident well-being along with quality of care and include resident and staff satisfaction measures. The framework must incentivize improvement while efficiently removing chronic bad performers. 

Tech Investment

Use funding and regulation to encourage investment in digital technology, and drive improvements in areas such as communication, care delivery on site, and resident engagement. The Centers for Medicare and Medicaid Services added more than 60 telehealth services, for example, that will continue to be covered beyond the public health emergency. This means that nursing homes in rural areas can continue to offer emergency department visits, therapy, and critical care services. We need to provide access and reimbursement beyond the pandemic for primary care and chronic disease management.

Creative Incentives

Apply creative incentives, such as buyback programs, to help the industry close functionally obsolete buildings, convert multiple occupancy rooms to single occupancy, and enact numerous infrastructure improvements to meet the needs of today’s long-term care residents.

Household And Neighborhood Models

Use regulation and funding to promote household or neighborhood models that use consistent staffing and even universal staffing. As we have seen in studies of the Green House model during the pandemic, these models perform better in both infection control and prevention, and resident/staff satisfaction.

Integrated Medicaid And Medicare Funding

To the maximum extent possible, integrate Medicaid and Medicare funding and care delivery for those that are dually eligible. We should focus on quality-of-life outcomes, chronic disease management, and palliative care versus the current curative care approach. Integration of relevant data and data flows is also essential, together with encouraging an integrated, interdisciplinary care team approach driven by resident goals.

Working Together

Finally, and most importantly, every stakeholder must understand that this is a disruptive moment. Skilled nursing facilities and long-term care are, for a moment, center stage. Those of us who care about this sector, and the millions of Americans it serves, must seize this moment. We’ve got to be bold, and perhaps the boldest step is to work together, even with those we consider to be adversaries, whether that’s industry providers, organized labor, consumer advocates, investors, or regulators.

We’ve got to find common ground and yes, this will mean negotiating trade-offs and compromises. The alternative is a cacophony of competing voices again, that will make it easier for policy makers and legislators to tune us out, especially at the state level, to fund other priorities outside long-term care where there’s broad consensus and agreement. If we can work together, residents—and the frontline workers who care for them—will reap the rewards of this powerful, yet fleeting opportunity.

Author’s Note

The author is a member of the Ziegler Healthcare Advisory Board, Sentrics Advisory Board, and Edenbridge Health Advisory Board.

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