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VIEWPOINT: Overcoming a Historic Funding Failure for Nursing Homes

By Kimberly Townsend

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As a business leader, can you think of something your business needs to keep its doors open that has increased in price since 2008? Have you increased prices for your products and/or services since 2008? 

At the start of 2023, the New York State Medicaid program was paying for care for 75 percent of the residents in our nursing homes — but at rates based on costs in 2008. In 15 years, the Medicaid rate for long-term care only increased by 1 percent. In that same timeframe, costs grew by 42 percent in pre-inflationary dollars. New York State entered 2023 with the lowest nursing home Medicaid rate in the country relative to revenue and expenses. 

For Loretto, which serves 10,000 individuals each year, 72 percent of residents are supported by Medicaid — that translates to a shortfall of over $100 per person per day, or a $7 million shortfall each year. 

New York State recently passed a budget touted to be historical in nature, with “substantial Medicaid reimbursement rate increases” that will assist in “creating a stronger health care system.” Unfortunately, while the “up to 7.5 percent increase” is helpful, it simply isn’t enough — and the increase comes, in part, by using funds previously appropriated to help facilities meet the minimum staffing ratios that were put in effect in 2021, in the middle of a workforce crisis.

Nursing homes in New York state have reached a critical point after 15 years of underfunding — and the trickle-down effect has significant implications for every New Yorker, not just the elderly.

• Staffing shortages — As Gov. Kathy Hochul is aware, the health-care industry is in a state of crisis. She declared a health-care staffing emergency in October 2021. In addition to the national shortage of health-care workers, nursing homes are not able to compete for a quality workforce due to their financial hardship. If nursing homes do not have the staff members necessary to care for individuals, they need to maintain a lower occupancy, which translates to beds sitting empty, and lost revenue (and care in the community).

• Unaccessible health care — Many nursing homes in Central New York, including members of the Long Term Care Council of Central New York (LTCEC of CNY), which represents a total of 4,664 skilled nursing beds are, for the first time in their history, leaving beds vacant. Statewide over 6,700 beds are empty and unavailable because there are not enough employees to provide care. Unavailable nursing-home beds have a direct impact on hospital capacity — when hospitals cannot discharge patients who need skilled-nursing care, there are fewer hospital beds and longer wait times for patients who truly need hospital care.

According to McKnight’s 2023 Outlook Survey — answered by nearly 1,000 nursing-home owners across the country, C-suite leaders, administrators, and nurse supervisors — Medicaid/Medicare reimbursement and staffing were among the top three non-COVID-related challenges heading into 2023. Notably, according to NIC Map Vision data, occupancy of free-standing, skilled-nursing facilities has not yet reached pre-COVID levels. 

Some nursing homes have reached a breaking point — since 2014, a total of 86 New York nursing homes have closed, sold, or consolidated, unable to keep up financially. Of those 86, nearly 20 percent have closed, sold, or have been listed for sale since the start of the COVID-19 pandemic. Those that remain are anticipating changes in 2023 — according to McKnight’s 2023 Outlook Survey, 40 percent of skilled-nursing owners, executives, and administrators expect they will sell some or all of their nursing-home holdings this year.

To meet the needs of older adults now, LeadingAge NY estimates the Medicaid nursing-home reimbursement rate needs to increase by 20 percent — which is less than half the increase in costs we have absorbed over the past 15 years. Looking ahead, there are other opportunities we have to ensure our older adults are getting the best care.

By 2034, the number of adults 65 years of age and older will be greater than the number of children under 18 years of age for the first time ever. In an effort to ensure every American has the support needed to age with dignity and financial security, U.S. Sen. Kirsten Gillibrand (D–N.Y.), a member of the Special Committee on Aging, has shared a five-point “Master Plan on Aging,” — affordable and healthy meals, affordable health care and prescription drugs, Social Security benefits and financial security, access to home or community-based care to age in place, and access to aging-friendly spaces and employment. Initiatives like this are essential as we look toward the future in Central New York and beyond.

Whether you are a fellow executive in the long-term care industry or a business leader who wants to see better health care for yourself and your employees, I hope you’ll join me in doing something truly historic — advocating for adequate funding to care for the people of Central New York — our employees, our parents, our grandparents, and our families. Let’s reach out to our state legislators, who have the ability to change this funding crisis, to share our concerns and the need to increase funding. You can also find more information about how to advocate for change on the Loretto website’s homepage.

As Senator Gillibrand said, “When you look at how a society cares for its older adults, it gives you insight into its values.” Let’s make sure our values in Central New York are represented as we search for solutions to caring for our aging population.        


Kimberly Townsend, Ph.D., is president and CEO of Loretto and author of “Lifecircle Leadership” and “Lessons in Lifecircle Leadership.” More information about Townsend is available at DrKimberlyTownsend.com and LorettoCNY.org.