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The Federal Staffing Mandate: A Threat to Small Nursing Homes

Updated: Jul 29

The federal staffing mandate has been a topic of concern for small nursing homes in recent years. With requirements for increased staffing levels to ensure quality patient care, many smaller facilities are struggling to keep up. This article will discuss four reasons why the federal staffing mandate will eventually run most small nursing homes out of business, along with potential solutions and ways to mitigate the impact on these essential care providers.


time clock for federal mandate



1. Increased Staffing Costs


High Turnover Rates


One of the primary challenges small nursing homes face is the increased staffing costs brought on by the federal mandate. As seen in the reference articles, staff turnover rates are already high in the nursing home industry. According to a national study, the median annual turnover rate for nearly all U.S. nursing homes in 2017 and 2018 was 94 percent. Small nursing homes are particularly vulnerable to these high turnover rates, as they often struggle to offer competitive wages and benefits to attract and retain staff.



Wage Competition


As the demand for healthcare professionals continues to grow, small nursing homes are finding it increasingly difficult to compete with larger facilities, hospitals, and even non-healthcare organizations such as Amazon and McDonald's in terms of wages. Many nursing home staff members are leaving the industry for higher-paying jobs, exacerbating the staffing shortage and increasing the financial burden on remaining facilities.



Staffing Agencies and Travel Nurses


To meet the federal staffing mandate, many small nursing homes must rely on staffing agencies and travel nurses, who typically work temporary assignments for higher pay. While these professionals can help fill staffing gaps, they often come at a significantly higher cost than permanent staff members. This increased expense can put a severe strain on the already limited budgets of small nursing homes, forcing them to make difficult decisions about the level of care they can provide.



2. Reduced Reimbursement Rates


Medicare and Medicaid


A significant portion of nursing home revenue comes from Medicare and Medicaid reimbursements. However, these reimbursement rates have not kept pace with the rising costs of providing care, particularly in the face of the federal staffing mandate. As a result, small nursing homes are finding it more challenging to cover their operational expenses, including the increased staffing costs necessary to meet the mandate's requirements.


a dollar bill with medicare embossed


Private Payers


In addition to Medicare and Medicaid, some nursing homes rely on private payers to cover a portion of their expenses. However, these private payers are also tightening their belts, offering lower reimbursement rates or shifting more of the financial burden onto patients and their families. This trend further limits the financial resources available to small nursing homes, making it even more difficult for them to meet the staffing mandate.




3. Operational Challenges


Limited Resources


Small nursing homes often have limited resources, both in terms of finances and administrative support. They may not have the same access to capital as larger facilities, making it more difficult for them to invest in staff recruitment, training, and retention efforts. Additionally, smaller facilities often have less administrative support, meaning that the burden of managing staffing and compliance with the federal mandate falls on already overworked administrators.



Staff Burnout


As the staffing mandate increases the pressure on small nursing homes to maintain adequate staffing levels, remaining staff members may be asked to work longer hours or additional shifts. This can lead to burnout, further exacerbating turnover rates and negatively impacting the quality of care provided. In fact, a survey of nurses in hospitals, long-term care facilities, and other healthcare settings found that roughly a third of nurses said they very likely will quit by the end of this year, primarily because of stress and burnout.



Regulatory Oversight


The federal staffing mandate comes with increased regulatory oversight, requiring nursing homes to demonstrate compliance with staffing requirements. This increased scrutiny can be particularly challenging for small nursing homes, who may struggle to allocate resources to tracking and reporting staffing levels. Failure to meet these requirements can result in fines and penalties, further straining the financial resources of small facilities.



4. Closure and Consolidation


Reduced Admissions and Closures


The staffing crisis in nursing homes is forcing many facilities to halt admissions or close completely. According to a poll by LeadingAge, over a third of its members are unable to admit new residents or serve new clients due to staffing challenges. Additionally, up to 40 percent of nursing home residents are living in facilities that are financially at risk of closure in 2022, according to Clifton Larson Allen, a wealth adviser for the long-term care industry. These closures disproportionately impact small nursing homes, as they lack the financial resources to weather the storm.



Industry Consolidation


As small nursing homes struggle to meet the federal staffing mandate and confront financial challenges, the industry is likely to see increased consolidation. Larger facilities and corporations may acquire struggling small nursing homes, resulting in a loss of local control and potentially reduced quality of care for residents. This consolidation can lead to less community-based care, as smaller nursing homes often have stronger ties to the communities they serve.



Potential Solutions and Mitigations


While the federal staffing mandate presents significant challenges for small nursing homes, there are potential solutions and ways to mitigate the impact on these essential care providers.



Improved Reimbursement Rates


One potential solution is to advocate for improved reimbursement rates from both government and private payers. By increasing reimbursement rates, nursing homes would have more financial resources to invest in staffing and meet the federal mandate's requirements.



Workforce Development Initiatives


Another possible solution is to invest in workforce development initiatives, such as training programs, mentorship opportunities, and career advancement pathways for nursing home staff. By providing these resources, small nursing homes can improve staff retention and reduce turnover rates.



Regulatory Flexibility


Finally, regulators could consider offering more flexibility to small nursing homes in meeting the staffing mandate's requirements. This could include providing additional time to achieve compliance or offering alternative staffing models that still ensure high-quality patient care.




Conclusion


The federal staffing mandate presents significant challenges for small nursing homes, with increased staffing costs, reduced reimbursement rates, operational challenges, and industry consolidation threatening their viability. However, by advocating for improved reimbursement rates, investing in workforce development initiatives, and seeking regulatory flexibility, small nursing homes may be able to continue providing essential care to their communities.



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