Biden to Seek Minimum Staffing Levels for Nursing Homes

Skilled nursing facility operators struggling to maintain margins as they cope with increased costs—especially labor costs, due to a shortage of nurses—soon may get hit with a federal minimum staffing requirement that could raise the cost of running the nation’s 15,500 nursing homes by as much as $10B per year.

The Biden Administration is preparing to impose minimum staffing requirements on nursing homes next year, the Washington Post reported this week.

Health and Human Services Secretary Xavier Becerra told the newspaper the Administration is acting in response to the catastrophic impact of the pandemic on nursing homes—an estimated 160,000 nursing home residents died from COVID-19, as well as 2,700 staff members.

Becerra did not indicate which minimum staffing level will be enacted, but the Administration is expected to follow recommendations made in a 2001 report produced by the Centers for Medicare and Medicaid Services, the agency that regulates the nursing home industry.

The agency recommended in the 2001 report that nursing homes should deliver at least 4.1 hours of nursing care to every resident each day, the equivalent of one nurse for every seven residents on day and evening shifts.

Several attempts have been made to impose the recommendation—most recently in 2016 under the Obama Administration—but each time a fierce lobbying effort by the industry beat them back.

According to the Government Accountability Office, only about a third of the nursing homes in the US were meeting the 4.1-hour care threshold before the pandemic started. The shortage of nurses—which existed before the pandemic and deepened during it as many nurses joined The Great Resignation—has probably lowered that number.

The American Health Care Association, which represents the nursing home industry, estimates that a 4.1-hour care mandate would require up to 187K new workers, costing an estimated $10B per year. The group says that such a mandate would be “unworkable” due to the national shortage of nurses and nursing assistants.

The imposition of minimum care standards at skilled nursing facilities could put many operators out of business, Edward Pan, a Colliers first vice president who specializes in senior housing, told GlobeSt.

“Imposing a minimum staffing requirement will drive many operators out of business as the business is already running at a fragile margin,” Pan said. “Operators must recognize and adopt what could be coming in the near future and decide if they want to continue fighting the uphill battle or close their doors entirely.”

Pan added that residents at skilled nursing facilities do not have uniform care needs, so operators need the flexibility to adjust those levels. “It’s difficult to set a standard to impose minimum staffing requirements, as each resident requires a different level of care depending on their acuity level,” he said.

Despite steadily rising occupancy rates, margins in 2022 have been shrinking for operators of skilled nursing facilities. Inflation and a shortage of skilled labor have caused a surge in operating costs that is squeezing NOI margins at senior living facilities, GlobeSt. reported.

Some operators have seen their margins cut in half by rising labor costs, a few have seen them shrink to a near-breakeven point. Rent increases and rising care fees remain the remedies of choice for dealing with rising operating costs.

According to Pan, skilled nursing facilities are highly management intensive, with much higher overhead expenses than a traditional assisted living facility

“An operator running at approximately 15% margin was already considered very successful in the industry pre-COVID,” he told GlobeSt. “Now, many skilled nursing facilities operators are suffering. The situation is not improving, especially with inflation and staffing shortage.”

By citing the grim death statistics in skilled nursing facilities in the early days of the pandemic, Becerra is implying that better staffing might have resulted in fewer COVID-19 deaths in nursing homes. This ignores the fact that the grimmest outcomes at nursing homes were the result of decisions made by public officials and could not have been prevented by staff at facilities.

Decisions like then-Gov. Andrew Cuomo’s March 2020 directive to New York’s nursing homes, prohibiting them from sending residents sick with COVID to hospitals.

With residents and staff forced to stay in close quarters with infected seniors, skilled nursing facilities located near the epicenter of NY’s outbreak–the counties just north of NYC–saw cases expand exponentially at their facilities, which house New York’s most vulnerable residents.