How Staffing and Funding Impact Nursing Home Quality

The way in which the United States finances, delivers, and regulates care in nursing home settings is unsustainable (NASEM 2022). Immediate action is necessary to correct decades of underinvestment and unaccountability. Advocates are heartened that the issue is receiving significant attention from the federal government and the general public, but disagreements remain over addressing the underlying issues.

As the Covid-19 pandemic recedes, nursing homes have emerged as one of its most battle-scarred survivors. But nursing homes are now faced with twin crises in staffing and finances. Decisive intervention is required. One-size-fits-all approaches get it wrong, and unfunded staffing mandates by the federal government threaten to worsen an already dire situation. Healthcare leaders are advocating for a more effective strategy.

Read on to learn more about the state of nursing home quality today and what can be done to improve it.

Holly Harmon is senior vice president of quality, regulatory & clinical services at the American Health Care Association / National Center for Assisted Living (AHCA/NCAL). In this role, she led the association’s quality initiative that identified national priority goals and developed tools and resources for providers to achieve these goals.

Harmon designed and launched AHCA/NCAL’s infection preventionist certificate program, which has trained over 4,000 individuals nationally. In addition, she coordinates the development of staff training modules in AHCA/NCAL’s online learning management system, which includes training of over 200,000 individuals as temporary nurse assistants during the pandemic. Harmon also led AHCA/NCAL’s advocacy and feedback to CMS and CDC on how clinical guidance needs to pay attention to the resident’s quality of life.

“Nursing homes have adjusted to a new norm post-pandemic and residents are enjoying many of the activities and experiences they enjoyed pre-Covid,” Harmon says. “Where the sector is still struggling is in the areas of workforce and financials.”

Nursing homes lost over 200,000 workers during the pandemic, suffering the worst impact of any healthcare sector (AHCA 2023). The nursing home workforce hasn’t been at these levels in nearly 30 years, and the macroeconomic conditions make recovery difficult. Nursing homes are adding roughly 3,700 monthly jobs, but it’s not nearly enough. As it stands, AHCA doesn’t expect workforce levels to recover until at least 2027.

“The nationwide labor crisis, coupled with high inflation and the end of Covid aid, is pushing a lot of nursing homes to the brink,” Harmon says.

Nursing home workers earn significantly less income than if they choose to work in another care setting. The NASEM report found that the annual mean wage for registered nurses (RNs) in nursing homes is approximately 10 percent less than it is in acute-care hospitals, and certified nursing assistants (CNAs) may earn only a little more than workers in other entry-level jobs, such as cashier, food service worker, and warehouse worker.

“Many nursing homes have had to either limit the number of residents they can serve or close altogether because they can’t find staff,” Harmon says. “Patients ready to be discharged from hospitals are waiting days, weeks, or months for a place at a skilled nursing facility, which is creating significant backlogs and a ripple effect on the entire health care system.”

Nursing homes are also experiencing a financial crunch. Approximately 62 percent of nursing home residents rely on Medicaid, and Medicaid only reimburses around 86 percent of actual nursing home costs (AHCA 2023). Simultaneously, the cost of nursing home goods and services is up 8.5 percent due to inflation. Over half of nursing homes may be unable to continue operations for more than a year.

“The economic and workforce crises go hand in hand,” Harmon says. “Due to chronic Medicaid underfunding and soaring inflation, providers are struggling to compete for workers. And when nursing homes can’t accept more residents because of a lack of staff, then they continue to struggle financially. This, in turn, leads to access to care issues.”

The Covid-19 pandemic brought major attention to the crises endured by our nation’s nursing homes. The Biden Administration has made improving nursing home quality part of its agenda. But a proposed federal staffing mandate, in its current form, would do more harm than good.

“A federal staffing mandate that would be impossible to meet given the current labor market,” Harmon says. “We’ve already seen roughly 500 nursing homes close over the course of the pandemic. If an unfunded staffing mandate moves forward, we expect to see many more.”

The Biden Administration is yet to offer a convincing explanation for how nursing homes are supposed to pay for the additional staff a mandate would require. The enforcement approach presented in an unfunded staffing mandate provides no new incentivization, nor any means of circumventing the sector’s core issues: nursing homes are still left with the loss of public health emergency funding, persistent Medicaid underfunding, a tight labor market, and inflationary pressure.

“We welcome oversight and accountability, but to enact meaningful change requires investing in our chronically underfunded sector, and a supportive, collaborative approach that encourages improvement,” Harmon says.

The argument against unfunded staffing mandates isn’t theoretical; it’s empirical. State staffing requirements in New York, Pennsylvania, and Illinois have failed to increase access to care. The Obama Administration came to the same conclusion in 2016: that a staffing mandate could result in unintended consequences and stifle innovation.

Harmon and her colleagues at AHCA are pushing for a more meaningful and considered approach via the Care for Our Seniors Act.

“We are advocating for meaningful action to prioritize seniors who deserve a robust, quality long-term care system,” Harmon says. “This means that policymakers must step up and implement supportive programs and resources that strengthen our workforce, improve the oversight system, and modernize our buildings. We cannot do it alone—we need help from all levels of government.”

This isn’t an issue that’s going away anytime soon. As the nation’s largest generation in history continues to age, nursing home quality and long-term care services will only grow more important. And even after the issues of staffing and finances are addressed, more battles are coming. Improved nursing home quality isn’t an end state; it’s a continued direction.

“Our elderly population is growing dramatically, and at the same time, their care needs are growing,” Harmon says. “There is an obvious desire for seniors to live at home as long as possible, but there will always be a need for nursing homes to provide around-the-clock care for those with complex conditions. We must strengthen the entire long-term care continuum, so that seniors receive the best care possible at every step of the journey.”