Medicaid Cuts Will Make It Nearly Impossible to
Attract and Retain Staff

(Chicago) -- The Illinois Council on Long Term Care predicted today that state budget cuts, if passed, would cripple nursing homes' ability to staff facilities with qualified professionals. According to the Council, the proposed 8.8 percent cut in Medicaid funding to Illinois nursing homes, totaling $171 million, along with the proposed elimination of bedhold payments, would force many facilities to shut down. For facilities that manage to stay afloat, the subsequent financial shortfall will severely affect their ability to attract and retain staff members in today's highly competitive labor market.

"With 79 percent of a nursing home's budget going to payroll, Medicaid cuts will strike a devastating blow to staffing levels, wages and benefits offered at Illinois nursing homes," said Terrence Sullivan, executive director of the Illinois Council on Long Term Care. "Thousands of nursing home staff members will end up losing their jobs, and resident care will suffer as a result."

Nursing facilities will be hard-pressed to offer attractive wage and benefit packages to potential employees in a tight labor market replete with competitors including hospitals, home health agencies, assisted living facilities, and other health care providers. Already, the nursing home profession is facing a critical shortage of nurses and aides, reflecting a shrinking labor pool and inadequate Medicaid funding to attract staff. A recent national report shows that 106,982 direct care positions are now vacant in nursing homes across the U.S.

"The demands for front-line staff members will skyrocket in the future, as health care providers face a burgeoning elderly population," Sullivan explains. A federal report indicates that in the next twenty years, there will be a need for 44.2 percent more registered nurses, 47.9 percent more licensed practical nurses, and 46.6 percent more nurse aides. However, the labor pool of nursing professionals has been drying up. Enrollments at nursing schools have declined significantly. Fewer young people are entering the health care field, and the average age of front-line staff members is increasing.

Over the past eight years, the average 100 bed nursing home has increased staffing of registered nurses from approximately 4.75 Full-Time Equivalent (FTE) registered nurses to 8.7 FTE registered nurses, accounting for an 82 percent increase. Additionally, wages for nurse aides have risen dramatically over the past eight years by an average of 33 percent.

The Illinois Council recommends that, with a recession budget, the best solution to avoiding these devastating cuts to Medicaid is to temporarily increase the provider license assessment. By raising money through a license assessment, all monies raised will be matched by the federal government. Increasing the provider license assessment will cost the state nothing and will also prevent the loss of needed Medicaid matching funds.

"Rather than lose federal funds, an increased license assessment brings more federal funds to Illinois to help solve the state’s budget problems," states Sullivan. "Increasing the license assessment is the most practical solution to maintaining the safety net of front-line nursing professionals for our state’s frail and elderly citizens."

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