No Innovation Without Compensation: SNFs Need Federal Support to Realize Biden’s Private Room Plans

Movement at the state and federal level has prompted an expedited shift to more private settings in nursing homes. While the trend isn’t entirely new for the industry, the push from government agencies to make it a compliance issue has garnered mixed reactions.

The Biden administration called for reduced room crowding in nursing homes in its reforms unveiled last week – in turn promoting single-occupancy rooms. The administration has yet to go into detail on how that initiative would be carried out.

States like Massachusetts have already mandated initiatives to de-densify nursing home rooms, with bed buyback programs offering some financial relief for operators that need to pay for renovations or new builds.

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While most residents prefer private rooms, current nursing home options involve shared rooms with one or more roommates, the White House stated. Shared rooms increase a resident’s risk of contracting COVID-19, among other infectious diseases.

“[The Centers for Medicare & Medicaid Services, or CMS] will explore ways to accelerate phasing out rooms with three or more residents and to promote single-occupancy rooms,” the White House stated.

Private rooms as infection control

SALMON Health and Retirement, which operates six senior living communities in Massachusetts, began converting its rooms during the first wave of COVID-19.

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CEO Matt Salmon said the group was prompted by the pandemic before the state made it a requirement – its oldest facility was impacted more so than newer buildings, losing 12 beds to the conversion compared to one of its newer buildings that just lost two beds.

“The de-densification of nursing home beds is going to impact older nursing homes, more so than newer ones,” Salmon said. “The more recent inventory should have less three- and four-bed rooms. I think that puts older operators in an unfair position because generally they rely on a much greater percentage of their occupancy on those three- and four-bed rooms.”

SALMON ended up selling the older building – losing beds poses a financial challenge to building owners and lenders who invested in an older facility, Salmon said. Financial arrangements might shift along with the shift to private or semi-private rooms.

“It had a significant impact on sale price, negative impact on the sale price,” Salmon added.

SALMON has been renovating and modifying existing buildings in order to add beds back while also adhering to state requirements.

“We’re still finding that process difficult and slow, but we do have options to add beds back into the space, other spaces in the building,” Salmon said.

The state has an incentive program in place to buy back beds if occupancy falls below a certain threshold, Salmon said, but it’s “not a huge windfall.” State payment per bed is about 50% what the operator would earn in a year if the bed was filled.

Regional de-densification efforts

States have been trying to implement similar requirements to what was proposed in the Biden reform, most recently Massachusetts with its de-densification policy.

The state Executive Office of Health and Human Services (EOHHS) originally implemented a $145 million nursing facility rate investment and policy reform initiative, which required skilled nursing facilities convert rooms with three to four beds to two bed rooms, among other items.

The policy was originally supposed to take effect in January but was pushed back to April 30, according to Tara Gregorio, president of the Massachusetts Senior Care Association (MSCA).

“Mass Senior Care continues to work with regulators and our member facilities to implement this policy and prevent the involuntary removal of beds, which would disrupt continuity of and access to quality nursing facility care,” Gregorio told Skilled Nursing News in an email.

Facilities that can demonstrate good faith progress toward single or two-bed rooms will gain additional time to comply with state regulations beyond the April 30 deadline, Gregorio added.

SNFs unable to convert because of spacing, zoning or other issues are seeking full waivers to the new requirement – it’s unclear if such waivers will be granted, and how many state facilities applied for an exemption.

“EOHHS has amended its rate regulation to allow providers to petition for capital rate adjustments to help cover the costs of these de-densification projects and grant money is expected to be made available shortly to further assist providers in complying with the regulation,” Gregorio noted.

At least for Massachusetts, many operators don’t have the financial resources to update and innovate within their buildings, Salmon added.

It becomes a “self-fulfilling prophecy” for government agencies, Salmon said, a cycle of underinvesting in the industry because they believe operators aren’t doing a good job, then they can’t do a good job because they don’t have financial support.

People will reinvest if they’re having success in an industry, but the nursing home industry hasn’t been able to reinvest, Salmon added.

“We’re constantly paring back and trying to cut costs and save money. You just don’t have the ability to invest in the physical infrastructure the way you should,” Salmon said. “I think that’s led to the situation we have now because now you have 40-year-old inventory or more, 60-year-old inventory [in the state] that has not been renovated or has had very little innovation, because we just haven’t had the resources to do it.”

Small home model and de-densification

Susan Ryan, senior director of the Green House Project (GHP), agreed that more incentives are needed to make private and semi-private reforms a reality.

“We should incentivize what we’d like to see … give us the necessary support through better funding.” said Ryan.

Removing financial barriers like access to capital and Medicaid underfunding would be a step toward nursing home innovation, Ryan said, like the shift to private rooms and the small home model.

Green House homes create non-institutional eldercare environments that are designed with private rooms and large communal spaces that better match current patient preferences; 371 homes across 32 states use the model.

CMS should look at HUD as an example and think about how policy can impact the financing of these homes, Ryan added, and perhaps have a bump in Medicaid reimbursement if an operator were to renovate or build using the small home model or private rooms.

Ryan said she had unrelated conversations with CMS several weeks prior to the Biden reforms, and she hopes to have more conversations as the government agency seeks to implement de-densification initiatives.

“Our data certainly has demonstrated how important private rooms are,” she said. “We are operating in a failed institutional model that has three-, four-person rooms.”

Adding private rooms had “everything to do” with fewer Covid cases and mortality in Green House homes, Ryan noted.

The payback time for building private rooms could be as little as three years too, according to a study published in The Gerontologist and authored by the Commonwealth Fund.

Construction cost per bed for a private room was $16,009 more than a shared room, the study found, a difference recouped in less than two years if beds are occupied and less than three months if a shared bed remains unoccupied at average private-pay room costs.

SFCS Architects, which has a focus on designing small home model nursing homes, still references the study when speaking with clients about new builds that use the model.

“You’re adding another bathroom, you’re adding a longer hallway, you’re adding more square footage to the building,” said Amy Carpenter, principal at SFCS. “They looked at that versus each day you have a bed sitting empty. That takes away reimbursement, even if you were just in a Medicaid-based nursing home, you’re losing reimbursement for every day that bed sits empty.”

From a workforce perspective, filling shared rooms can be more of a logistics headache too, Carpenter said. Staff need to be aware of resident personalities, match residents up based on gender on top of thinking about best infection control practices when it comes to filling shared rooms.

“We’ve also come up with a lot of clever ways of nesting rooms, so that we’re not doing long, double-loaded corridors. We’re trying to minimize the corridors as much as possible,” said Carpenter, referring to the more traditional nursing home modeled after hospitals.

Nesting rooms or grouping rooms to have four resident room entrances face each other instead of being off a long hallway, decreases travel distance and in turn makes a big difference in quality of life and longevity, Carpenter said.

The model encourages people to walk because they only have to walk a small distance, she added.

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