Even before the coronavirus swept through care facilities, many were struggling with thin profit margins. Now they could be wiped out.
By Matthew Goldstein, Robert Gebeloff & Jessica Silver-Greenberg @ NYTimes.com/Business, April 21
Even before they became deadly petri dishes for the worst pandemic in generations, many nursing homes were struggling to stay afloat and provide quality care. But since the start of the coronavirus outbreak, nursing home operators have had to spend more money on protective equipment for staff and technology to connect residents with relatives who are no longer allowed to visit. Their revenues have shrunk because they are admitting fewer new residents in hopes of reducing the risk of infection.
The result is that some nursing homes, which often run on razor-thin profit margins, may be unable to pay their rent and other bills without government help. “It could be a huge economic mess,” said Charlene Harrington, a professor emerita of nursing at the University of California, San Francisco. “It is possible that many nursing home chains could go bankrupt with the virus.” [....]
Nursing homes care for about 1.5 million people in the United States, and 70 percent of the 15,400 facilities are run for profit. While the financial picture for the industry, which also includes homes run by government agencies and nonprofits, was hardly rosy before the virus struck, it was especially precarious for many for-profit nursing homes.
Reimbursements from government programs like Medicaid are a main source of revenue for nursing homes, but operators have long complained those payments have not kept pace with the cost of care.
The industry is increasingly relying on the government for another form of support: The Department of Housing and Urban Development guarantees $20 billion in mortgages to more than 2,300 nursing homes — about 15 percent of the country’s total, up from about 5 percent a quarter-century ago. (Last year, the $146 million collapse of Rosewood Care Centers was the biggest default in the history of the mortgage-guarantee program.)
It can by pricey just to keep the doors open.For-profit nursing homes often rent their properties under long-term leases from real estate investment trusts, known as REITs; investment firms; or private equity shops. A review of regulatory filings found that [....]