Genworth: Nursing Home, LTC Costs Still Rising, Affected By COVID

The COVID-19 pandemic has exacerbated what were already steadily increasing costs for nursing home and at-home healthcare services, according to a recent survey.

The annual Cost of Care survey conducted by Henrico County-based Genworth Financial Inc. showed that the median cost for a private room in a nursing home in Virginia has increased about 7.4% this year to about $105,850. Nationally, costs also rose 3.6% to about the same amount.

The general trend over the 17 years that Genworth has conducted the survey has been steadily rising costs for various types of long-term care, as providers face growing expenses for labor, training and regulatory compliance.

The COVID-19 pandemic has accelerated that trend as providers have had to implement new safety and training protocols and buy more personal protective equipment for employees, said Gordon Saunders, a senior brand marketing manager at Genworth who manages the annual survey.

Genworth, which sells long-term care insurance, collected 15,000 survey responses from nursing homes, assisted living centers, adult daycare providers and at-home care providers across the nation.

"Providers have been competing with higher-paying, less-demanding jobs for years, but with COVID-19, they told us it has become much more difficult to recruit and retain care professionals because of factors such as concerns about exposure to COVID-19 and parents needing to stay home with school-age children," Saunders said.

In the most recent survey, which was conducted in July and August, providers nationwide said assisted living facility rates increased by 6.15% to an annual median cost of $51,600 per year. In Virginia, rates were up about 1% to an annual median cost of $58,200.

In this year's survey, Virginia did not see an increase in the cost of homemaker services-which includes assistance with hands-off tasks such as cooking, cleaning and running errands-but the national median cost was up about 4.4%.

The median cost for home health aide services-which includes hands-on personal assistance with activities such as bathing, dressing and eating-rose less than 1% in Virginia, while the median national cost was up 4.3%.

The national median cost of a semi-private room in a skilled nursing facility rose to $93,075, an increase of 3.24%. In Virginia, the cost of a semi-private room was up 4.28% to $91,980.

Costs are generally higher in the Richmond area than the median for Virginia. For instance, the median annual cost for a private room in a nursing home in the Richmond area stood at $115,523 for 2020. The only category where costs in Richmond were lower than for the state was assisted living facilities, at a median cost of $43,740, compared with a median cost statewide of $58,200.

Many long-term care providers are trying to absorb the new costs created by the pandemic, Genworth said based on interviews with providers. Yet more than half-62%-predicted that they would eventually be forced to raise rates in the next six months, with 43% saying those increases would top 5% or more.

Some providers have offered increased hazard pay of up to 50% for employees to work if they might face COVID-19 exposure.

"We have heard from providers that attracting skilled labor is very much a challenge," Saunders said. "If you have these types of skills, you are very much in demand. I do believe that is going to continue to be a challenge."

Lew Spelgatti, owner of the Home Instead franchise in the Richmond and Tappahannock areas, said his business, which provides home care services, has tried to absorb as many costs associated with the pandemic as possible.

"COVID has affected everyone," he said. "For us, being a small business, we have decided that we are providing all the protective equipment for caregivers. We don't want it to come out of their pockets, and we want to stay competitive as well, so we don't want to pass those fees to our clients as well."

The company, which employs about 150 caregivers, provides homemaker and basic personal care services to clients but has been planning to expand more into providing healthcare such as administering medications for clients. That plan had to be put on hold this year because of COVID-19, but Spelgatti said he is planning to move forward with it in 2021.

"As far as cost goes, there has been an impact," he said. "We know that on the flip side of that coin, COVID has really illuminated the fact that we need to consider aging at home as at least a viable option compared with going into a facility."

Genworth said results of another survey it conducted of 1,000 consumers showed that the COVID-19 pandemic has had an impact on the way people think about long-term care planning. About 40% of the people surveyed said they were increasing their willingness to prioritize saving for long-term care. About 1 in 3 of those surveyed said they have already started taking action by thinking, researching, and talking to loved ones or financial professionals about how they would pay for long-term care services they might need.