May 22, 2018
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Why small, rural nursing homes are fighting for survival

Photo illustration by Eric Zelz | BDN
Photo illustration by Eric Zelz | BDN
By Richard A. Erb, Special to the BDN

Last spring, the Maine Legislature established the Commission to Study Long-term Care Facilities to address increasing concerns about the long-term viability of Maine’s nursing homes. The commission was directed to examine three critical areas: funding issues, staffing requirements and access issues — particularly in rural areas.

I served as a member of this commission, and in our work, it became apparent early that a decade of underfunding nursing homes had taken its toll. In the June 13 BDN article, “Empty beds, empty coffers: Why Maine’s rural nursing homes are facing an uncertain future,” reporter Jackie Farwell does a thorough and accurate job of exploring the issues and educating the public about the challenges facing our nursing homes today.

In addition to insufficient Medicaid reimbursement, high staffing standards and increased resident acuity, rural nursing homes also are hamstrung by their smaller size, reimbursement policies that do encourage small homes, and competition for resources from other local health care providers.

State policies make it very difficult for smaller facilities, many of which are located in rural areas of the state, to survive. Consider the following: The average nursing home in Maine cares for about 66 people compared with 110 nationally. Rural nursing homes are even smaller. For example, the Calais Nursing Home cared for 52 people. Oceanview Nursing Home in Lubec is licensed to care for 39 residents.

These smaller homes are absolutely the right size for the community and good for residents. Moreover, they are desired by families who are making the difficult decisions. They want to be able to visit their loved ones easily and know their caregivers. Being small definitely has its advantages, but a significant disadvantage is that it’s difficult to achieve cost effectiveness.

State Medicaid reimbursement policies encourage larger facilities with greater economies of scale. Policies reward these efficiencies and encourage high occupancy. As many know, there are pockets in the state where occupancy is down. This may be because of population trends or competition from other local health care providers.

Whatever the cause, when facilities have fewer beds filled, they incur financial penalties. There is no mechanism for financial relief and, over time, a low occupancy rate will likely lead to closure.

Smaller homes are more likely to be owned by sole proprietors or families versus being corporately owned, in which case the overhead costs can’t be spread to other homes. They also tend to be highly dependent on MaineCare. Statewide, nursing homes depend on MaineCare (Maine’s Medicaid program) for about 67 percent of their residents. Smaller independent homes often rely more heavily on MaineCare, some as high as 98 percent. These homes must try to keep costs down, often compete with other health care providers and have no private pay resources.

During the commission’s work, this question came up: If facilities are drowning, why don’t they just get out of the business? First, no one wants to close a nursing home. It’s antithetical to caregiving. But for those whose homes have been insufficiently funded over a long period of time or for those who would like to retire, it’s not a favorable market.

There are few buyers interested in operating a nursing home in a location proving to be unstable. Instead, bed rights are often purchased to finance construction or improvements elsewhere. Maine law mandates that new beds can only be “built” if the change is MaineCare neutral. The reality is that there is little financial incentive to purchase and operate rural nursing homes.

Critical access hospitals were developed in Maine to ensure rural areas had access to acute care. An important stabilizing factor is an enhanced Medicaid reimbursement rate. The commission discussed how those state policies might be applied to long-term care services. This will be one of several ideas that we analyze as the group continues to develop additional recommendations to preserve rural access to nursing homes.

When a nursing home closes, employees lose their jobs, and residents lose their home. People want to remain in the community where they have spent their lifetimes, and we should facilitate state policies that allow it to be so.

Richard A. Erb is president and chief executive officer of the Maine Health Care Association.


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