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NURSING HOMES from Page 1 residents at long-term care facilities in Illinois and killed more than 10,000. Though vaccines and infection control measures have lately helped prevent the sort of outbreaks that marked the darkest days of the lockdown era, health care providers are now grappling with a new and more contagious COVID variant. Add in the lingering fear of contagion among families weighing the pros and cons of caring for elder loved ones at home versus in a facility, and it’s little wonder that nursing homes report that they are on life support. “Our census is recovering, but it’s recovering so slowly,” says Donna Sroczynski, president of operations at Symphony Care Network, which has 28 facilities in Illinois, Indiana, Michigan and Wisconsin. Sroczynski says the average number of people that Symphony serves per day is down about 20 percent, compared with pre-pandemic levels. At the same time, expenses are up at least 30 percent due to hiring additional staff, testing requirements and securing personal protective equipment. “It’s a recipe for disaster,” Sroczynski says. While COVID-19 brought new challenges, it also exacerbated long-standing issues facing an industry tasked with caring for some
vey reported they are operating at a loss. According to a separate analysis by the trade groups, the nursing home industry has projected that it will lose $22.6 billion in revenue this year and that 1,670 facilities will close or merge. Meanwhile, publicly traded Brookdale Senior Living posted a net loss of $108 million during the first quarter of 2021, compared with net income of $369 million during the same period a year earlier. And revenue fell 26 percent to $749 million in the quarter. Brentwood, Tenn.-based Brookdale is the largest senior living company in the country, with about 700 assisted living, skilled nursing and other locations in 41 states, including 11 communities in the Chicago area.
DECLINES
Occupancy rates at nursing homes have steadily declined for decades, as assisted living facilities and home health have become more popular among individuals requiring a lower level of care. But nursing home occupancy dropped sharply during the pandemic as hospitals postponed elective surgeries, which meant fewer referrals for post-acute care. Meanwhile, to prevent outbreaks when COVID tests were scarce, many nursing homes refused to admit people “THE PANDEMIC REALLY SORT OF LAID BARE who might have been exposed to JUST HOW PROBLEMATIC THE STAFFING the virus during a hospital stay. SHORTAGE IN NURSING HOMES IS.” And people with Tamara Konetzka, health economist, University of Chicago access to homebased services of the nation’s most vulnerable avoided high-risk congregate living residents. settings for fear of infection. In fact, only one-quarter of Even before COVID-19 started nursing homes and assisted living spreading, the number of longcommunities nationwide are con- term care facilities in Illinois had fident they’ll last a year or more, declined nearly 10 percent to 913— according to a recent survey of 738 alongside a 14 percent drop in adfacilities by the American Health missions—from 2015 to 2019, acCare Association and National cording to the latest state data. Center for Assisted Living. While Today, nursing homes in Illinois most nursing home operators are are 63 percent full on average— privately held and therefore keep about 10 percentage points below their revenue and profit margins pre-pandemic levels, says Matt under wraps, more than half of Hartman, executive director of the those who responded to this sur- Illinois Health Care Association,
which represents about 500 senior care facilities in the state. Hartman says that four association members have shuttered in the last few months alone and that even more facilities are expected to close through the end of 2021, particularly as federal COVID relief funds run out. Further complicating matters for nursing home operators is a nationwide staffing shortage. During the pandemic, nursing homes saw workers leave the industry in search of higher-paying jobs with less exposure risk. The shortage has created a bidding war for talent. To attract Chicago-area workers, some nursing home operators say they’re raising pay and offering signing bonuses. “The pandemic really sort of laid bare just how problematic the staffing shortage in nursing homes is because it has been there for decades, but it just got worse during COVID,” says Tamara Konetzka, a health economist at the University of Chicago. The “physically and emotionally demanding” jobs often come with no benefits or sick pay, she adds. Many operators say they’re having to dig deep to incentivize workers, noting that low Medicaid rates don’t cover the cost of doing business. However, lawmakers and advocacy groups have called for more transparency during the pandemic around just how much facilities are spending on staffing and quality. For example, many nursing homes keep operations under a separate entity than real estate and other valuable assets, which can shield the companies from liability. To prevent nursing homes from profiting while staffing levels remain low and three or more residents are packed into each room, lawmakers are looking to link new funding to specific safety and quality metrics that benefit residents and reduce racial health disparities.
SUPPORT
The Illinois Department of Healthcare & Family Services, which spends more than $2.5 billion annually on nursing home services for about 45,000 Medicaid beneficia-
JOHN R. BOEHM
Post-COVID financial toll threatens to drive some nursing home operators under
Smith Senior Living CEO Kevin McGee says his firm has been approached to acquire two local facilities. ries, supports the proposal. The government health insurance program for the poor and disabled covers the majority—about 60 percent—of nursing home care provided in the state each year. Nursing home operators are also bracing for a flood of COVID-related lawsuits. Law firm Levin & Perconti is representing families affected by the COVID-19 outbreak at the state-run LaSalle Veterans’ Home late last year, during which more than 200 veterans and staff tested positive for the virus and 36 veterans died, according to an April report by the Illinois Department of Human Services’ Office of the Inspector General. And an estimated 1,000 lawsuits against nursing homes are in the works, according to Healthcare Heroes Illinois, an advocacy group raising awareness around immunity and liability issues. “This is an existential threat to the industry,” says Healthcare Heroes spokesman Paul Gaynor. “And the pandemic isn’t over.” Sroczynski declines to say whether any lawsuits have been filed against Symphony, which is among operators that experienced outbreaks during the pandemic. But she notes that “the whole industry in Illinois is being stalked by predatory lawyers.”
Amid all the uncertainty, COVID relief funds have been a lifeline for nursing home operators during the pandemic. HFS last year distributed $359 million in CARES Act funding to long-term care facilities, which also got about $520 million directly from the federal government. And an additional $75 million was recently allocated to the facilities. “As those dollars run out, you’ll start to see more operators close their doors,” says Hartman. Even though pre-pandemic occupancy rates in Illinois hover below the national average, facility closures in certain areas prevent residents from getting care close to home and family, he says. Some struggling facilities will look to find a partner that can help keep them afloat. For example, Kevin McGee, CEO of two-community Smith Senior Living, says the company has been approached by two local facilities looking for a buyer. At Smith Village and Smith Crossing, “we have support for nursing at the corporate level, we have support for purchasing, we have support for business office functions,” McGee says. “Those single-site organizations that are by themselves, they’re putting their hands up and saying, ‘We can’t do this again. We need to join a system.’ ”
Crime could dampen demand for downtown condos, real estate agents worry DOWNTOWN from Page 3 Gwen Hughes, a Berkshire Hathaway HomeServices Chicago agent, agrees. “Crime is on everyone’s minds, both buyers and sellers,” Hughes says an in email. As a result, she writes, “The downtown recovery has been slower than I expected. We are all hoping that the crime situation gets taken care of, and the market will start to improve.” Many of the buyers of high-end downtown condos are suburban people either moving into the city as empty-nesters or buying weekend in-towns, and people from other parts of the Midwest who want a foothold in the dynamic city they love to visit. “If they keep seeing this news,” Farra says, “they’ll stay closer to home.”
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The violence certainly doesn’t only threaten condo sales in pricey neighborhoods; it’s undermining daily life throughout Chicago. Efforts by Mayor Lori Lightfoot and the Chicago Police Department to get violence under control have had little effect, to the point that frustrated aldermen called a special City Council meeting in early July to push for better solutions to a frightening spate of shootings around the city. And the Illinois Retail Merchants Association wants more police patrols in the Loop to prevent violence from convincing downtown workers to stay home and work remotely. It’s too soon for any data that would indicate whether recent spasms of disorder downtown have led to a falloff in the area’s condo sales.
Gail Spreen, a Jameson Sotheby’s International Realty agent and longtime Streeterville resident, says she doesn’t expect to see the market’s recovery slow down, for two reasons: All the great amenities downtown, such as restaurants and entertainment venues, outweigh violent incidents in buyers’ perception of the lakefront neighborhoods. And violence has become, essentially, white noise in the background of Chicago. “We’ve been hearing about crime for so long, every weekend for years,” Spreen says. “It’s just another weekend.” Spreen says she showed two suburban couples downtown condos on July 6 and 7 and neither expressed any concern about violence. “It didn’t come up,” she says. Because of the long history of vio-
lence, Spreen says, “people are more careful when they go out. I’m more careful when I go out. But they want the energy of downtown living.” The strongest sign yet that the appetite for downtown condos is back was the $11.25 million sale of a Lake Shore Drive penthouse last week. The sale price was the highest anyone has paid for a downtown condo since early 2019. That is, since long before the pandemic and episodes of social unrest punctured the downtown condo market. Restaurants are reopening, theaters are getting ready to, and the lakefront path and parks beckon. “With everything opening up, people are seeing that downtown is where they want to be, where they have the opportunity to be with other folks and connect,” says Kimberly Bares,
CEO of the Magnificent Mile Association, which boosts that area’s retail, entertainment and tourism options. While she’s not involved in residential real estate, Bares says what she expects to see in the market is “people who didn’t buy during the downturn trying to get in before the prices go back up.” Farra says she’s hoping for the same thing, although she’s surprised not to have seen more buyers flowing into the market when “the inventory is priced so aggressively” thanks to a giant backlog that built up during the two crises of 2020. And she attributes that, at least in part, to an overriding sense that downtown isn’t as safe as it once was. “We have to turn around the perception that there’s no control,” Farra says.
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