Nursing Homes Are Getting Billions in COVID Aid — Where Is It Going?

A survey of nursing homes published in August by the American Health Care Association/National Center for Assisted Living found that 55 percent of facilities across the country were operating at a loss. Nearly three-quarters of industry respondents said they would not be able to sustain their operations for another year at the current pace.

At smaller nursing facilities and nonprofit operations, federal dollars have helped keep the lights on. Nursing home occupancy is down almost 30 percent since February at the Eliza Bryant Village nursing home and senior care community in Cleveland, says Marc Rubinstein, the chief financial officer. The nonprofit has received more than $1 million through federal and state support this year. But revenue is down between $150,000 and $200,000 per month. And costs have skyrocketed, Rubinstein says, rattling off personal protective equipment (PPE), supplies for outdoor visitation and tablets and other communication devices as “the tip of the iceberg."

Janet Snipes, executive director of the 133-bed Holly Heights Care Center in Denver, says the roughly $800,000 her for-profit facility received through the Provider Relief Fund has been “so very helpful” in covering expenses like testing, PPE, staffing, new filtration systems, air purifiers and more.

And federal funds have also blunted COVID-19's impact at larger for-profit operations. Genesis HealthCare, one of the country's largest health care and skilled nursing operators, estimates that the pandemic reduced the company's earnings by nearly $60 million in July, August and September — even though it received roughly $64 million in federal and state aid during the third quarter alone. Genesis received more than $250 million in relief grants and government support between April and September, according to its latest earnings report. “The business is still burning cash,” CEO George Hager Jr. said during a November earnings call with reporters.

The industry has pointed to steep losses as evidence that more money is needed to keep facilities afloat through the winter. Mike Cheek, senior vice president of reimbursement policy at American Health Care Association/National Center for Assisted Living, says his organization supports “reasonable efforts to ensure this federal aid has been properly directed to providers to cover COVID-related costs and potential losses.” But he says more funds will be needed to help nursing homes weather “a huge financial crisis, threatening access to long-term care for millions of seniors."

'There are just so many ways to hide this stuff'

But the aid packages to large for-profit operations have raised eyebrows among industry watchdogs. Brian Lee, executive director of the Families for Better Care advocacy group, points to Ensign Group, a publicly traded skilled nursing company that in August announced it was returning all $110 million it had received through the Provider Relief Fund. The organization enjoyed strong profitability during the second quarter of the year. “We know that there's a high degree of responsibility that accompanies government reimbursement,” CEO Barry Port said on an earnings call.

Despite the pandemic, Ensign's stock price has soared to record levels. Zacks Equity Research recently ranked Ensign an “incredible growth stock,” estimating its cash flow growth is up more than 18 percent over the year. “They're trading at the highest level they've ever traded at, in the middle of a pandemic in which they're supposed to be bleeding money,” Lee says, suggesting Ensign's success challenges the notion that for-profit homes are struggling — and raises the possibility that other companies on comfortable financial footing received government funds and opted to keep the money.

But many publicly traded nursing home companies saw their stock prices plummet in February and March and haven't rebounded. Yet the way nursing homes are structured makes it difficult to gauge how well or how poorly for-profits are doing financially. These facilities are often set up as small nursing companies owned by larger corporations. Those corporations may own a group of separate companies that hire nursing home staff or lease real estate, keeping the day-to-day nursing home operations separate from the rest of the organization. It's a structure that allows a parent company to potentially shield many assets if a nursing home is sued for negligence.

"These big companies all have separate property companies, management companies, staffing, therapy, financing,” says Charlene Harrington, a professor emeritus of sociology and nursing at the University of California in San Francisco. “If you're only looking at the operating company, you're not able to figure out what's happening with the money."

Industry watchdogs worry that some for-profit homes are funneling aid dollars into these separate companies rather than spending the money on residents’ care. Nursing home companies can put federal dollars toward paying rent to their parent company, for example.

If a parent company also happens to own or have a close relationship with a medical supply manufacturer — which is uncommon but not unheard of — it can effectively charge itself a premium for personal protective equipment, using federal aid to pay. “If you spent $1 million on PPE, that doesn't tell you how much PPE you bought. Was that bought at market rates? There are just so many ways to hide this stuff,” Wasserman says.

Staffing shortages persist despite aid packages

Despite the distribution of funds, staff shortages are still commonplace, contributing to the pandemic's spread within nursing homes. A recent AARP analysis of federal nursing home data found that more than 1 in 4 nursing homes across the country had a staff shortage in the four weeks ending Oct. 18. In South Dakota and Kansas, roughly half of facilities were short-staffed.

Research has connected staff shortages to increased risk of coronavirus infection, as employees assume more responsibilities and interact with more residents than they would at higher-staffed operations. Harrington conducted a study this year that found understaffed California nursing facilities were twice as likely to have coronavirus infections as nursing homes that were sufficiently staffed.

She says residents would be better served if government aid dollars were used to hire additional workers and registered nurses, or to bolster wages to make these positions more attractive. Many of the industry's roughly 700,000 certified nursing assistants make less than $15 an hour.

"The research is so strong that if you have more total staff and more registered nurses, that's the only factor that's really protective against the COVID virus,” Harrington says. “We're giving them all that money, but we don't require them to meet standards."

The nursing home industry has for years contended that facilities are understaffed in part because it is difficult to find qualified workers. Harrington contends the industry's recruiting struggles are partly self-inflicted by low wages, particularly at for-profit facilities. The median pay for nursing assistants in the U.S. is just under $30,000 annually, according to federal data. Registered nurses in nursing care facilities make a more comfortable $70,000, but they'd make considerably more in medical or surgical hospitals or outpatient care facilities.

"The shortages are caused because you could get a job as a janitor [instead],” Harrington says. “You won't need the training, and you might make more money than you would in a nursing home where you're exposed to COVID."