Providing long-term care services can be a thankless job. Many of us would not consider bathing, feeding, and clothing elderly patients to be our ideal career. What’s more, wages for long-term care workers are low: averaging around $15 per hour. Thus, it’s no surprise that long-term care workers are being lured away by higher-wage jobs at Amazon or FedEx that pay up to $25 per hour in some parts of the country. Such jobs don't involve bodily fluids or increased legal liability in the wake of the pandemic.

The COVID-19 pandemic accelerated the loss of long-term care workers nationwide. According to the Bureau of Labor Statistics, nursing homes have lost 221,000 workers since the start of the pandemic. Moreover, assisted living facilities saw 38,000 workers leave during COVID, bumping up the total figure of long-term care workers lost to around 260,000 workers. These staff shortages negatively impact nursing homes and assisted living providers across the country.

More than a quarter of a million employees left the long-term care workforce since the start of the pandemic. From 2011 to 2019, nursing home and assisted living employment increased steadily. From March 2020 to the present, the trend dramatically reversed.

In November, the American Health Care Association and National Center for Assisted Living (AHCA/NCAL) released a survey in which 86 percent of nursing homes and 77 percent of assisted living providers said their workforce situation grew worse over the course of COVID. Nearly 6 in 10 nursing homes limited new admissions due to staff shortages, and around 8 in 10 nursing homes remain concerned that workforce shortages will force them to close.  

For context, the AHCA/NCAL is the largest trade organization for the long-term care community. It represents 14,000 nursing homes and assisted living facilities that care for over 5 million adults.  

The AHCA/NCAL survey also noted that while most hospitals and physicians’ offices managed to replenish staffing levels during COVID, long-term care facilities–such as nursing homes and assisted living facilities–did not. The AHCA/NCAL believes long-term care facilities are suffering a labor crisis worse “than any other health care sector.”

Nearly 6 in 10 nursing homes limited new admissions due to staff shortages, and around 8 in 10 nursing homes remain concerned that workforce shortages will force them to close.

The uphill battle to retain a long-term care workforce

Erlanger, Kentucky, is located just outside of the Cincinnati-Covington metropolitan area. There, the battle to recruit and retain long-term care workers is playing out between an “Amazon Air Hub” and local nursing homes. Unsurprisingly, the salaries and benefits offered by Amazon outpace those of Erlanger’s local nursing homes. For example, the average starting pay for entry-level positions at Amazon warehouses and cargo hubs is more than $18 an hour, with the possibility of rising to $22.50 an hour and a potential $3,000 signing bonus depending on the location and shift. Moreover, full-time roles with the company include health benefits, 401(k)s, and parental leave.

Conversely, lower-skilled nursing home positions typically pay around $15 an hour, with minimal sick leave and benefits. Even for states providing temporary COVID-19 bonuses for long-term care workers, the benefits don’t match what's on offer from Amazon and other private-sector behemoths. As noted by Danielle Geoghegan, a business manager at Green Meadows Health Care Center in Kentucky, in a Kaiser Health News article: “Amazon pays $25 an hour… [or they can] come here and deal with people’s bodily fluids.”

“Amazon pays $25 an hour…They come here and deal with people’s bodily fluids.”

Medicaid limits the rates that long-term care facilities can pay their workers

In the same KHN article, Betsy Johnson, the Kentucky Association of Health Care Facilities president, noted the difficulties facing long-term care managers. Phrasing it succinctly, she said: "Chick-fil-A can raise their prices...[but] we can’t pass the costs on to our customer." Long-term health care facilities services can't raise prices because Medicaid is the dominant payer for nursing homes and assisted living facilities.

Most long-term care payments are Medicaid rates set at the state level. Often, Medicaid reimbursements pay around one-third of what private insurance would compensate. Furthermore, because Medicaid is budgeted at the state level–and state governments can’t run deficits like the national government–states have the incentive to reduce or flatline Medicaid costs. According to data from the National Association of State Budget Officers (NASBO), in State Fiscal Year 2019, when looking at state spending from state and federal funds, Medicaid accounted for 29 percent of total state spending for all items in their budgets.

In Kentucky, Medicaid reimbursement rates stagnated at a one-tenth of 1 percent increase for five years. However, a more significant increase occurred in the last two years to offset inflation.

In practice, many low-paying jobs hold immense intrinsic social value – such as those in long-term care.

An opportunity to reimagine long-term care

The inability of nursing homes and assisted living facilities to retain or attract workers shows a dark side of the “Great Resignation.” Specifically, most employees want a combination of better pay, more flexibility, and less emotionally draining work. In the abstract, those sentiments are entirely understandable when thinking about low-wage work. But, in practice, many low-paying jobs hold immense intrinsic social value–such as those in long-term care.

Many long-term care employers are struggling to recruit and retain workers in their industry. But, in many ways, the long-term care industry is a broken system in need of reform.

Long-term care facilities dependent on below-market government reimbursements will never successfully compete for workers with private-sector companies that offer better pay, increased flexibility, and less emotional stress. That’s not to say many long-term care workers will not stay in the profession for the emotional fulfillment it brings. Rather, current economic realities bode poorly for hiring prospects in long-term care.

Policymakers and researchers need to consider a broad restructuring of the long-term care system that affords both choice and fiscal sustainability for patients and institutions alike. At FREOPP, we are working on policy solutions to restructure and reimagine long-term care in the years ahead.