It is no secret that the COVID-19 pandemic wreaked havoc on the nursing home industry. In terms of the industry itself, we are seeing more closures of nursing homes, more consolidation, and the evaporation of the not-for-profit sector of nursing services. More of these non-profits are being swallowed up by for-profit providers.

What happened? There are a number of factors here. Firstly, many nursing homes across the country appeared unprepared for the extensive infection-control measures required during the pandemic. This resulted in some nursing homes becoming COVID hot spots and losing many patients and some of their workers to the virus. Lawsuits were filed and, depending on what state you reside in and when the death or injury occurred, the lawsuits were deemed meritorious. While the states moved to protect the healthcare industry from COVID-19 lawsuits, many of the lawsuits filed by the families of descendants were able to allege gross negligence to prevent the agency from claiming COVID-19 immunity.

Nursing Home Closures by the Numbers

Since the pandemic began in 2020, 327 nursing homes have closed across the country. Many of these closures were the result of state investigations into the quality of care during the pandemic while others were the result of economic distress. In many cases, vulnerable nursing home workers were prevented from working due to fears concerning the virus. This has and will continue to cause understaffing problems.

We are only five months into 2022, and already 20 nursing homes have shut down. That number could balloon to over 400 after the year is up.

Industry-Wide Trends

The current trend is away from skilled nursing facilities and toward assisted living facilities or post-retirement care centers that provide limited medical services. Nursing homes are further divided into custodial care facilities and temporary rehabilitation centers. The number of skilled nursing facilities has gone down on the West Coast and the trend is now rippling across the East Coast, as well.

Profitability in the sector, especially in California, which has a robust regulatory framework and expansive regulations when it comes to building large structures due to earthquake concerns, is now at an all-time low. This is forcing the industry to make several changes that will have broadscale consequences across the U.S. When you add in lawsuits related to nursing home care and expanded liability under federal law, the entire sector may be in serious trouble.

This is especially true for non-profits that do not have corporate backing and generally rely on government funding, donations, and reimbursements. As the funding for these types of non-profits drys up, the non-profits are exploring their options by consolidating with large corporations who can provide the backing they need to remain open.

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