The Changing Face of the Nursing and Residential Care IndustryAugust 18, 2022
In the United States, there were 88,955 nursing and assisted living facilities (all ownerships) employing 3.0 million workers in fourth quarter 2021. The nation’s nursing and assisted living sector lost nearly 379,000 employees from February 2020 (pre-pandemic) to June 2022, according to the Bureau of Labor Statistics. This amount of job loss far outpaced other health care sectors in the nation.
Establishments in the nursing home industry are primarily engaged in providing inpatient nursing and rehabilitation services with the health services being largely some level of nursing services and round-the-clock medical care.
The residential care industry comprises establishments primarily engaged in providing residential and personal care for persons who choose to maintain their independence and do not need round-the-clock medical care. According to the Assisted Living Federation of America, assisted living is a long-term care option that combines housing, support services and health care as needed.
Oregon’s nursing and residential care industry (private ownerships) consisted of 1,661 facilities employing 35,272 workers in March 2022. Since February 2020, this industry experienced a net loss of 3,737 jobs.
Employment trends in Oregon’s assisted living facilities have not matched the employment trends in nursing homes. Since 2001, employment in assisted living consistently grew by an average of about 800 jobs a year until the pandemic hit in early 2020. Nursing homes, on the other hand, have experienced employment levels varying widely from year-to-year with a period of job losses from 2002 through 2007, and more losses in 2010, 2012, and 2013.
The number of assisted living facilities in Oregon outnumbered the number of nursing homes by nine to one in 2022. Since 2001, the number of assisted living facilities have grown by 528 units or by 55% reaching 1,494 units in first quarter 2022. In contrast, the number of nursing home facilities has remained relatively stable, increasing by only nine facilities or by 5.7% during the same period.
Demand for Long-Term Care in Oregon
Demand for long-term care options for seniors is expected to increase as Oregon’s older population continues to grow.
According Portland State University’s Population Research Center, Oregon’s population 75 years and older is expected to increase by 344,312 or by 107% from 2020 to 2045, reaching 664,980 by 2045. In stark contrast, the state’s population 24 years or younger is expected to grow by only 41,591 or by 3.3% by 2045.
A similar picture emerges nationally, where the 65 and older population is projected to nearly double in size from 49 million in 2016 to 95 million in 2060. By 2060, the share of people aged 65 and older will compose nearly one-quarter of the population in the United States, according to the U.S. Census Bureau.
Who Works in Nursing and Residential Care Facilities?
The types of occupations in nursing home and residential care vary from health care services to food serving, grounds keeping, and building maintenance. Although varied, the majority of occupations (55%) or nearly 1.8 million workers in the nation were in healthcare practitioner and healthcare support occupations in 2020. These specific occupations included nursing assistants, home health and personal care aides, licensed practical and vocational nurses, and registered nurses. The next largest occupations were in the broad categories of building cleaning, food preparation, and personal care.
If we assume that Oregon has a similar occupational makeup as the industry nationally, Oregon’s average hourly wage for the two largest occupations in long-term care ranged from $15.33 for home health and personal care aides to $18.48 for nursing assistants in 2021. The average wage for all occupations in 2021 was $28.10.
The Cost of Long-Term Care Services
Genworth, a long-term care insurance company, has carried out an annual survey on the cost of long-term care since 2004. In Oregon, the monthly, median cost of care was $5,045 in assisted living facilities and from $10,342 - $11,113 in nursing homes. Nationally, the annual cost of care has increased by $8,464 (18.6%) in assisted living facilities and $16,027 (17.3%) in private nursing homes in the last five years. According to Genworth, the main cause of the increases in the cost of care is supply and demand. The company estimates that until year 2030, 10,000 baby boomers will turn 65 every day and seven out of 10 of these people will require long-term care services at some point in their lives.
The Industry Speaks Out: The State of Assisted Living and Nursing Homes in America
The American Health Care Association (AHCA) and the National Center for Assisted Living (NCAL) carry out a survey of nursing home and assisted living facilities each year. According to the AHCA and NCAL, the long-term care industry has been facing an unprecedented workforce challenge since the pandemic. A reported combination of workload, environment, low wages, reduced occupancy rates, and COVID-19 vaccine requirements have contributed to worker shortages. More than 300 nursing homes have already closed since the pandemic began.
Here are the main conclusions from the June 2022 assisted living and nursing home surveys from the employer’s perspective:
State of the Assisted Living Industry, June 2022
- More than one-half of assisted living facilities are experiencing a worse staffing situation since the beginning of 2022 with 63% of facilities facing moderate or high staffing shortages.
- 87% of assisted living communities are experiencing difficulty hiring staff and nearly all are asking staff to work more.
- Nearly one-third of facilities are either limiting new admissions or closing their facilities due to staffing shortages.
- Over 90% of facilities have increased staff wages but consider lack of interested or qualified candidates and the inability to offer competitive wages an obstacle to hiring new staff.
- Nearly 40% of facilities are operating at a loss and nearly one-half are concerned about having to close over staffing woes.
- Assisted living facilities estimate that their costs have increased by 40% in one year and one-third say they cannot sustain the current pace for more than one year.
- 60% of nursing homes are experiencing worse staffing shortages since the beginning of 2022 and 87% face moderate or high staffing shortages.
- 98% of nursing homes are experiencing difficulty hiring staff and 61% are limiting new admissions.
- While nine out of 10 nursing home providers have offered increased wages and bonuses, lack of either interest or qualified candidates are the top obstacles in hiring new staff.
- Nursing home providers estimate their costs have increased by 41% in one year and 73% of providers are concerned they may have to close due to staffing woes.
- Nearly 60% of nursing homes are operating at a loss and more than one-half report that they cannot sustain their current pace for more than one year.
Another recent study carried out by the Economic Policy Institute, The State of the Residential Long-Term Care Industry, focuses on a comprehensive look at employment levels, demographics, wages, benefits, and poverty rates of workers in long-term care. Below is a summary of their report from the employee’s perspective:
- Prior to the pandemic, employment in the residential long-term care industry was rapidly increasing but still not meeting demand. During the pandemic, the industry saw significant job losses with employment levels still about 400,000 below pre-pandemic levels.
- The majority of workers in long-term care (80.9%) are women, which includes a disproportionate number of Black women (22.4% compared with 6.5% of the overall workforce) and immigrant women (12.8% compared with 7.2% of the overall workforce).
- Nationally, the typical or median worker in the long-term care industry is paid $15.22 an hour compared with the median worker in all industries who is paid $20.07. Workers in this industry are less likely to have employer-sponsored retirement plans or health insurance.
- Workers in long-term care industries have lower union coverage rates than the overall workforce (6.9% compared with 11.9%).
- Poverty rates for workers in the residential long-term care industry are higher than for the overall workforce. More than one out of 10 direct care (10.4%), food service (10.1%), and cleaning and maintenance workers (14.6%) live in poverty.
The current workforce shortages in the long-term care industry, exacerbated by the pandemic, are causing some establishments to halt admissions or close completely. Many workers in this industry face low pay and poor working conditions, and long-term care facilities find it difficult to compete for workers with other industries. Meanwhile, the rapidly growing population of older adults is expected to drive demand for long-term care even higher in years ahead.
The pandemic has also sparked a national conversation about where and how people want to live as they age and need increasing assistance. A recent poll by The John A. Hartford Foundation found that 57% of older adults say that COVID-19 has affected their willingness to live in a nursing home and 89% say that changes are needed to make nursing homes more acceptable and inviting to them.
Alternatives to traditional nursing homes are becoming more popular which include programs like GRAYCE, which helps family caregivers support older adults or Greenhouses that serve less than a dozen residents and are more like home. Additionally, new models of care and resources have popped up like the Pioneer Network, Green House Homes and The Eden Alternative that promote connection, a sense of purpose, and continual learning.
Lastly, more and more health care services are now being carried out in an individual’s home, which can encourage more elders to “age in place”. Thanks to today’s technology, many elders can receive varied professional health care services in their homes, paid for by Medicare as if they were in a hospital. According to a recent article in Next Avenue, Hospital at Home: The Future of Health Care in Your Living Room, 77 medical systems and 177 hospitals in 33 states that have been approved by the Centers for Medicare and Medicaid Services waiver program, will now pay for acute care in a home setting. As technology advances, it seems reasonable that elders who are comfortable with computers and cell phones will continue to demand home based delivery of medical care and remote monitoring which could enable them to stay in their homes much longer than in prior years.