Workforce woes, nursing home closures pressure sustainability of long term care

Iley and Frank Petereit bought their burial plots two decades ago.

Frank likes to think of himself as a planner, so he has most everything worked out for when they eventually, in his words, “kick the can.” The now 92-year-olds have a gravestone at the site, already etched with everything but the year of their eventual deaths.

But Frank hasn’t planned for long term care.

The two have lived together in their southeastern Sioux Falls home for over 55 years — and they have no intention of moving.

“I think we’ll just stay here until they carry us out,” Frank joked. “It’s kind of comfortable here. If I lived somewhere else, there might be a lot of people I might not want to talk to.”

Three decades ago, the Petereits might not have had that choice — likely being sent to a nursing home when they reached a certain age. New technology and home health services are allowing more South Dakotans than ever to age in their homes.

But that trend is trouble for the long term care industry.

With more people aging at home and living longer, they need more care when many finally do enter assisted living and nursing homes, which requires more staff in an already difficult workforce landscape. And as the baby boomers near the end of their lives over the next 20 years, an increased demand in long term care services will further strain the industry.

“What’s been a crisis is really starting to become a catastrophe,” said Mark Deak, executive director of the South Dakota Health Care Association.

Nursing home closures pressure other long term care services

Many nursing home residents are dependent on Medicaid, the federal-state health insurance program for low-income people. While Gov. Kristi Noem has proposed to increase nursing homes’ Medicaid reimbursement rates by 21%, up to about 90% of the cost to care for Medicaid patients, more nursing homes are likely to close over the next few years even if the Legislature approves the increase this session, long term care experts say.

That’s because Medicaid reimbursement isn’t the sole issue. The workforce shortage and low occupancy rates also play a role.

Fifteen South Dakota nursing homes have closed over five years, and seven have closed in the last 12 months, according to Deak. There are still around 155 state-registered assisted living facilities and over 90 nursing homes in the state. There are also a number of retirement communities, companies offering home health services and community-based adult day services.

The rise in assisted living facilities over the last 30 years mitigates the loss of nursing homes.

It was the state’s plan to encourage investments in long term care options outside of nursing homes, said Kitty Kinsman, former secretary of the state Department of Health during the Mickelson and Janklow administrations. The state established a moratorium, or a limit, on nursing home beds to do so.

She said long term care has been a challenge for decades.

“As I’m sure you’ve heard, no one wants to go to a nursing home,” Kinsman said. “No one wants to end up there. To the extent that society and community have created living options for people to stay longer and be healthier in a social setting that continues to improve their quality of life, we should be doing that. It makes sense from a cost-wise to social standpoint.”

However, the state has seen a decrease in assisted living facilities over the past five years as well as nursing homes. Adult day services, which provide programming and supervision for aging and disabled adults during the day so they can continue to live in their homes, have decreased from 30 to three in the last seven years.

Enough beds, but not enough workers

According to a June 2022 report from the Bureau of Labor Statistics, nursing facilities have seen the largest drop in employment in the health care sector since before the coronavirus pandemic. While South Dakota assisted living and home health care have dropped by 37 and 41 workers since 2020, respectively, nursing facilities have lost roughly 1,030 workers.

That’s a problem as aging baby boomers require more long term care services. The U.S. Census Bureau estimates that more than 27% of the state’s population will be over age 60 in seven years — an increase of 38% from 2012.

Facilities have enough beds to accommodate the need, officials say, but not the staff.

Even though long term care facilities are already strapped for cash because of low Medicaid reimbursement rates, many have had to hire temporary staff and travel nurses to fill the immediate need, said Veronnica Smith, administrator of Countryside Living, a senior living community in Mitchell. Smith has worked in the long term care industry for three decades.

Countryside Living hired temporary staff to fill the equivalent of 2.5 full-time positions at $50 an hour for two months last year, which is more than twice the cost of traditional staff.

“Financially, that brought us down to a very small margin,” Smith said.

If long term care facilities can’t find staff to fill positions or can’t afford temporary staff, that impacts their ability to fill beds and forces them to shut down wings or reduce occupancy rates, said Tammy Hatting, chief operating officer with the South Dakota Association of Healthcare Organizations.

In March 2019, nursing homes in South Dakota operated at an average 84% occupancy rate. In December, they were at an average 77.66% — some around 50%, including nursing homes in Mitchell, Gettysburg, Winner, Eagle Butte and Sturgis. 

Oftentimes, people who go into nursing homes become Medicaid eligible as the cost of the care depletes their savings. In an average nursing home, more than half of the residents are on Medicaid, said Doug Ekeren, regional president and CEO of Avera Sacred Heart and Queen of Peace hospitals.

If nursing homes aren’t adequately reimbursed to make a profit and must close, that puts more pressure on the rest of the long term care industry, Ekeren said.

More people aging in their homes as nursing homes close

The demand for home services has never been greater. 

Avera@Home, the health care system’s home health services program, serves over 1,000 patients with another 500 or so through personal care services, said Sandy Dieleman, president and CEO of Avera@Home. Personal care services include cooking, cleaning, doing laundry and doing other household chores.

By comparison, Avera serves between 1,200 and 1,300 nursing home residents between its 21 facilities, Ekeren estimates.

The state Department of Human Services’ Dakota at Home program receives about 14,000 calls a year inquiring about services to help people age in place, according to the department. And according to a national survey, 88% of adults say they want to age in their home, Dieleman added.

But even as home health becomes a more popular option, it’s not the silver bullet to solve the state’s long term care issues, because of South Dakota’s geography and rural nature.

It isn’t cost effective for home health nurses to drive an hour to visit one patient in rural South Dakota when they can see several more in the same timeframe in an urban setting, Smith said. That underscores the state’s need for independent living and retirement communities in the coming years.

“Our smaller, rural communities are not going to have the ability they’re used to of staying in their own community as they age,” Smith said. “If you live in Tripp, you might have to travel to Sioux Falls or Rapid City to get services you need.”

Finding workers and seeking further Medicaid reimbursement

Recruiting people into the long term care workforce is one of the biggest challenges the industry must tackle.

Organizations are hoping to “widen the pool” of potential candidates, Hatting said, by reaching out to high school students, luring retirees back into the workplace and searching outside of the state. The South Dakota Association of Healthcare Organizations has extended a social media workforce recruitment campaign across the country.

Avera has hired nurses from outside the United States to fill open positions, Ekeren said. The health care system is also using its internal travel nursing agency to temporarily fill positions.

“This is a way for us to still retain them and provide them with new opportunities and challenges and help other locations where they need assistance,” Ekeren said. “I think that is positive and has significantly lowered costs for travelers outside of Avera.”

Sanford and the Good Samaritan Society are also hiring nurses internationally to staff hospitals, nursing homes and other long term care facilities. The integrated companies hope virtual care will serve as a solution as well, expanding access for South Dakotans by making it easier to make doctor appointments without travel and by freeing up nursing home staff to focus on bedside care while virtual nurses handle paperwork and records.

The health care system is also using benefits, flexible scheduling and professional training to entice potential employees, said Nate Schema, Good Samaritan Society president and CEO, in an emailed statement.

Meanwhile, the industry is waiting to see what the Legislature does with Gov. Noem’s proposal to raise Medicaid reimbursement rates. Because of inflation, bumping Medicaid reimbursements to 90 percent of the cost of care is actually more like 84 percent, Deak said. 

Ekeren said the increased reimbursement rate would “buy us some time as we work with the state to figure this out.”