Low reimbursement rates, staffing shortages among challenges

A question haunted the month-long fight for the Edgar Benjamin Healthcare Center that ended recently with the ousting of the center’s administrator: Would the Mission Hill facility be able to continue operations even as the center’s leadership claimed that it needed to shutter due to financial challenges?

In April, a court-ordered receivership removed Tony Francis, the center’s then-administrator, amid allegations of financial mismanagement and put Roxbury attorney Joseph Feaster in charge of the facility, which serves 73 residents and employs 110 staff.

At that time, the official closure plan filed with the state’s Department of Public Health was suspended, but lingering questions around the center’s financial situation mean that plans for the Edgar Benjamin to reach its 100th birthday in 2027 remain, for now, in the realm of hope.

“I feel very grateful to know that we have an opportunity to stay open for now,” said Delicia Mark, the center’s new administrator, who was hired last month.

But the Edgar Benjamin isn’t alone in the challenges it faces. A report released in May by the Federal Reserve Bank of Boston painted a daunting picture for nursing homes in the Boston area and across the New England region.

That report found that between 2011 and 2024, communities across the region saw a decrease in nursing home beds even as populations are rapidly aging. Now, there are 150 fewer nursing homes in the region compared to 2011, a decrease of 15%.

It’s a drop that follows national trends, but at an accelerated rate. Across the U.S. in the same period, the number of nursing homes dropped by about 5%.

“We don’t see any signs that those closures, as it currently stands, are going to be stopping,” said Riley Sullivan, who authored the report.

Within the region, the Greater Boston area saw the largest number of closures over the period the report examined, but other New England communities that had fewer facilities in the first place — including counties in Vermont, Connecticut and Maine — saw a greater percentage of beds lost.

Local residents are feeling that absence, especially those looking to keep family members nearby when considering locations for nursing home care.

During hearings on the proposed closure of the Edgar Benjamin in March, residents’ family members and guardians complained that, when Francis and his team provided a list of nearby facilities as alternatives, many of the ones that families were directed to had no space available.

Sullivan said the gap between New England and the rest of the country plausibly could come from the region having, on average, a higher labor cost. He also pointed to the older and aging population in the region — in 2022, adults 75 and older made up 7.9% of the region’s population compared to 7.2% nationwide — though both theories were only hypotheses and not specifically supported from data in the report.

“The cost of workers across country does vary,” Sullivan said “In New England, where we do have higher costs, that may be contributing to the high rates of closures, just in trying to fund these homes and keep them properly staffed.”

Continued nursing home closures could also have a broader impact on other sectors. Sullivan pointed to a 2023 report released by the Massachusetts Health and Hospitals Association that found that, on average, 1,200 patients a day are “stuck” in hospital beds because they can’t access care in nursing homes or other postacute-care settings, a category that also includes facilities like assisted-living residences and psychiatric units.

“It cascades out of just the nursing home sector into hospitals, and it can really impact the entire health system if there isn’t a place for people to go to recover and receive skilled care,” Sullivan said.

Staffing shortages

The landscape of shuttering nursing homes is complicated by staffing shortages lingering from the COVID-19 pandemic.

At the start of the pandemic, employment in nursing and residential care facilities dropped sharply, alongside other health care jobs like ambulatory services and employment in non-healthcare sectors. Hospitals, too, saw a drop, but by a smaller margin.

By late 2020, employment in many industries rebounded to pre-pandemic levels, but by the end of 2022, staffing in nursing homes across New England was still significantly lower than it had been before 2020, at about 88% of the level it had been at the end of 2017. Massachusetts fared slightly better, at just over 89% of pre-pandemic levels.

At the Edgar Benjamin, those staffing shortages translated into higher costs. Mark said the facility has had to put funds toward engaging hiring and employment agencies to try to fill staff vacancies.

“Since COVID, a lot of people don’t want to be in health care anymore,” she said.

Pending federal changes could see the staffing landscape shift more drastically in coming years. In April, the Centers for Medicare and Medicaid Services — the federal agency that administers those health care programs — announced new minimum staffing standards that, in urban facilities, will be phased in by May 2026.

Those new standards will require a registered nurse to be present at facilities around the clock and establishes specific number of total hours staff must be providing care to the facility’s residents.

According to the Boston Federal Reserve report, at current staffing levels, less than one-fifth of nursing homes nationwide would meet those new standards.

Paul Lanzikos, co-founder of the Dignity Alliance Massachusetts, which advocates for older adults and people with disabilities, called the staffing situation in the state “dire,” and said that a majority of nursing homes in Massachusetts have been operating below state staffing standards.

In his view, changes like enhanced training, more competitive wages and benefits, and increased positive recognition — as well as some nursing homes that are performing poorly reallocating staff — would bolster the nursing home workforce.

Funding for the facilities has also impacted closures in the field. The Boston Federal Reserve report found that Medicaid provides most of the funding entering long-term care facilities, balanced by a mix of Medicare, private insurance, veterans benefits and out-of-pocket expenditures. Nationwide, over $154 billion in Medicaid spending went toward long-term care in 2022, making for about 19% of total Medicaid spending.

In much of New England, the balance is especially tilted toward Medicaid. Massachusetts saw $5.9 billion of its Medicaid spending — nearly 28% — go toward longterm care. In Maine, Connecticut and New Hampshire, that share was above 35% of state Medicaid spending.

But, according to the report, reimbursement rates for Medicaid patients at long-term care facilities are often out of balance with what facilities need to spend to care for patients. It found that, in 2019, the median reimbursement rate was 86% of reported patient costs. That is especially true at facilities like the Edgar Benjamin, where Mark said Medicaid pays for an estimated 90% of the residents at the center.

To increase funding, Mark said she is looking to put currently vacant space at the Edgar Benjamin to use and start running dialysis treatment from the site, which would bring in additional funding.

However, other factors might impact how Medicaid reimbursement rates line up with patient costs. Lanzikos, of the Dignity Alliance, said he thinks often the issue is not a mismatch in funds, but how that money is allocated, especially as private equity firms buy up nursing homes, which research has found leads to increases in fees as well as worsened outcomes for patients.

Ownership of nursing facilities has come under scrutiny from the Biden Administration, which, in late 2023 finalized new rules requiring nursing homes to disclose their ownership to public and federal agencies.

Reimbursement increases could help

Changes in Medicaid reimbursement rates could add some support — the report pointed to pending changes in Maine, which will see an increase in reimbursement rates phased in between 2025 and 2027 — but even then, rising costs may negate any major impacts from the funding increase, Sullivan said.

“That should hopefully bring reimbursement rates for Medicaid more in line with the actual cost outlays of these facilities [in Maine], but potentially the costs will also be rising over that time,” he said. “It’s kind of still-to-be-determined what the actual impact will be.”

But Mark said changes to reimbursement rates in Massachusetts could be a major boon to nursing homes like the Edgar Benjamin.

“They really need to revisit the reimbursement rates for nursing homes, because our expenses are high,” she said. “If we were able to get a higher reimbursement rate it would be a huge, huge help for us.”