In the Philadelphia region and nationally, the coronavirus pandemic has sharply reduced the number of nursing home residents, both because so many elderly have died and because families are warier than ever of placing loved ones in the facilities.
This dramatic drop has plunged the industry into an era of uncertainty over its future.
Even before the pandemic, Medicare and Medicaid, which pay for the majority of nursing home care, were pushing more care into the patients’ homes to save money, but the pandemic is expected to hasten the reshaping of the industry, as some locations close and others get smaller or specialize.
The need for nursing homes will never disappear entirely, physicians, nursing home executives, and analysts said last week, but it could take years for nursing-home usage to rebound.
Demand for beds will bounce back from COVID-19 lows, given the aging of the U.S. population, said Bill Kauffman, senior principal at the National Investment Center for Seniors Housing & Care, a nonprofit information service in Annapolis, Md. “The question is how much demand? That’s an unknown.”
Managers at the nonprofit Simpson House, a 155-year-old West Philadelphia retirement community, are convinced that the coronavirus has caused long-term damage to the nursing-home business. “Nursing homes today cannot survive as they have," said Carol McKinley, who in March became chief executive of Simpson Senior Services Inc., which owns Simpson House.
That’s one reason Simpson is dramatically reducing the size of its nursing home, from 142 beds to 60, enough to fulfill its obligations to serve the residents who live full-time at Simpson House under continuing-care contracts. Simpson also offers apartments for those who live independently and a unit that provides personal care for residents not sick enough to need nursing care.
Simpson, once known as the Methodist Episcopal Home for the Aged, has also cared for a large number of patients from the broader community, but its nursing-home occupancy rate fell from 95% in 2019 to 68% last month. Some of the decline came from discharging 21 patients to other nursing homes as part of the downsizing, which was also driven by rising costs.
“We had to make these decisions to ensure that a 155 year ministry continues to survive the next 155 years,” McKinley said.
The Philadelphia region is home to 234 nursing homes with nearly 23,000 residents. The industry is particularly important in Pennsylvania, which has one of the oldest populations in the nation.
Diane Menio, executive director of the Center for Advocacy for the Rights and Interests of the Elderly, a Philadelphia nonprofit, expects more nursing homes to do what Simpson is doing. "If you look at the census for facilities, they’re all down,” she said.
In Southeastern Pennsylvania, the average nursing home occupancy has fallen to 73% from mid-May May through Oct. 18, according to an Inquirer analysis of federal data. That is down sharply from an average of 90% pre-COVID.
In South Jersey, the occupancy rate has averaged 69% this year, down from 88% pre-COVID.
Nationally, nursing home occupancy drifted downward from 2015 through the middle of 2018 in part because of a push by federal regulators of payment models geared to avoiding nursing home stays after joint replacements, said Kauffman, of the National Investment Center.
The rate was stable until the arrival of the coronavirus when it fell 10.9 percentage points between February and August, reaching a new low of 73.8%.
It is too soon to know the extent of the financial fallout, but it’s expected to be significant. Two real estate investment firms that own some of the nursing-home properties operated by Genesis Healthcare Inc., a major nursing-home firm based in Kennett Square, recently wrote off more than $200 million in rent payments due in the future, fearing that Genesis won’t make them.
The nonprofit Abramson Senior Care recently sold its highly rated, but money-losing nursing home in Horsham because it wanted to focus on other services for the elderly, including home care.
Sidney Greenberger, chief executive of AristaCare Health Services, a Cranford, N.J., firm that owns six nursing homes in New Jersey and one in Pennsylvania, is not as pessimistic about the industry’s future as some others but still thinks it will take years to get back to previous occupancy levels.
Many long-term nursing home residents died of COVID-19. And many frail elderly people in the community — potential clients — died at home or in hospitals, Greenberger said. “We’re going to have to wait, from a long-term care perspective, until the Baby Boomers are come to need the care, he said.
Meanwhile, nursing homes are taking a financial hit from empty beds. Greenberger estimated that the 120-bed AristaCare at Cherry Hill is losing more than $2 million in annual revenue. AristaCare is terminating leases on seven Pennsylvania nursing homes because they were losing money even before COVID-19.
Germantown Home, a 180-bed facility, that historically operated at nearly full capacity, has been in the low 70% range since May. Now most of its new patients are there for short stays, rather than long-term care, but even short-term stays after hospitalizations aren’t as common as they were pre-COVID.
“Hospitals are not referring a high number of patients like they were in a pre-COVID environment,” said Pam Howard, administrator of the facility in Germantown . "Families and patients alike are choosing to go home to recuperate when it is feasible.”
Restrictions on visiting nursing homes are a big factor in such decisions, said Joshua Uy, a Penn Medicine geriatrician who is medical director of a West Philadelphia nursing home.
“When you don’t have visitors, people, especially if they are a very involved family, get very nervous about sending their loved one to a nursing home, and understandably so,” Uy said.
Still, there’s always going to be a need for nursing homes, Uy said.