How the Nursing Home Industry Can Come Back from the Pandemic

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How the Nursing Home Industry Can Come Back from the Pandemic

In 2020, the nursing homes industry witnessed their worst year in memory. Of the half million Americans who died from COVID-19 related causes, 36% of them were a nursing home resident or staff member. In some states, nursing homes account for up to 54% of deaths; that’s more than half!

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On top of the hundreds of thousands that coronavirus killed, the pandemic also killed the reputation of many nursing homes due to how they handled outbreaks in their facility. Problems include healthy residents being forced to share rooms with people who tested positive. Also, experimental treatments given to residents without their family’s knowledge, and nursing home staff becoming vectors for disease transmission and refusing to get the vaccine. Despite the anger these failures have generated, 20 states granted legal immunity to nursing homes, preventing them from having to explain themselves in court. All these factors come together to worsen the already-dim view most Americans have of nursing homes.

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Other Concerns Of The Nursing Home Industry

Nursing home troubles don’t end with a PR crisis. Between falling occupancy and rising costs, most nursing homes are in dire financial trouble. 65% of long term care facilities are operating in the red while an additional 25% have a profit margin under 3%. If their monetary shortfalls aren’t resolved soon, a large number of facilities could close. Despite the resentment Americans hold for nursing homes, they're a necessary service to provide for the population. By current projections, 70% of senior citizens will require long term care at some point in their lives.

The pandemic has already encouraged people to reevaluate how they see the future, leading a third of adult to take action and financially prepare for long term care. Nursing homes do not have enough present customers to stay afloat, but a lot of future customers will need their services down the line.

The Way Forward

Facing crises on multiple fronts, how can nursing homes move forward? They can clean up their facility and reputation together by enacting simple policies. Cleanliness of a facility is the #3 consideration for current prospective residents. Facilities must consistently apply hand washing rules to visitors, residents, and staff and consistently disinfect with a one-step multi surface cleaner. These procedures go beyond coronavirus; improving surface cleaning and disinfection may reduce healthcare-associated infections (like sepsis) by up to 85%. The future needs to be clean.

Nursing Home Industry

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Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver

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