Challenges and Futures of Long-Term Care Industry after COVID-19 Pandemic

Abstract

COVID-19 pandemic has affected people’s daily life dramatically since December 2019. More than 211 million cases and 4.42 million deaths have been reported and confirmed all over the world. Long-term care facilities are taking the biggest hit during this pandemic, even after the spread-out of the vaccines. Globally, residents in long-term care facilities have experienced disproportionately high morbidity and mortality from COVID-19. Elderlies residing in long-term care facilities have the greatest susceptibility to COVID-19 and the poorest outcomes from infections. This chapter overviewed the insight, impact, and challenges of COVID-19 on the residential care homes in UK, US, and Australia and provided possible implications for the long-term care market post-pandemic.

1. Introduction

COVID-19 pandemic has affected people’s daily life dramatically since December 2019, since it was firstly discovered in Wuhan, China, in December 2019. The pandemic has already spread out to the entire world since March 2020. More than 211 million cases and 4.42 million deaths have been reported and confirmed all over the world. The COVID-19 pandemic has already become one of the deadliest pandemics in human history.

Globally, residents in long-term facilities have experienced disproportionately high morbidity and mortality from COVID-19. Across Europe, almost all countries have struggled to protect vulnerable people in long-term care facilities, no matter their relaxed or strict strategies. Despite the difficulties arising from differences in definitions, in almost all countries where there have been deaths linked to COVID-19, a substantial proportion of those deaths were among care home residents [1]. Based on the same report from International Long Term Care Policy Network, the current average of the share of all COVID-19 deaths that were care home residents is 46% (data from 21 countries). Take an example of May 2020, in Belgium, 51% of the country’s 9,052 fatal COVID-19 cases were reported from long-term care facilities [2]; there were 7,469 reported cases from long-term care facilities in France, including 66% from nursing homes and 34% from other facilities [3]; Germany had reported 22,071 infections related to institutions caring for the elderly (long-term care facilities and nursing homes), disabled people, homeless people, migrants, or those in prison [4]. In the US, COVID-19 also has been shown to affect the elderly (aged 65 years and older particularly severely, with this demographic having the highest COVID-19-associated hospitalization rate around 600 per 100,000 cases based on the date in 2020 [5].

Given that older adults experience a greater number and severity of chronic diseases and disabilities, it is inevitable that COVID-19 will disproportionately affect this population [6]. Thus, it is not surprising that elderly people residing in long-term care facilities, such as nursing homes, care homes, have the greatest susceptibility to COVID-19, as well as the poorest outcomes from infections. This Chapter would like to overview the insight and impact of COVID-19 on the care homes in the UK, US, and Australia, and provide possible implications for the long-term care market post-pandemic.

2. The care homes in the United Kingdom

2.1 COVID-19 in care homes

The UK government publishes daily statistics on COVID-19 related cases and deaths. The detailed reports about care homes across the UK were published in different ways in each separate sub-section.

In England, the Office of National Statistics (ONS) started publishing data on all care home resident deaths on April 11^th, 2020.29,511 care home residents in England died from COVID-19 or related causes up until July 23^rd, 2021, which is 22% of all England COVID-related deaths. The lower percentage of deaths in 2021, compared with 2020, also relatively shows the effectiveness of the vaccines.

In Scotland, the Care Inspectorate Scotland (CIS) has reported weekly data on confirmed COVID-19 related death of care home residents since May 25^th, 2020. There are 10,505 COVID-19 related deaths in Scotland overall as the date of August 16^th, 2021, 3,317 care home deaths (32%) are included. However, even there’s a lower number of deaths in Scotland, the percentage of COVID-related nursing home deaths in 2021 is higher than that in 2020. The elderlies living in care homes (nursing homes) are still the group that has been hit the most.

In Wales, Care inspectorate Wales (CIW) reported weekly data on notifications of deaths of care home residents. A total of 1,932 care home residents’ COVID-19 related deaths have been reported to the CIW, since the first confirmation on March 16^th, 2020. There are 24% of overall COVID-related deaths in Wales happened in care homes (nursing homes).

The Department of Health of Northern Ireland released daily statistics on COVID-19 cases and deaths since April 19^th, 2020. By the date of August 26^th, 2021, there are 2,337 COVID-19 related deaths in Northern Ireland. Of those, 439 occurred in residential/care homes, and 1,859 were confirmed in hospitals [7]. During Fall 2020, 437 care home residents died from suspected or confirmed COVID-19, i.e., around 81% of all COVID-19 care home resident deaths occurred within the care home [8]. Therefore, the total care home resident deaths make up 14% of all COVID-19 deaths in Northern Ireland (Table 1).

	Total deaths (2021)	Care home deaths (2021)	%	Total deaths (2020)	Care home deaths (2020)	%	Total death percentage
UK Total	65,276	12,353	19%	89,243	22,836	26%	23%
England	57,137	10,263	18%	75,782	19,248	25%	22%
Scotland	3,762	1,320	35%	6,686	1,997	30%	32%
Wales	3,002	663	22%	4,945	1,269	26%	24%
Northern Ireland	1,255	107	9%	1,830	322	18%	14%

Table 1.

The COVID-19 statistics about care homes in the UK (July 2021).

Source: Office of National Statistics; Care Inspectorate Scotland; Care Inspectorate Wales; Department of Health of Northern Ireland.

2.2 The structure of the care homes in UK

The UK care home market is a relatively fragmented sector. The structures of care homes are from large corporate operators providing in excess of 10,000 beds to sole traders with one or two homes. Most of the care homes are operated by charities and other not-for-profit organizations. The care home industry, as a whole, is a vital social service. The independent (non-public sector) operators, such as the 10 largest for-profit providers, dominated a quarter of the market. Smaller groups made up around 38% of capacity, with the remainder owned by operators with one or two homes [9]. According to the Grant Thornton report in 2018, in recent years, a two-tier market has emerged based on payment methods, including public pay and self-paying. The operators whose income is mainly from public supports, such as local authority or NHS usually achieves significantly lower profits than those with self-paying.

Like many other countries, the UK’s age structure is shifting towards older ages. In 1999, around 15.8% of people were 65 years and over, this increased to 18.5% people in 2019 and is projected to reach around 23.9% people by 2039 (Figure 1) [10].

Figure 1.

Percentage of Population by Age Group in the UK. Source: Office for National Statistics (January 2021).

The increasing number and percentage of an aging population will be a large group requiring access to care services, such as residential care, care home services, and nursing homes. However, although the growth rate in the 65+ population is forecast to accelerate over the next decade, the absolute number of long-term residential accommodations has declined by 4.4% between 2001 and 2016 [9]. In 2017, 14.8% (estimated) of 85 years and older were in elderly residential accommodation, compared with 25.2% [9].

There are two types of payments for elderlies, one is from local authorities (i.e., public payment), the other one is self-pay. According to Grant Thornton’s research in 2018, around 25% of care homes have over 75% of residents placed by local authorities. Average fees covered by local authorities were 10% less than the total cost of providing care, approximately a 200 million pounds to 300 million pounds shortfall in funding. To counteract this, self-funders have to pay around 40% more out of pocket to care homes, compared with the UK council-funded patients. Even though, the self-pay market is still growing at a fast rate.

2.3 The challenge of the care homes in UK

The biggest challenges of care homes in the UK, before the COVID-19 pandemic, are three aspects: decreasing potential demand due to the switching payment methods; increasing population size with limited bed numbers; declining qualified staff and nurses in care homes. These challenges, under the outbreak of COVID-19, become much tougher and more difficult to deal with.

Before the COVID-19 pandemic, the potential demand for care homes have already decreased due to the switching payment methods. Self-funders become the new focus of the market after several care home closures that focused on local authority-funded payers [9]. Without the support from the local authority, not every single elderly, who is eligible for residential care homes, has sufficient ability to self-support his/her stay and other further expenses. After the pandemic, due to the high numbers of confirmed cases and deaths, a proportion of potential consumers would start to question care homes and reconsider their options after retirement. The demand for care homes may have an even sharp decline during the post-pandemic period.

The residential care home industry has experienced dramatic changes due to the pandemic. With the drastic hit from COVID-19, residential care homes would have to face many potential problems, such as social distancing bed arrangement, more inputs on disinfection supplies, etc. The capacity of the care homes dropped because of the limitation of room and space, to protect patients and follow the pandemic safety rule. Piling inputs on disinfection supplies may cause declining investment in other aspects (such as staffing, daily operation supplies, etc.), which possibly affect the daily routine or even the operation model. The percentage of net earnings¹ among care home providers falls from 32.8% in 2006/07 to 25.2% in 2016/17, which has been attributed to increased food and property costs, the freezing of local authority fee rates in real terms, and higher wage costs before COVID-19 [9]. After the pandemic, the care homes may face an even lower percentage of net earnings due to the increasing investment in preventive and disinfection supplies and higher hiring costs for qualified staff.

Hiring a qualified and satisfying staff was one of the biggest challenges for the care homes in the UK before the pandemic. It is estimated that 1.22 million social care workers will be needed between 2016 and 2036 [9]. The increase of national living wage (NLW) and national minimum wage (NMW) has raised the real wages and the original costs of each care home. However, the pandemic completely changed the story of nursing education, which may turn the staffing situation in UK in a different direction. According to the data from the Universities and Colleges Admission Services (UCAS), there has been a total 37,635 nursing students accepted onto the course in 2020, comparing 30,395 in 2019. It includes 29,740 students placed in England, 4,785 in Scotland, 1,985 in Wales, and 1,125 in Northern Ireland. There was a significant fall in nursing students in England in 2017 due to the removal of the NHS bursary. This 2020 number shows a new faith and understanding of the nursing world during pandemic. Even though, the Health Foundation warned the government’s pledge for 50,000 more nurses by 2025 would be insufficient to meet growing demand, especially during the coronavirus pandemic. The pandemic may still have potential to shrink this gap by encouraging more people to pursue careers in medical field.

3. The nursing homes in the United States²

3.1 COVID-19 in nursing homes

The COVID-19 pandemic in the United States has already confirmed more than 39.1 million cases, with more than 639,000 deaths, which make the United States the most of any country, and the 24 highest per capita worldwide. COVID-19 has been shown to affect the elderly (aged 65 years and older) particularly severely, with this demographic having the highest COVID-19-related hospitalization rate in the US of around 600 per 100,000 cases [5]. Given that older adults experience a greater number and severity of chronic diseases and disabilities, it is inevitable that COVID-19 will disproportionately affect this population [6]. Thus, it is not surprising that elderly people residing in long-term care facilities, such as nursing homes, have the greatest susceptibility to COVID-19, as well as the poorest outcomes from infections.

Using state and federal data, the COVID Tracking Project (CTP) estimates that as of March 2021, about 8% of people who love in US long-term care facilities have died of COVID-19 (nearly 1 in 12), and nearly 1 in 10 for nursing homes alone. According to CTP, throughout the COVID-19 pandemic, a third of all US COVID-related deaths were long-term-care facility deaths, which include nursing homes, assisted living, and other long-term care facilities.

3.2 The structure of nursing homes

Nursing homes in the US are aiming to provide care to those with permanent disabilities rather than to ‘cure’ [12]. According to the Centers for Disease Control and Prevention 2016 statistics, there are approximately 15,600 nursing homes in the US, with around 1.7 million beds and over 1.3 million residents. There are also 12,200 home health agencies, providing care in the patient’s own home and serving 4.5 million patients each year. Other types of long-term care contain hospice care agencies, residential care communities, and adult day service communities, the latter two of which provide able patients assistance (Table 2).

	Nursing homes	Home health agencies	Hospice care agencies	Residential care communities	Adult day services centers
Number of facilities	15,600	12,200	4,300	28,900	4,600
Number of beds	1,700,000	N/A	N/A	996,100	N/A
Number of residents	1,300,000	4,500,000	1,400,000	811,500	286,300

Table 2.

Statistics about Long-Term Care Facilities in the US (2016).

Source: National Center for Health Statistics, CDC, 2019.

The nursing home industry contains a relatively large number of nursing homes, with fees being affected by numerous factors, including consumer demand and government regulations. As a result, it is a highly competitive industry [13].

The COVID-19 pandemic may affect consumers’ preferences regarding the long-term care facilities they choose. Before the substantial rise in COVID-19 cases among the general population in July 2020, nursing homes and assisted living facilities made up the majority of US COVID-19 cases, with a fatality count of more than 50,000, comprising over 43% of the total deaths in June [19]. This high death rate and the following struggle to ensure patient safety and transmission control in nursing homes may deter potential service users from selecting residential care. This scenario may lead to a demand shifting on the long-term care services market, from nursing homes to home care.

3.3 The challenge of nursing homes

The conduct of nursing homes relates to various external factors, which impact the behavior of long-term care providers, such as government regulations, policies, and property rights (for-profit or not-for-profit). And not all patients were always treated and cared for equally.

Throughout the pandemic, all residential care facilities were following the same government COVID-19 regulations and protocols to the best of their ability, such as maintaining social distancing rules in a public area, separating and quarantining COVID-19 patients, emphasizing strict facial mask rules, etc [14]. All the regulations and rules caused another layer of the financial burden for most residential care facilities. Some small facilities, or those that lack strong financial support, may struggle to implement these changes, and therefore must face tough competition from other nursing homes with greater financial means, as well as from other substitutes for long-term care.

To assess the overall performance of the long-term care industry, several measures are usually examined, including expenditure on long-term care, private insurance for long-term care, the price of nursing home care, and the relative use of nursing homes, home healthcare, and hospice services [13]. Long-term care facility costs comprise the largest share of annual direct spending by those receiving Medicare beneficiaries as a result of age (>65 years) or disability status [15]. Long-term care expenses, such as nursing homes and assisted living facilities, are the number one category for out-of-pocket payment, followed by home healthcare [16]. In 2020, nursing homes cost an averagely of $6,844 monthly, or $82,128 per year, which is higher than the median household income in the US. Given the scale of the financial costs, the additional risk of COVID- 19 infection, and the restrictions on visiting could turn potential consumers away from all this type of long-term care, especially with inexpensive other forms of care. For example, home healthcare costs an average of roughly $4,000 a month [17].

Before the pandemic, nursing homes were usually the prioritized choice for elderlies, because of trustworthy performance, regarding the quality of care, group living, and partial insurance coverage [18]. However, even prior to 2020, the average annual growth in demand for home healthcare was greater than that of nursing home facilities (Table 3) [19]. With the additional influence of the pandemic, it is reasonable to observe that more people will start to choose home healthcare over nursing home care as the most appropriate, safe, and affordable option for their later lives.

NHE, billions	2009	2010	2011	2012	2013	2014	2015
Nursing care facilities and continuing care retirement communities	134.9	140.0	145.0	147.4	149.2	152.6	158.8
Home health care	67.3	71.0	73.8	77.1	80.0	83.6	88.8
Annual Growth, %
Nursing care facilities and continuing care retirement communities	3.5	3.8	3.6	1.6	1.3	2.3	2.7
Home health care	8.3	5.5	4.0	4.4	3.7	4.5	6.3

Table 3.

National Health Expenditure (NHE) amounts and annual growth for nursing home and home health care.

Source: Centers for Medicare and Medicaid Services (CMS), Office of Actuary, National Health Statistics Group.

4. The residential aged care facilities in Australia

4.1 COVID-19 in residential aged care facilities

The COVID-19 pandemic was confirmed to have reached Australia on January 25^th, 2020. Until now, there were 56,565 positive cases and 1,019 deaths confirmed in Australia. The Australian Government Department of Health reported positive cases and COVID-associated deaths on daily basis. The elderly account for a staggering 697 of those deaths. 61% of deaths occurred in residential aged care facilities. People who had picked up the infection in the nursing home where they were supposed to feel safe. Table 4 here illustrated the positive cases overall and in residential aged care facilities for each subarea in Australia.

	Total cases	Total deaths	Total cases in residential aged care facilities	Total deaths in residential aged care facilities	Percentage deaths in residential aged care facilities
Australia	85,629	1,162	2,338	710	61.15%
Australian Capital Territory (ACT)	742	3	—	—	—
New South Wales (NSW)	51,986	295	345	53	17.97%
Northern Territory	204	—	—	—	—
Queensland	2,016	7	1	1	14.29%
South Australia	898	4	—	—	—
Tasmania	235	13	1	1	7.69%
Victoria	28,456	831	1,991	655	78.82%
Western Australia	1,093	9	—	—	—

Table 4.

COVID-19 in Australia (09/19/2021).

Source: Australia Government Department of Health (09/19/2021).

In the ACT, Northern Territory, South Australia, and West Australia, there’re no active reported positive cases or death available in nursing homes. In other subareas, the number of positive cases and deaths is not as high as UK or US, but the percentage still may prove the severity of the outbreak at the residential aged care facilities. In Victoria, almost 80% of COVID-related deaths are from residential aged care facilities (Figure 2).

Figure 2.

COVID-19 in Australia’s nursing homes (September 2021).

4.2 The structure of nursing homes in Australia

Aged Care in Australia is the provision of services to meet the unique requirements and needs of elderlies in Australia, which includes in-home care, residential care in aged care (nursing) homes, and short-term care such as respite care [20]. The aged care industry provides older Australians with a range of different services, allowing them to access appropriate and affordable care when and where they need it. In Australia, many aged care services are government-subsidized to help keep costs manageable and affordable [21]. Australians, who are eligible for government subsidies, will still be expected to contribute to the cost of services if they can afford to.

The Australian aged care sector is large and complex. According to the Aged Care Financing Authority, the aged care industry is one of Australia’s largest service industries, including over 350,000 employees, over one million consumers, and around 2,000 service providers. The aged care industry is essential to elderlies in providing a variety of care options for their later stages of life. In 2016/17, aged care services made up $17.8 billion of Commonwealth expenditure, which is a significant public involvement [22].

There are over 2,000 aged care services in Australia, supplying three different types of aged care services: home and community care (HCC); home care; and residential care. HCC provides entry-level basic support for older people who need assistance to live independently. Home care contains 4 levels of care provided to elderlies living at home, ranging from basic to high-care needs. Residential care provides accommodation and support for those who choose to live within residential care facilities, which is the one we focus on in this chapter. In 2013/14, residential care facilities generated 82% (14.8b) of total revenue and received 73% ($9.8b) of total Commonwealth funding to the aged care sector, while residential aged care places represented only 18% (189,283) of total aged care places (Table 5).

	HCC	Home care	Residential care
Number of providers	1,676	504	1,016
Number of places	775,959	66,149	189,283
Commonwealth funding	$1,701m	$1,271m	$9,814m
Total revenue	$1.8b	$1.3b	$14.8b

Table 5.

Basics about the Aged Care Facilities in Australia.

Source: Deloitte Access Economics [22].

A combination of for-profit, not-for-profit, and government service providers contributed to these three types of aged care services. Across all three types, not-for-profit providers supplied most aged care services, with the market share of these providers ranging from 52% in residential care to 74% in HCC [22].

Looking at the recent patterns and prominent factors, the growth of the aged care industry is a given without the hit of COVID-19. Apparently, the pandemic warned people to make a smart choice about their aged life. The aged care facilities, especially the residential aged care facilities, face quite big challenges before and after the COVID-19 pandemic.

4.3 The challenges of the nursing home industry

The first challenge is the changes of demands of the Baby Boomers. As Baby Boomers move into old age, this trend is set father greater momentum over the next three decades. Baby Boomers are a sizable cohort, accounting for nearly 5.6 million Australians [23]. The proportion of people aged 65 years or over is projected to increase from 13% in 2010 to 23% by June 2050 (Figure 3) [24].

Figure 3.

Estimates about the percentage of elderlies by 2050. Source: Australian Government [24].

Given that the number of seniors is continuously climbing and potential consumers are now exercising more control over the care packages and facilities, policymakers and service providers should focus on creating a sustainable system that supports the increasing volume of the elderly [25]. Compared with the new generations, Baby Boomer tends to be cautious and rational on consumption behavior. With the hit from COVID-19, it is possible to switch Baby Boomers’ decision-making process and affect the demand of aged care facilities. Aged care service providers can consider investing in technologies such as Augmented Reality, Virtual Reality, Artificial Intelligence, Video Calling, CRM solutions and more to suit the varying demands of seniors.

The second challenge is the lack of skilled staffs and how the aged care facilities attract them. The Aged care sector is heavily dependent on the skills of the workforce. From the population perspective, for every couple of retirement age, there were 15 people in the working-age population in 1970. This number dropped to 10 by 2010 and is projected to decline to 5 by 2050 [26]. Apparently, the number of skilled workers leaving this industry is rising. Increasing workload and stress, less career growth opportunities, extended working hours and dissatisfaction from the remuneration are some of the main reasons responsible for the drain of skilled employees [25].

The COVID-19 pandemic is possible to make this situation even worse. According to a survey of the Australian nursing, midwifery, and care worker workforce, which was completed by Rosemary Bryant AO Research Centre in May 2021, around half of the survey respondents were moderately or extremely concerned about having adequate staff (53.18%), the welfare of their colleagues (52.15%) and having the right skills mix in the workplace (51.43%). The workload for nurses has significantly increased since the pandemic. During the pandemic, working at an aged care facilities means the highest levels of workplace demand, role conflict, work-life conflict, and lowest job satisfaction, as well as the lowest clarity compared to other workplace groups [27].

Another problem is to attract qualified and skilled workers. Recruitment of a skilled workforce such as certified care givers and nurses for the aged care facilities is also a big challenge as well. Under situations with high workloads and low job satisfaction during the pandemic, attracting a qualified workforce becomes even harder. The aged care service provider may invest in some high-quality technology solutions and create a robust infrastructure to manage the situation. For example, they can offer the remote working options or proper transport facilities by arranging private vehicles or an appropriate bus facility [25].

5. Conclusion

Starting from the early months of the COVID-19 pandemic, the long-term care facilities have experienced an extremely tough period all over the world. Suddenly, the nursing home industry, which has been long operated out of public view, finds itself at the center of scrutiny. During a crisis like this pandemic, it becomes especially critical to preserve the necessary functions for long-term care facilities. It is essential for aged care centers to maintain their size, the number of beds, recourses, manage external emergency circumstances, and also boost the potential demands. Based on our findings from the UK, the US, and Australia, we can say that the COVID-19 outbreak will likely push potential or existing residents and their families to question and reconsider whether the residential long-term care facilities, such as nursing homes, senior centers, or aged care facilities, are the best or safest options for them to be.

The pandemic challenged and changed the way of operations for almost all the long-term care facilities all over the world. Even the number of elderlies is rising in the future, the diverse format of retirement life care and the decreasing trend of public financial supports have already dropped the demand for residential long-term care facilities before the COVID-19 pandemic. Due to the rising number of confirmed COVID cases and deaths in nursing homes, not only the potential patients, but also the qualified staffs and workers may have second thoughts about continuing their works in nursing homes. Meanwhile, the entire long-term care industry has been lacking qualified and skilled staffs and nurses all the time even without the pandemic. Although, in some countries (such as UK), potential students who may dedicate their will to become a nurse or font-line medical workers after seeing and understanding the meaning and importance of medical-related work. Unfortunately, this is not happening in most of the countries.

After the COVID-19, for potential elderlies or demanders who may need residential care, there’re many other new options that can provide sufficient and affordable care. All options for later-life care, including assisted living facilities, home healthcare, and community-based care, need to be reviewed and re-evaluated after COVID-19. As the major financial supporters of long-term care, each government may also need to consider how to adjust the residential aged care facilities and adapt them into the new business norm after COVID-19. And also, potentially speaking, home- and community-based care are highly possible to become the new dominants for the post-COVID long-term care industry.

Conflict of interest

The authors declare no conflict of interest.