Representatives of skilled nursing facilities (SNFs) are estimating the SNF sector will potentially lay off 20,000 employees, will forgo the creation of 20,000 new jobs and will alter employee benefits as a result of the Medicare payment cuts that took effect on Oct. 1. That estimation comes from a new analysis by Avalere Health made on behalf of the Alliance for Quality Nursing Home Care.
Avalere's survey was conducted between Oct. 3 and Oct. 17. Approximately 2,932 facilities were represented by 292 responses from small (less than 100 beds), medium (between 100 and 1,000 beds) and large (more than 1,000 beds), providers across the country. Those responding to the survey represent about one-fifth of the SNF industry, said Emil Parker, Avalere Health director, during a conference call Monday announcing the results of the study.
The purpose of the survey, explained Parker, was to gain detailed information about how SNFs plan to respond to the Medicare payment reduction.
[See also: Skilled nursing facilities warn of zero profits if more cuts are made.]
"I think this survey result is significant, and a cautionary tale as we move forward into the rest of the year around further reductions in payments to nursing facility providers, in particular," said Alan Rosenbloom, the Alliance's president, during the call.
Survey respondents indicated that due to the Medicare payment reductions they will be making changes to their employees' benefits, including changes in wage rates (freezes and cuts, for example), elimination of paid holidays, increasing the share employees contribute to health plans and reducing or eliminating 401(k) matching contributions.
While the majority of survey respondents (63.2 percent) said they do not expect to lay off staff, nearly 37 percent said they are expecting to lay off direct service staff. Most of those planning layoffs said they will be eliminating positions in the "other" category of direct service staff with smaller numbers of layoffs anticipated for categories such as certified nursing assistants, licensed practical nurses, therapists and social service personnel.
The Alliance and Avalere stressed many jobs that would have been created as the result of expansions, repairs or the additions of new facilities will not happen because of the payments cuts, but the survey found that only 23.5 percent of respondents plan to significantly delay or cancel the opening of new facilities and/or the expansion of existing facilities. The majority of respondents, 76.5 percent, said they do not plan to delay or cancel projects.
"We can't guarantee that this is a representative sample, (but) there are reasons to consider the possibility that these results actually underrepresent the true impact of the regulation," said Rosenbloom.
He said the changes to the therapy assessment process will take time to appear and therefore could not be accurately reflected in the survey period. He also said smaller operators do not have the ability to forecast how the payment changes will impact them and so it will take some time for those facilities to recognize and act on how the changes.
"Our bottom line is that what we're seeing is the leading edge of a potentially very significant job loss wave in the skilled nursing space precisely at the time that Congress and state governments are considering even more cutbacks in Medicare and Medicaid payments," he said. "For skilled nursing facilities, which are uniquely dependent on those two government payment programs and given that the Medicaid half of that equation pays a lot less than what it really takes to cover the cost of care, we're very concerned that a sector that is in a precarious position could very easily and inadvertently be pushed over the edge."
Follow HFN associate editor Stephanie Bouchard on Twitter @SBouchardHFN.