Extending Hazard Pay for Assisted Living and Nursing Home Heroes May Be the Best Option for Everyone Involved
Have you been here yet, the point where the care for mom or dad, or grandma or grandpa becomes too much, or the medical need or attention that they require outstrips our abilities or resources? At that point, we turn to professionals in assisted living or nursing facilities to care for our loved ones. We work to choose facilities that will be comfortable for them and will provide them the care that they need, and that we wish we could provide. What we as consumers have failed to realize is that the people providing the care, day in and day out, are often there because of their desire to help people and not necessarily because they can earn a living wage providing care to our loved ones.
Nationally, the median salary for certified nursing assistants (CNAs) is $12.73 per hour, licensed practical nurses (LPNs) $20.55 an hour, and for registered nurses (RNs) $29.94 an hour per Payscale.com. That equates to an annual salary of roughly $26,500 for CNAs, $42,750 for LPNs, and $62,275 for RNs. While the actual salary levels of these individuals may vary greatly depending on where you live, the experience levels, shift differentials and a number of other factors, the point is caregivers who are caring for our loved ones are not being paid enough! In fact, during the COVID-19 pandemic, it was highlighted that many of these caregivers work multiple jobs in order to provide for their own families, which in turn heightened the risk of spreading COVID-19.
As the country battles to contain the spread of COVID-19, healthcare professionals across the country are on the front line. They put themselves and their family’s at risk every single day in order to continue to provide care to the sick and infirm. Many organizations at the height of COVID implemented Hero Pay (or hazard pay) to entice their workers to continue showing up as staffing shortages began to impact care. An informal survey of First Midwest Bank healthcare clients showed that Hero Pay usually ranged from a $2-$5 an hour increase, which was meaningful for a number of workers. The question is, given the work that these individuals are doing every day, should these pay increases become permanent? Should we as a country be advocating to increase the starting salaries and wages for healthcare professionals across the board to further entice individuals to pursue a career in healthcare?
Mike Taylor, the Head of Healthcare & Capital Markets for First Midwest Bank, notes “high level it is easy to say “Yes, Hero Pay should remain in place,” and all our healthcare workers in general should be paid a better wage. However, in order for that to happen, we would need to see changes in the government reimbursement system that is currently in place.”
Per AARP and CMS (Centers for Medicare and Medicaid Services), the government through Medicare and Medicaid currently covers the cost of care for 70% - 80% of the skilled nursing resident population nationally. As a result, much of the operational success of senior care providers rests on the level of reimbursement from the government. In the CliftonLarsonAllen 34th SNF Cost Comparison and Industry Trends Report, they noted that the best performing skilled nursing facilities have only a 4.5% operating margin, while the median for the industry was breakeven (-.1%), and this was before the pandemic hit and further impacted operations. So, skilled nursing is not a highly profitable industry, where the operators can afford to increase the wages of their staff without the government making changes to reimbursement. To further that point, in August, the American Health Care Association surveyed skilled nursing providers nationally and 72% responded that they could not sustain operations as they currently are for longer than a year, pointing to the increased costs associated with the pandemic, including the cost of labor. So, while the government has provided over $10B of aid to assisted living and skilled nursing providers through the CARES Act Provider Relief Fund, more would need to be done if we are going to make Hero Pay permanent for these employees.
As consumers, and individuals that are concerned about our loved ones and the care they are receiving, we need to continue to be vocal and support the efforts by the government to support the senior care industry. While each individual facility may deal with challenges differently, the quality of the people that are working there, and ultimately the quality of care that is being provided to our loved ones is closely tied to what those providers can pay their people, which without being dictated to by the government, is a direct result of what government reimbursement looks like for the care being provided. There are plenty of people in the US who have the passion to help others, let’s find a way as a Country to ensure that we are compensating and rewarding them to care for our loved ones so that it is more than just a calling that keeps them coming to work every day.
The First Midwest Bank Healthcare Team’s lenders have been actively involved in the senior housing sector for a number of years. First Midwest Bank specializes in providing financing to support the operations, the acquisition, and the development of senior housing properties.
Want to learn more about First Midwest Bank's Healthcare Finance team? Connect with one of our lenders today at https://www.firstmidwest.com/commercial/specialized-industries/healthcare-finance/