SIOUX FALLS, S.D. (KELO) — South Dakota has lost at least five nursing homes this year. More are likely to close in the coming months.

That could mean that grandpa or dad needs to move to another nursing home that may be 20 miles or more from his existing facility. Or it could mean that grandma can get older in a community she’s called home for 80 years.

“We’ve had over 10 percent of our state’s nursing homes close in the past few years,” said Mark Deak, the executive director of the South Dakota Health Care Association.

“We have seen more closures recently in the past couple years and unfortunately, I think we’re going to see more closures, and probably significantly more closures as facilities have maybe burned through whatever capital has been available to them either through their reserves or fundraising that’s taken place that just goes into operations,” said Doug Ekeren, who leads Avera Health’s long term care’s strategic business unit.

The fate of nursing homes in South Dakota is largely in the hands of the state officials because the state sets the all-important Medicaid reimbursement rate, industry experts said.

“It’s not whether we can do something about it as this point, it’s whether or not we truly have the will to do something,” Deak said.

What’s the state’s role?

On average 55% of the residents in nursing homes residents use Medicaid.

Individual states set the reimbursement rate for Medicaid. In short, the states decide how much to pay nursing homes for the cost of caring for a resident on Medicaid.

South Dakota’s Medicaid reimbursement rates have been discussed for at least several years. The state has also recently increased the reimbursement rates, but according to the South Dakota Health Care Association (SDHCA), the rate of $158.54 in the fiscal year 2021 was lower than any of the six neighboring states.

“We’re thankful in recent years the state has taken strides in the right direction…,” Deak said. But it’s difficult to dig “yourself out of such a deep hole” created by inadequate funding, he said.

Deak said the estimated Medicaid shortfall in the state is $56 million a year. “That’s a shortfall of $64 for each resident per day,” Deak said.

A 2008 study showed that South Dakota’s reimbursement shortfall was higher than the national average.

The national average Medicaid reimbursement was $214 per day per resident, according to the Long Term Care Community Coalition.

Facilities file cost reports with the state each year but it doesn’t always result in an adequate increase in Medicaid payments, Ekeren said.

The data submitted and reviewed by the state shows that the gap between costs and Medicaid reimbursement can be more than $100, according to Ekeren.

“There can be $140 to $150 per day per Medicaid resident difference between the cost of providing the care and the reimbursement the state provides,” Ekeren said.

A statement from the South Dakota Department of Human Services said in response to KELOLAND questions highlighted a 6% reimbursement rate increase in 2021. “This unprecedented increase was coupled with an additional $30 million in one-time funding provided to nursing facilities,” the DHS said in a statement.

The SDHCA 2019-2020 report said nursing homes would receive a 2% increase for the coming year.

“We appreciate Governor Noem’s recent temporary increase in Medicaid reimbursements for long-term care providers in the state of South Dakota, but the reality is that we need permanent funding solutions to support and address our workforce and resident care needs now and in the future,” Aimee Middleton, Good Samaritan Society vice president of operations, said in a statement to KELOLAND News.

Leaders in the long-term care industry want a sustained, adequate Medicaid reimbursement.

“This needs to be a priority,” Deak said of addressing adequate Medicaid reimbursement.

The need for increased and adequate Medicaid reimbursement transcends any political lines, said Carole South-Winter, a health management professor at the University of South Dakota.

“It’s not a party issue I think that’s one of the most important things my students learn as well when we start to discuss reimbursement in South Dakota. It’s your profession and not your political party,” South-Winter said.

Empty beds but no staff

There will be nursing homes in the state who may have empty beds “not from a lack of demand but because the staff isn’t available,” said Brett Hoffman, director of public policy and communications for SDHA.

“You cannot keep enough bends open if you don’t have the staff,” South-Winter said.

Those empty beds can create at least two problems.

Someone’s relative may need to leave their loved ones for a nursing home out of town because the local home doesn’t have the staff to take them.

And it can mean that a nursing home loses a potential resident who may have a better insurance reimbursement rate.

Many nursing homes in the state are operated by non-profit entities but that doesn’t mean they don’t need to earn a profit to operate the facility.

Ekeren said the lack of staff in some communities is because the labor force is tight.

The state’s unemployment rate was 2.3% in July. It was 3.2% in July of 2021, according to the South Dakota Department of Labor and Regulation.

Industry leaders also said that pay is a factor as long-term care staff can often be paid less than what other jobs offer.

Some have been able to increase pay but that also creates more pressure on finances.

There’s not a lot of wiggle room between running the black and running with a deficit.

“They really don’t run with high margins anyway, Long term care facilities have never operated (with large margins),” South-Winter said.

South-Winter has also noted that fewer USD students in health care fields are working in long-term care facilities.

COVID-19 included media coverage of deaths and dying at nursing homes. The images of bodies being taken to morgues were seen by a potential workforce, she said. Students also absorb the stories of the stress of working in a long-term facility during the COVID-19 pandemic.

South-Winter said those are some reasons why students didn’t pursue work, or some may not plan on working, in a long-term care facility.

“I think we need to do a better job of ensuring that people understand the expectations, and frankly the rewards, that can come with providing care that somebody else needs and isn’t able to care for themselves,” Ekeren said.

What about COVID and that money?

“The pandemic has put unprecedented stress on the senior care industry,” Middleton said in a statement o KELOLAND.

Nursing homes did receive COVID relief money to help cover increased costs such as personal protection equipment (PPE) and related.

. (AP Photo/John Minchillo, File)

“The COVID relief dollars and various programs were very helpful but our costs went up significantly during this time period…,” Ekeren said.

Nursing homes used a lot of PPE. Some also constructed temporary visitation areas and more screening to check for COVID was added.

Ekeren said some of the protections are still in place today. The COVID relief money is done, he said.

Even before COVID, the long-term care industry was regarded as the first or second most regulated industry in the county, Ekeren said. While regulations protect residents and staff, it takes money to meet those regulations, he said.

The impact of alternatives to nursing homes

The DHS pointed out in its statement that “the nursing home industry has been feeling the impact of consumers having more home and community base options to meet their long-term care needs.”

Ekeren said people do have options such as assisted living, congregate care and home care options.

But, South-Winter said, those options can also have staffing and cost challenges. Some have closed or reduced their resident numbers, she said.

Deak said some residents left nursing homes during COVID as relatives chose to care for them in a different setting. But for some of those families now, as in-person work returns, it can be difficult to continue that care, he said.

Still others may be struggling to provide care for a relative because a local nursing home is not able to take that relative, Deak said.

The impact of closures

“When a nursing facility closes, it has ramifications for the facility residents, the residents’ families, the employees as well as the local community,” the DHS said in its statement. “When the Department of Human Services is notified of a facility closure, our staff offer technical assistance and visit with the nursing home provider to see if they are interested in exploring other service options.” 

Not only does a closure impact the residents and their families, but it also has a community impact as well.

“In smaller communities, oftentimes they will forever lose their largest employer,” Deak said.

Employees need to find different jobs and sometimes, that’s in a different facility out of town or in a different field.

“It’s a tough situation all the way around,” Deak said.

Although closures can happen in small and large communities. Most of the recent closures have been in small rural towns such as Lennox, Armour and Clear Lake.

“More than 70% of the residents we (Good Samaritan) serve live in rural communities, and we remain resolute in ensuring they have access to care as close to home as possible,” Middleton said in her statement.