March 2025: Nursing Home Financial Viability and the Impact of the COVID-19 Pandemic
During the pandemic, many businesses were hit hard, but the nursing home industry was particularly effected because of declining occupancy rates and shortages of direct care workers. Now that the pandemic is over, the higher cost of labor has lead the nursing home industry to argue that current Medicare and Medicaid payment rates are not adequate. In contrast, some academic researchers have argued that nursing homes were profitable during the pandemic and do not need increases in payment rates.
In a study published in Health Affairs and a research brief published by the Scripps Gerontology Center, Dr. Bowblis worked with Drs. Applebaum and Brunt to study the financial performance of nursing homes just before and during the COVID-19 pandemic. One of the financial performance measures they examined was net income. Net income is defined as the total profit a nursing home made from caring for residents, donations, investments, operating a gift shop, and pandemic-related emergency funds provided by the government. Because these emergency funds were temporary, they also examined the net income of nursing homes excluding any pandemic-related emergency funding.
When pandemic-related emergency funds are included in net income calculations, they found that nursing homes were profitable in 2020 and 2021, and that this level profitability was generally higher than in 2018 and 2019. However, by 2022, the median nursing home in the nation and Ohio lost money. In calculations that excluded emergency funds, they found that nursing homes would have been unprofitable for all of they pandemic years they studied (2020-2023). They also conducted analysis which showed these results were present whether the nursing home did or did not use related party transactions. The implications of this research is that nursing homes were only able to remain open during the pandemic because they received emergency funding from the government. Without these emergency funds, nursing homes could have closed. Because the government is no longer providing pandemic-related emergency funds to nursing homes, without increases in Medicare and/or Medicaid payment rates, many nursing homes may find it is not financially viable to remain open.
The references to the research brief and article are:
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Bowblis JR, Brunt CS, Applebaum R. 2025. Understanding the Financial Performance of Ohio’s Nursing Homes During and After the COVID-19 Pandemic. Oxford, OH: Scripps Gerontology Center. Miami University. (Available here).
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Brunt CS, Bowblis JR, Applebaum R. 2024. Loss of Public Health Emergency Funds Challenges the Financial Viability of Nursing Homes, Especially Not-for-Profit Facilities. Health Affairs 43(11): 1578-1586. (Available here).
December 2024: Consumer Satisfaction and Nursing Home Star Ratings
For over a decade and half, the Centers for Medicare and Medicaid Services (CMS) has reported star ratings for nursing homes. In theory, these star ratings can be used by consumers to help them select a nursing home. CMS' star ratings reflect compliance with federal regulations, staffing, and quality of care. However, most individuals in nursing homes are there because they require long-term care and the nursing home is their home. For these long-stay residents, the star ratings may not reflect what is most important to them, which is the quality of life they have within the nursing home.
A paper published in Journal of the American Medical Directors Association examined the association of CMS' star ratings and consumer satisfaction scores using data from Ohio. The study found that consumer satisfaction scores are imperfectly related to CMS star ratings. In other words, there can be nursing homes that have high consumer satisfaction scores and low star ratings as well as nursing homes with low consumer satisfaction and high star ratings. The implications of this is research is CMS' star ratings do not fully capture aspects of nursing home care that are important for consumers, hindering their ability to make informed choices.
The reference for the article is: Kwon JH, Bowblis JR. 2024. Association Between Nursing Home Five-Star Ratings and Consumer Satisfaction. Journal of the American Medical Directors Association 25(12): 105322.
A copy of the article is available at the journal’s website.
March 2024: Agency Staff Use in Nursing Homes
The COVID-19 pandemic disrupted labor markets, including the nursing home industry. Between 2020 and 2021, an estimated 8.4% of the nursing home workforce left the industry. In response, many nursing homes needed to rely on temporary staffing agencies.
In a paper published in Health Affairs, Dr. Bowblis and colleagues examined the trends in agency staff utilization in U.S. nursing homes from 2018 to 2022. They found that the proportion of nursing homes using any agency staff increased from about 20% to over 50%, that the proportion of direct care nursing hours being filled by agency staff increased 7-fold, and a greater share of nursing homes used agency staff every day. The economics of using agency staff suggest that nursing homes would have preferred to use directly employed nursing staff. The hourly cost of agency staff increased at a slightly faster rate than direct care nursing staff, and had an average hourly cost that was at least 40 to 50% higher per hour. The trends in agency staff utilization point to the continued challenges long-term care providers face in caring for older Americans.
The reference for the article is: Bowblis JR, Brunt CS, Xu H, Applebaum R, Grabowski D. 2024. Nursing Homes Increasingly Rely on Staffing Agencies for Direct Care Nursing. Health Affairs 43(3): 327-335
A copy of the article is available at the journal’s website.
April 2023: Measuring Quality of Life in Nursing Homes
The Centers for Medicare and Medicaid Services (CMS) has publicly reported nursing home quality using its Five-Star Quality Rating System for over a decade. Currently, the quality measures reported by CMS focus on quality of care and nursing home process (e.g., nursing staff levels). There is currently no quality of life measures reported by CMS despite the fact that many long-stay residents may place significant value on the quality of life a nursing home provides.
In a published paper in the Journal of the American Medical Directors Association, Dr. Bowblis and colleagues examined potential measures of quality of life that are currently collected by CMS as part of their oversight of nursing homes. These potential measures included data collected from resident assessments and deficiency citations associated with quality of life. These potential measures were compared to validated quality of life measures collected from surveys of residents in Minnesota and Ohio. The key finding of the paper is these potential measures correlate poorly with validated measures of quality of life obtained from resident surveys. If CMS wants to incorporate a meaningful measure of quality of life into the Five-Star Quality Rating System, existing data tools may not be adequate.
The reference for the article is: Shippee TP, Parikh RR, Duan Y, Bowblis JR, Woodhouse M, Lewis T. 2023. Measuring Nursing Home Qualify of Life: Validated Measures are Poorly Correlated with Proxies from MDS and Quality of Life Deficiency Citations. Journal of the American Medical Directors Association 24(5): 718-722.e4
A copy of the article is available at the journal’s website.
December 2022: Methodological Considerations in Classifying Nursing Homes Based on Resident Composition
In various academic studies, outcomes for individual patients are not available. Therefore researchers rely on classifying facilities based on the composition of the patients the facility serves. This is particularly true when studying racial/ethnic disparities. For example, to statistically identify racial/ethnic disparities, researchers may calculate the proportion of Black patients and then use an arbitrary proportion as a threshold to classify the facility as serving a high-proportion of Black patients. They then compare facilities serving a high-proportion of Black patients to all other facilities. The validity of this analysis depends on the threshold used by the researcher to classify facilities.
In a published paper in Medical Care Research and Review, Dr. Bowblis and colleagues examined different methodologies to identify nursing homes with different resident compositions. They examined different thresholds to define "high-proportion": first, based on the percentile threshold used to define “high-proportion”; and second, whether that percentile threshold is state-specific or national. The key findings of the paper are the specific threshold used should primarily be determined by the objective of the study and whether the analysis will be adjusted for other resident and facility factors. The paper also describes the advantages and disadvantages of using each of threshold.
The reference for the article is: Bowblis JR, Akosionu O, Ng W, Shippee T. 2023. Identifying Nursing Homes with Diverse Racial and Ethnic Compositions: The Importance of Geographic Heterogeneity and Geographic Context. Medical Care Research & Review 80(2): 175-186.
A copy of the article is available at the journal’s website.
April 2022: The Economics of a Hypothetical Nursing Home Staffing Regulation: "Expected" Staffing Levels
The Centers for Medicare and Medicaid Services (CMS) reported a staffing star rating on the Nursing Home Compare website. Between 2011 and March of 2018, this staffing star rating was adjusted for resident acuity using the Staff Time Measurement (STM) studies conducted by CMS in the 1990s. In technical documentation, CMS referred to this adjustment factor as an "expected" staffing level. In 2020, some nursing advocates suggested that CMS should require nursing homes to staff to these "expected" staffing levels. This is despite the fact that the STM studies conducted by CMS were not designed for and did not assess the adequacy of nursing staff.
In a published paper in Innovation in Aging, Dr. Bowblis examined what would happen if CMS considered these "expected" or STM staffing levels as a hypothetical requirement. The key findings were nursing homes and nursing home regulators did not consider "expected" staffing levels a relevant benchmark. Moreover, if CMS adopted the "expected" staffing levels as a requirement, it would be economically infeasible for most nursing homes to staff to this hypothetical benchmark. Without additional funding, the majority of the nursing home industry would become insolvent.
The reference to the article is: Bowblis JR. 2022. The Need for an Economically Feasible Nursing Home Staffing Benchmark: Evaluating an Acuity-Based Nursing Staff Benchmark. Innovation in Aging 6(4): 1-11.
A copy of the article is available at: The Need for an Economically Feasible Nursing Home Staffing Regulation