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Too many empty beds at Colorado nursing homes leave the industry in financial distress

Two corporate operators are pulling back from the state, attempting to transfer a combined 29 nursing homes into new hands.

The sign for Centennial Health Care Center stands in the sun on March 2, 2021, in Greeley. The home is one of 25 in Colorado owned and operated by SavaSeniorCare. (Josh Polson, Special to The Colorado Sun)
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State health officials are worried about the future of a handful of Colorado nursing homes with “severe financial concerns” after a bruising pandemic year that resulted in too many empty beds. 

Two major nursing home operators, meanwhile, are making plans to back out of Colorado or at least decrease operations after occupancy has been reduced statewide by about 3,000 residents, and to an average of 67% of capacity.

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Also, the only nursing home in Estes Park, run by the city health authority, is one of four home closures across the state that regulators say is troubling evidence of financial strain and potential patient disruption. 

More than 2,340 residents of nursing homes, assisted-living centers and other long-term care centers died of coronavirus, and the facilities were banned from accepting new residents if any residents or staff were infected with the virus. 

SavaSeniorCare plans to step away from all 25 of the senior care centers it operates in Colorado, while Genesis HealthCare is working to unload operation of four of its 10 facilities across the state.

The corporations have announced their plans to pull back from the Colorado market but so far have not announced new operators to take over the facilities. They would not release the names of the nursing homes they are trying to unload from their portfolios. 

“We have nursing homes with severe financial concerns, and we have lots of nursing homes that owners are trying to sell,” said Kim Bimestefer, director of the Department of Health Care Policy and Financing, which pays for most nursing home patients through Medicaid and keeps watch on the homes’ financial health.

Rooms stretch out behind the Sierra Vista Health Care Center sign this month in Loveland. The home is one of 25 in Colorado owned and operated by SavaSeniorCare. (Josh Polson, Special to The Colorado Sun)

In addition to monitoring resident care through the pending transitions, Bimestefer said, the state department and ally agencies have boosted payments to nursing homes through federal and state stimulus. They also are working to add more patients served at home through community-based services. Colorado agencies and advocates have long been working to help patients leave nursing homes or stay out of them altogether if they want, and the pandemic fallout provides an opening to redouble that work, Bimestefer said. 

“It’s an opportunity for us to work with the industry on transformation,” she said. 

Working for a safe transition of hundreds of patients remains a key. Colorado knows there are operators who want to get out of running nursing homes, said Bonnie Silva, HCPF’s director of the Office of Community Living. But, she added, the state does not yet know who is willing to take those on. 

Two corporations backing away from combined 29 homes 

SavaSeniorCare, somewhat unique in the industry, both owns its buildings and operates its skilled nursing facilities and senior care centers. In Colorado, the company has multiple centers in Denver, Colorado Springs and Fort Collins, but also several homes in rural towns — including Brush, Yuma, Montrose and Sterling.

The company is leaving certain markets, including Colorado, to prioritize others. Sava is attempting to keep its 25 buildings, but find new operators. The Georgia-based company hopes to have new operators take over by the end of 2021. 

“We are working to find successor operators and will work closely with them to ensure a smooth transition,” said Annaliese Impink, Sava’s vice president for compliance.

Sava wants to downsize operations and focus on improving care at a smaller number of centers, including by increasing focus on infection prevention and investing in new equipment, she said. 

Genesis, based in Pennsylvania and operating in 24 states, has 10 Colorado homes along the Front Range from Fort Collins to Pueblo, as well as one in Grand Junction. 

The company that owns four of those Colorado buildings, Welltower, recently announced that it was terminating leases with Genesis at 51 properties around the country. Welltower wants to transfer management of those properties to other long-term care facility operators. 

A glint of light brightens up part of the sign outside the Elms Haven Center this month in Thornton. The home is one of 10 in Colorado operated by Genesis HealthCare. (Josh Polson, Special to The Colorado Sun)

The goal is that current staff will remain in place and resident care will not be affected by the transition, Genesis said. The company isn’t saying which four Colorado centers will have new operators until the plan is secure, part of an effort to avoid staff turnover.

“We have not yet disclosed transition centers as we are still in the process of communicating with patients, residents, families and staff,” said Lori Mayer, a spokeswoman for Genesis. 

As part of the deal, Genesis will receive $86 million from Welltower, “which it will use to repay a portion of its debt obligations to Welltower,” Genesis said. If certain conditions are met, including that new operators are found for the 51 centers across the country, Genesis could receive up to $170 million more in debt reduction from Welltower. Genesis, which leases 246 senior-living facilities from various landlords across the country, owes Welltower $423 million.

Genesis blamed the pandemic for a dramatic drop in resident admissions, which led to mounting debt on its lease payments. 

“These restructuring transactions improve the financial and operational stability of the company significantly and build on the encouraging signs we are seeing as COVID-19 case rates continue to materially decline and residents, patients and staff are vaccinated,” Genesis CEO Robert Fish said in an emailed statement.

Nursing homes typically need to have 70% of beds full to break even, but most Colorado nursing homes are no longer at that threshold. Of the state’s 230 nursing homes, 26 are below 50% occupancy. 

A report on nursing homes from the Medicare Payment Advisory Commission, which advises Congress on how to save money, said the average profit margin at nursing homes nationwide was less than 1% before the pandemic. 

Resident deaths, bans on new admissions reduced capacity

Nursing homes across the country, not just in Colorado, are struggling financially, mainly due to empty beds, said Doug Farmer, president and CEO of Colorado Health Care Association, a trade group for nursing homes. 

The drop in resident numbers is due to three reasons, including the death of residents from COVID-19. Also, when a nursing home in Colorado had a confirmed case of the virus among residents or staff, the home was not allowed to admit new residents. 

On top of all that, many families who had been considering a nursing home for a loved one postponed those plans during the pandemic, Farmer said. People put off those decisions not just because nursing homes were often plagued with outbreaks, but because of pandemic-related restrictions that prohibited in-person, indoor visits for much of the past year, he said. 

Some people decided, ‘I don’t want to put mom, dad, uncle into a setting where we can’t come visit.’

Doug Farmer, president of Colorado Health Care ASsociation

“Some people decided, ‘I don’t want to put mom, dad, uncle into a setting where we can’t come visit,’” he said. “Other people looked at the height of the outbreak, the cases are high, the mortality rate is high, ‘I think we will wait until the pandemic settles.’”

Colorado has 3,000 fewer residents in nursing homes and other senior care centers than it did before the pandemic began, with just more than 13,000 in the latest count, Farmer said. 

Farmer was confident in the industry’s future, however, and that the homes losing their operators would find new ones. The industry will rebound, and nursing homes will remain an important part of America’s continuum of care for seniors and people with disabilities, he said. 

“I don’t think overall demand for long-term care is going to go away,” Farmer said. “I think it will take some time for people’s confidence to return.”

A discarded mask lies on the sidewalk by Kenton Manor this month in Greeley. (Josh Polson, Special to The Colorado Sun)

If all goes according to plan, residents shouldn’t notice a difference as new operators take over the Colorado facilities, Farmer said. He’s watching closely, though, in the hopes that the transition doesn’t result in closures, particularly in some rural areas where Colorado has already seen nursing homes shut down in the past several years. 

“COVID has just made that all the more challenging,” he said. 

Colorado nursing homes receive three rounds of coronavirus relief

The number of Coloradans living in nursing homes who are covered by Medicaid government insurance fell to about 9,300 last month, down from 11,000 before the pandemic. About 40% of the 6,000 Coloradans who have died from COVID-19 were in nursing homes when they got the virus. 

Because of the loss of patient revenue, and because of sharply increased operating costs due to staffing needs, testing, personal protective equipment purchases and more, the state funneled $117 million in federal CARES Act supplemental funding to the 232 Medicaid-covered facilities, Silva said. The state added $14.6 million of its own funding, and is in the process of releasing an additional $13.3 million.

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The federal and state infusions weren’t enough to rescue the facilities from financial distress, however.

More concerning than the planned transfers of 29 centers in Colorado, though, are the planned closures, state officials said. Four closings in 14 months are “something we haven’t seen in the decade prior,” Silva said. 

Besides the Estes Park center, other nursing facilities that have closed since the beginning of 2020 are Union Printers Home and Laurel Manor, both in Colorado Springs. The state said a fourth nursing home had notified officials it was changing its skilled nursing beds to assisted living.  

The rising sun hits the SavaSeniorCare Kenton Manor sign this month in Greeley. (Josh Polson, Special to The Colorado Sun)

The state ombudsman’s office charged with advocating for long-term care patients declined a request for comment about the closures and the potential turmoil at other nursing homes. 

The closure of Estes Park’s nursing home by April is the final step in a long decline of patient numbers, said Estes Park Health chief operating officer Gary Hall. COVID-19 fears and extra costs did the latest damage, after years of families deciding to send their elderly relatives to lower-elevation homes, and expensive real estate driving out potential health care staff. 

Three patients are left to move from Estes Park, Hall said. The virus makes even moving out more difficult, as patient belongings must be quarantined for a set period of time. 

“The great majority have been able to move to the same single facility on the Front Range, and many of them were very happy to be able to stay with their fellow residents,” Hall said. “It’s a great new facility and, since it takes Medicaid, is a great fit for the residents. Some of the families live outside of Estes, some in Estes, and so it’s unfortunate that the Estes families have to travel farther for visits.” 

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