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Survey shows significant cost increase and financial hardship for nursing homes in response to COVID-19

According to a recent survey held by the American Health Care Association (AHCA), a majority (55%) of nursing homes are operating at a loss now (nearly 90% at a razor thin margin or loss) with 72% saying they won’t be able to sustain operations another year at the current pace.  This has been largely driven by the increase in costs responding to COVID-19 (personal protective equipment (PPE), additional staffing and testing) and Medicaid’s underfunding, which only covers 70 to 80% of the actual cost of care.  Below is a summary of the results of the survey of 463 U.S. nursing home providers, August 8-10.

U.S. Nursing Homes Facing Financial Crisis

• 55% of nursing homes are operating at a loss (89% operating a profit margin of 3% or less).

• Nearly 60% of funding for nursing homes comes from Medicaid (which only covers 70 to 80% of the actual cost of care).

• 72% of nursing homes said they won’t be able to sustain operations another year at the current pace (40% said less than six months).

COVID-19 Response Has Significantly Increased Costs with Sharp Drop in Revenue

• PPE supplies (90%), staff hero pay (78%) and additional staff (46%) are driving significant cost increases for nursing homes.

• Nursing homes say their top costs in continued response to COVID-19 include PPE supplies (95%), staffing (78%) and testing (74%).

Importance of Continued Government Support

• 96% have received some government funding (82% federal, 52% state).

• Nearly 60% will experience significant problems with increased costs and lost revenue when government funding ends.

• 93% said government funding is very important to helping with COVID-related costs and losses.

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