December 28, 2021 - As we get ready to turn the page to 2022, one hesitates to continue to discuss the COVID-19 pandemic. However, the fallout continues, with fresh ramifications for the long-term care industry. The industry continues to receive heightened scrutiny following the pandemic, and New York's legislative answer to the concerns are set to hit nursing home businesses in New York as of Jan. 1, 2022, with a cap on allowable profits. The impact on capital outlays and acquisitions remains to be seen.

Both legislatively and through executive action, the State of New York began introducing fresh proposals impacting nursing homes in March 2021. The goal of the legislation was to ensure nursing homes, which receive government funding, spend at least 70% of their revenues on direct resident (patient) care, 40% being utilized directly to pay staffing costs for resident-facing staffing such as registered nurses, licensed practical nurses and nursing aides, with requirements on the minimum number of hours such staff need to spend with a patient per day.

Additionally, which is the larger concern of the two items, New York decided that nursing home businesses should not be operated for profit and, effective Jan. 1, 2022, it has capped allowable profits for nursing home businesses at no more than 5%, as determined by revenue and expenses reported on Medicaid cost reports.