Spending big on staffing agencies, nursing homes wonder how long they can hold on
May 29—A worker shortage in nursing homes is pushing some facilities to spend big on staffing agencies, imperiling their operations.
"It's creating a severe cash crunch for us," said Tom Argue, administrator of the small Webster at Rye nursing home.
The shortage of nursing home staff isn't new. A trend that started well before the pandemic has accelerated in the past two years. Longtime staffers are retiring or burning out of the care industry.
Potential new hires are turned off by some combination of continued COVID-19 fear, bad associations with nursing homes after the devastating toll they suffered from the pandemic in 2020, and the pay that has remained lower than in many other lines of work, even retail and hospitality.
And some workers — former and potential new staffers — are sidelined from the workforce by their own care obligations for children or their own aging family members.
Across the country, the American Health Care Association, a trade group for nursing homes, estimates 400,000 people have left the long-term care industry since the pandemic began. But the number of people who need care from a skilled nursing facility is not going down.
So facilities are turning to health care staffing agencies to bring in nurses and licensed nursing assistants to take care of their residents. Agencies are a kind of middleman that recruit health care professionals, usually for temporary assignments, sometimes local, sometimes all over the country.
Agency nurses are typically classified as independent contractors, meaning they often don't get benefits such as employer-sponsored health insurance. But nurses and other medical professionals who work for staffing agencies typically are paid higher rates than regular employees of a hospital, nursing home or other health care provider — and the agency gets a cut too.
On the other end of the equation are nursing home administrators like Argue, trying to figure out how to pay those rates and maintain sufficient staffing to care for his residents.
Argue said that from 2019 to 2021, his facility has tripled its annual spending on staffing agencies — from just over $100,000 before the pandemic, to more than $300,000 last year.
This year promises to be even worse, Argue said. Since September 2021, he said, the facility has spent more than $700,000, averaging more than $100,000 per month and climbing fast.
In April, Argue said, Webster at Rye had to spend $172,000 on agency staff.
"We need people," Argue said. "It's like every industry — there's not enough people right now."
But Argue said reducing staff size is not an option. Low staffing levels have been linked to poorer health and safety for residents. If a nursing home does not have enough staff to take on new residents, that can push the nursing home deeper into financial loss.
Unsustainable spending
The profit margins of nursing homes have never been fat, particularly for those facilities that accept patients with Medicaid, the health insurance program for poor and disabled people run jointly by states and the federal government. Medicaid reimbursement rates are set by state policy. Nursing homes can't just bill the state to make up for the cost of agency staff.
County nursing homes, including the Sullivan County nursing home, are having to hire more agency staff too, said Ted Purdy, the Sullivan County home's administrator. Before the pandemic, he estimated about 10% to 15% of his staff came from agencies. That's now up to 20%, or one in five.
Purdy said the Sullivan County commissioners see how difficult it has become to hire — and he said he's hoping the county budget will include more money for nursing home staff.
Brendan Williams, president of the New Hampshire Health Care Association, the state chapter of the nursing home trade group, said too many nursing homes are spending unsustainable amounts of money on staffing agencies — which could spell danger for the industry.
Citing an analysis by accountancy group CliftonLarsonAllen LLP, Williams said 55% of New Hampshire nursing homes — more than half — were projected to have margins in 2022 below negative 7.5% — meaning those nursing homes are making less than the cost of providing care, and losing money at a rate that puts them at financial risk.
In 2019, Williams said, just 16% of nursing homes in the state were losing money at that rate — though less than half of New Hampshire nursing homes turned a profit that year.
Williams said he worried the staffing agencies are charging unfair rates — a concern echoed by almost 200 members of Congress in a January letter to the White House COVID-19 coordinator, asking for federal agencies to figure out if health care staffing agencies were price-gouging.
Suspended training
The pandemic put a kink in the workforce pipeline too, Argue said. Licensed nursing assistants or LNAs, the lifeblood of many nursing homes, go through training courses that involve some hands-on work — which, if it was happening in a real nursing home and not in a classroom, had to be suspended during the worst of the pandemic.
Some nursing homes, including the Webster at Rye, used to be able to reliably produce their own staff through on-site training. But with that training put on hold to keep the number of outsiders at a minimum, Argue said he has not been able to train his own staff lately.
Even training staff on-site isn't a guarantee.
Williams said some agencies have hired trained staffers away from nursing facilities and are essentially "leasing" them back to the same facilities at a higher rate.
While the higher pay from an agency might be a draw, Purdy, of the Sullivan County Nursing Home, said for people who need more stability in their hours and benefits like health insurance, being a contractor for a staffing agency isn't a great tradeoff.
"People see the grass isn't always greener on the other side," Purdy said.
