Pennsylvania’s nursing home industry is bracing for a potential funding crisis after Governor Josh Shapiro’s (D) proposed budget for the upcoming fiscal year failed to include an increase in Medicaid reimbursement rates. This omission comes despite years of advocacy from industry leaders who argue that increased funding is crucial for maintaining quality care and preventing further facility closures.
The lack of a Medicaid reimbursement increase is a significant setback for nursing homes, which have been grappling with rising operating costs, a persistent workforce shortage, and declining occupancy rates. “Despite recent investments and reimbursement increases, Pennsylvania’s long-term care continuum remains in crisis,” said Zach Shamberg, President and CEO of the Pennsylvania Health Care Association (PHCA), in a press release. “Nursing home closures, bankruptcies and ownership changes, coupled with declining occupancy driven by ongoing caregiver shortages, paint a stark picture.” According to PHCA, Pennsylvania has seen over 40 facility closures since 2019, with several occurring in recent months. This underscores the precarious financial situation many nursing homes face.
While Governor Shapiro has previously demonstrated a commitment to addressing the challenges facing the long-term care sector, including the establishment of the certified medication aide position in 2024 to alleviate staffing burdens, industry leaders argue that these efforts are insufficient. Garry Pezzano, President and CEO of LeadingAge Pennsylvania, stated, “Sadly, the underlying system is broken, with providers facing uncertain funding year after year. Despite critical investments in recent years, costs of care have continued to skyrocket, and the workforce shortage has no end in sight.” Pezzano asserted that at least $139 million is needed for nursing homes to remain viable.
The current budget proposal, which focuses on workforce development, cost-cutting in healthcare, housing and energy, and economic development, leaves the nursing home industry feeling overlooked. Governor Shapiro stated, “My budget proposal is focused on solving problems for Pennsylvanians… to keep creating more opportunities. This budget strikes a balance by making historic investments while maintaining fiscal responsibility, continuing to cut taxes, and ensuring our Commonwealth’s surplus remains strong while we keep moving Pennsylvania forward.” However, the lack of direct support for nursing homes raises concerns about the long-term stability of the sector and its ability to provide essential care to vulnerable residents.
Looking ahead, PHCA plans to collaborate with the General Assembly and the governor to address the systemic issues plaguing the industry, including reforming the state’s reimbursement model. Shamberg emphasized the need for a comprehensive approach, stating, “It’s time for a discussion that takes into consideration the broader systemic issues facing providers by addressing the root cause of the ongoing funding challenges.” The future of Pennsylvania’s nursing homes and the quality of care they provide hinges on these upcoming discussions and the state’s willingness to prioritize the needs of its aging population.