A necessary boost for nursing homes

Opinion editor's note: Editorials represent the opinions of the Star Tribune Editorial Board, which operates independently from the newsroom.

•••

The phrase "workforce shortage" doesn't do justice to the post-pandemic reality a Fergus Falls, Minn., nursing home faced.

Before COVID-19, PioneerCare had about 325 employees on its payroll. But at one point, as inflation took its toll and other businesses competed for employees, "We were down to 185 for a while. It was pretty scary," said CEO Nathan Johnson.

There's been a steady improvement, with staff back up to 235, but it's "nowhere near where we were when the pandemic started," Johnson told an editorial writer this week.

The problem is daunting. Without adequate staff, the facility can't admit residents. Limited residents means limited revenue — patients, not empty rooms, drive reimbursement. Which in turn makes it harder to recruit and retain staff, especially when other costs, like building expenses, remain fixed.

It's an ever-tightening spiral that many Minnesota nursing homes grappled with due to the pandemic and its economic aftershocks. Thankfully, the Minnesota Legislature — Republicans in particular — heeded urgent calls from industry and the Star Tribune Editorial Board for assistance to prevent further nursing home closures and reduced capacity.

In the session's waning days, legislators struck a much-needed deal to provide a $300 million rescue package of grants, a temporary rate boost and workforce incentive funds for the struggling industry. This is in addition to a $100 million loan fund passed earlier in the session.

The aid is part of a larger, historic investment this session totaling nearly $1 billion in care for older Minnesotans. In addition to nursing home assistance, legislators approved $412 million for programs that serve low-income seniors who need services at home or in their communities. That's a farsighted measure as the Baby Boom generation continues to age.

Still, nursing homes will continue to have a critical role in the care an aging population requires. The industry's ongoing financial and staffing challenges resulted in nursing home closures and reduced capacity, with closed beds making it difficult for hospitals across the state to discharge patients not requiring that level of care but still needing assistance nonetheless.

Despite the alarms sounded by the industry, the Editorial Board and other advocates, the aid package for nursing homes came down to the closing days at the Capitol. Republicans merit praise for their insistence on helping this industry, making aid a top priority in last-minute deal-making to pass a bonding bill with bipartisan support.

"Frankly, it couldn't wait until next year," said Sen. Jordan Rasmusson, R-Fergus Falls, who played a lead role in putting the aid package together.

The $300 million measure will help facilities provide hiring bonuses, boost compensation and pay down debt in uncharted post-pandemic economic conditions. According to state elder care trade groups and Minnesota Senate Republicans, the new Nursing Facility Grant program will provide each nursing home "at least $225,000." An "average 50-bed facility could see $465,000 in grant funding."

An 18-month temporary rate boost wielding state and federal money will give facilities an additional $12.35 "add-on" per resident per day. While that may not sound encouraging at first glance, PioneerCare's Johnson says it adds up when you do the math.

For example, PioneerCare has 105 licensed beds. Now multiply that by 365 days, and it's apparent how this temporary assistance will strengthen facilities' bottom lines. Johnson estimates it'll total $600,000-$700,000 over the program's 18-month-long span.

The aid package isn't a panacea, but it should help the industry weather the economic uncertainties in the pandemic's aftermath. The dollars are also a critical bridge given how nursing home reimbursement works in Minnesota.

Many nursing home residents here and elsewhere rely on public dollars to pay for their care. The state sets reimbursement rates. Minnesota's relatively new reimbursement system adjusts for higher costs but has a built-in lag time of almost two years before increases catch up to nursing home expenses. Unfortunately, many homes have already tapped or exhausted financial reserves. The grants and other aid passed this session will help during this lag time.

The Star Tribune Editorial Board has called for a task force to scrutinize and find lag time remedies as well as look at another related reimbursement issue: rate equalization. This policy limits nursing homes from charging more to residents paying with private funds. Minnesota is currently one of only two states with this policy, and it's time to evaluate it.

Legislators did commendably authorize a nursing home facility rate study, though it doesn't specifically focus on lag time or rate equalization. The study should address those questions in the report required to be submitted in January 2025.