Senior Living Is Driving Health Care Industry Distress

February 23, 2022

Replacing Infrastructure Adding Financial Pressure

But the cost pressures for these facilities cannot be overlooked. Mark R. Ustin, partner, Farrell Fritz, P.C., the firm’s health care policy expert, tells GlobeSt.com that COVID-19 has exacerbated prior trends in institutional long-term care, where occupancy rates were already falling as a result of older adults preferring to age at home.

“At the same time, the advent of managed care and the need to replace older infrastructure simultaneously increased costs and reduced reimbursement,” Ustin said. “COVID added to that the increased cost of salaries needed to retain staff, who like other Americans often had to leave the workforce due to increased demands at home from children out of school, and also had a more general desire not to work in an environment that was frequently a hotbed for transmission of the disease.”

“Add to that the additional costs of new legislative and regulatory mandates in some places aimed at correcting perceived shortcomings in service delivery (e.g., via minimum staffing requirements, new equipment mandates, or caps on profits in the for-profit space), and you have a recipe for financial disaster.”

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