More help vital for Minnesota's nursing homes

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

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When a nursing home closure is done conscientiously, the staff's duties continue long after the grim news is announced. RiverView Memory Care in Crookston, Minn., serves as a recent example.

On March 17, its leaders told the public it would close its doors due to the labor shortage and other financial challenges. At the time, it had 17 residents. As their families find new care facilities, RiverView staffers — when requested— accompany residents during the move, help them unpack and make the new place feel familiar before bidding farewell.

The extra help settling in is touching but also illustrates an alarming reality. This is not an ordinary business closure. It's one that often uproots frail residents and forces families to scramble to find care elsewhere in an era where waiting lists are all too common. It also leaves communities without a major employer.

These facilities are now facing an existential threat from financial headwinds, and Minnesota lawmakers need to take heed and act swiftly. Specifically, a robust short-term aid package this session should be a priority to help these facilities weather post-pandemic staffing challenges and inflation. Also in order: scrutiny of whether the state's pioneering 2015 nursing home reimbursement reform needs refining.

Solutions like this wouldn't only benefit nursing homes, residents and families. They can also help avoid a harmful ripple effect throughout all of health care. Lack of nursing home capacity has already prevented the discharge of hospital patients who don't need this level of care but still require expert assistance. This has bottled up Minnesota hospital capacity, affecting patients and these facilities' bottom lines.

"I don't know of a nursing home in our state that isn't in trouble; it's just the degree of trouble they're in,'' Carrie Michalski, RiverView Health's president and CEO, told an editorial writer.

Underscoring Michalski's concerns: Another nursing home closure came in mid-April just down the road from her facility. A letter from Pioneer Memorial Care Center, a 44-bed facility in Erskine, announced it would close in June, saying operations are not financially viable.

Legislators must take the lead on this because the state sets the rates for those who receive nursing home care. Many residents rely on public dollars to pay for their care. Minnesota is also one of two states that limit facilities from charging higher rates to residents who pay privately, a longstanding rule that also merits serious scrutiny.

This rule, known as rate equalization, prevents nursing homes from cost-shifting to cover any public program losses, something that's standard in other parts of the health care system. The result is that nursing homes have less flexibility when faced with bottom-line pressures.

There are 343 Medicaid-certified nursing homes in Minnesota, with 24,600 active beds. The state's nursing home industry reports that 17 facilities have closed since 2020. The Long-Term Care Imperative also notes that closures don't tell the whole story about capacity. Facilities staying open have reduced beds or put them on "layaway," typically due to staffing woes. This has reduced capacity by 2,597 beds since 2020, the "equivalent of 50 average-sized nursing homes," the trade group said.

The industry's struggles aren't being ignored at the State Capitol, with Republicans commendably advocating for more aid. But the DFL majority and Gov. Tim Walz's administration contend that the 2015 payment reform — known as "Value Based Reimbursement," or VBR — will automatically build in higher expenses. Officials said the "statutory forecasted increase" will provide $847 million over the next four years. It's important to note that this sum also includes federal dollars, so the state investment isn't as high as it may seem.

The DFL majority also argues that substantial investments in long-term care are also needed for other elder care, such as for aging-at-home services, and that state investments in child care will help ease the nursing home industry's workforce woes. The DFL intends to make historic investments in these other critical areas.

But the industry has compelling rebuttals. It notes the delay of almost two years before VBR increases catch up to nursing home costs, with the lag time potentially causing closures. Facilities in many cases have already exhausted lines of credit and other options, the Long-Term Care Imperative's Patti Cullen and Kari Thurlow recently told the Star Tribune Editorial Board.

We'll also add that the current system may cap VBR reimbursement for a substantial cost — traveling nurses, an expensive but necessary staffing option during a severe labor shortage. That's a significant flaw in the argument that VBR increases will eventually make facilities whole.

The industry clearly needs a healthy dose of short-term assistance this session. Providing it would be a high-profile way for DFLers to support small towns and rural communities. To sound a Walz campaign theme, this is a "One Minnesota" issue.

It's also imperative that legislators drill down into what improvements the VBR system needs and whether rate equalization is beneficial. An interim expert commission should report back in 2024 on these complex but essential questions.

Editorial Board members are David Banks, Jill Burcum, Scott Gillespie, Denise Johnson, Patricia Lopez, John Rash and D.J. Tice. Star Tribune Opinion staff members Maggie Kelly and Elena Neuzil also contribute, and Star Tribune CEO and Publisher Steve Grove serves as an adviser to the board.