Almighty dollar! U.S. nursing homes send vulnerable residents packing

In the United States, thousands of vulnerable elderly nursing home residents have been evicted and left either wandering in the street or having to settle in homeless shelters, where the risk of contracting the coronavirus is high and much-needed care for them is absent.

A shocking revelation, made by The New York Times in June, has cast a dark shadow over the nursing home business.

As a surging number of COVID-19 cases has overwhelmed hospitals and nursing homes became one of the chief destinations for coronavirus-stricken patients, many nursing home residents have been cleared out to make way for them.

But apart from the urgent need to house the fast-growing COVID-19 patients, the NYT report noted that these evictions could also be driven by financial incentives.

Nursing homes, commonly seen as shelters for old people only, are technically reserved for patients of all ages. Taking in patients recovering from surgery or acute illnesses, for example, makes up much of their business. But since the different types of insurance programs used to pay for patients' stays have an effect on the revenue they bring in, nursing homes have long had the incentive to classify residents by how profitable they are.

On the one hand, patients going through post-surgery rehabilitation and expected to pay through Medicare, a federal program for the elderly and the disabled, are likely to find their stays more welcomed. On the other hand, those committed to long-term residence using Medicaid, the other public option that covers the poor, may nevertheless become expendable should the facility decide to make room for the former group.

What contributes to this unspoken prejudicial policy is the much higher rate of reimbursement nursing homes receive from Medicare than Medicaid. A study last year found that on average Medicaid paid nursing homes $214 a day per resident, while the average Medicare reimbursement was $523 a day.

The COVID-19 pandemic has further reinforced nursing homes' preference for Medicare payers. Last year, the Medicare formula for reimbursing nursing homes was altered, and taking in sicker patients for a short period of time has become more profitable.

While nursing home providers have struggled financially due to a shrinking share of patients who need to stay for brief rehabilitation stints, a phenomenon caused by the suspension of non-essential surgeries, having the clearance to receive COVID-19 patients has virtually reshaped the balance sheet.

With coronavirus cases soaring throughout the country, nursing homes have been expecting the inflated admission of patients who fit the more profitable type. By admitting someone infected by COVID-19 who has Medicare, they can make $600 more per day than by having a Medicaid beneficiary as a resident.

The motivation to generate more profits led to the eviction of those contributing less to nursing homes' financial gains. Employees and doctors of some nursing facilities told the Times that they believed the reason for the recent evictions indeed had a financial layer. Others confirmed that making room for COVID-19 patients was the objective.

According to 26 ombudsmen from across the country who spoke to the Times, at least 6,400 nursing home residents had been involuntarily discharged during the pandemic, with many sent to homeless shelters.

Follow the money

For years, the business that relies on federal money has been chasing after where government incentives lead. Taking in COVID-19 patients isn't just about making the extra bucks from each Medicare payer. It is also about the cash incentive nursing homes receive from government at both state and federal levels.

California's Department of Social Services offered up to $1,000 a day for nursing facilities to admit those who tested positive for the coronavirus. In Michigan, the state provided $5,000 per bed upfront to facilities planning to remodel themselves into COVID-19 "hubs." Across the country, nursing homes have been the recipient of several hundred thousand dollars from the U.S. Department of Health and Human Services for coronavirus relief.

But despite the cash infusion, nursing homeowners seem unmotivated to spend it on things that could have helped prevent the spread of the virus among staff and residents. Throughout the country, deficiencies of infection control and staffing shortage in nursing homes have been widely reported. Yet financially speaking, it is not in their interest to hire more registered nurses or improve the conditions of virus containment, even though studies suggest they have been crucial in minimizing COVID-19 casualties. Over the years, what has been attracting their monetary devotion is the offer of extra services through which they could charge more fees.

In the U.S., nursing homes have been the one institution where most COVID-19 deaths are recorded. Four in every 10 people who died from the disease had been residents or staff of nursing homes or assisted living facilities. That number has surpassed 100,000 since December.

Search Trends