Zach Shamberg

Scott

Welcome to our podcast called VERSED with Scott Tittle, a VIUM capital podcast where we'll be interviewing leaders in the long-term care sector who are shaping the future of the profession. We've been discussing issues top of mind to them so our listeners can be even more well-versed as they tackle their day. This podcast is powered by VIUM Capital, a new national financial services firm focused exclusively on providing capital solutions to the seniors, housing and healthcare sectors. For more information, you can find us at volumecapital.com. I'm your host, Scott Tittle. This is VERSED. I'd like to welcome to our first podcast, Zach Shamberg, the president of the Pennsylvania Healthcare Association. Hey, Zach, welcome.

Zach

Thanks for having me.

Scott

Now, Zach, you're in the middle of a very intense legislative session there down in Harrisburg, and we really appreciate your time today. So we don't wanna take up too much of it. We have you on to talk about a very important topic regarding the workforce crisis, but also specifically some agency staffing issues there in in Pennsylvania. But before we get to it, why don't you tell our listeners about your background and how gotten long-term care?

Zach

Yeah, of course. What's interesting is that I really grew up in long-term care, but indirectly I have parents who have worked in long-term care for 25, 30 years, and I can remember conversations when I was younger in middle school and in high school where my parents would talk about the trials and the challenges in long-term care. And all I wanted to do was talk about sports or something else. And now I find myself years later leading those discussions at the dinner table, which is is really nice. I've come full circle. When I graduated college in 2010, I went to be a campaign manager in southeast Pennsylvania right outside of Philadelphia, and we won a race down there in Montgomery County. I became chief of staff to a state representative. We did another campaign in 2012, and then I came to work for the Pennsylvania Healthcare Association, and I was our Chief Lobbyist.

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I was our Director of Government Affairs. And that went until about 2019 when I then assumed the role as president and CEO of PHCA. And just for the listeners, we represent long-term care in Pennsylvania, that's nursing homes, personal care and assisted living. We represent providers, the workers, most importantly the residents. And as I'm sure you'll talk to other guests in this podcast, our role has never been more important, Scott, than it's now, especially after the last two years. We've got providers and workers and residents who need help, who need support, and that's our main role. That's our main job.

Scott

And along those same lines, not only is it more important than ever to be part of the association at the state level, but also the national level. Right? And you were just recently appointed to the National Center of Assisted Living Board. Why don't you tell us a little bit about that experience so far?

Zach

Yeah, that's been fantastic and really elevate Pennsylvania to the national stage and getting the issues that affect assisted living communities and personal care homes here in Pennsylvania in the national spotlight. And being able to affect change, not just in our state capital in Harrisburg, but in Washington DC and working with leaders like LaShuan Bethea, who's assumed your role at NCAL and folks on the NCAL board, other state executives, not just to further an agenda, but really what I found most beneficial, Scott, is learning what other states are experiencing and being able to share in those experiences. Being able to use those experiences to affect change here in Harrisburg. It's been really, really positive just in the last two to three months that I've been able to join the NCAL board.

Scott

Yeah, LaShuan's doing a tremendous job there at NCAL. I'm really excited for where the association's going. And I can imagine for you as an advocate there in Pennsylvania, being a part of the National Association not only allows you to have greater access to your counterparts around the country, the other state chapter presidents, but also to get a good flavor for what other operators are experiencing in other states. And I imagine that makes your region a better advocate there in Pennsylvania. So really look forward to hearing more about your experience at NCAL in the future. As I mentioned before, you are in the middle of a legislative session in Harrisburg. Why don't you tell us, for our listeners some of the priorities you have in the current legislative session?

Zach

Well, aside from workforce, the priority has to be Medicaid funding. And for the last two years, our legislature here in Harrisburg as well as the governor, they've really stepped up to support long-term care in 2020, it was with the CARES Act funding last year in 2021, it was the American Rescue Plan, obviously both one-time stimulus funds that helped our industry, our sector survive. Ultimately, that was what it was about in 2020 and 2021. But as we look forward, Scott, it's gotta be about sustainability and predictability and recurring funding. It's the only way we're gonna be able to allow or empower our providers to invest in their workers, to bring more workers to the front lines and to meet the higher and higher operational costs that unfortunately they're experiencing now, and they're likely to stay in this sector. So that all comes back to Medicaid funding. And aside from any workforce initiatives that we take on, it's gotta be an investment in Medicaid to ensure the sustainability of this sector. And that's very important in Pennsylvania being one of the oldest states in terms of population in the entire country.

Scott

You know Phil Fogg, who is the president of the American Healthcare Association Board of Governors nationally, and also the CEO and president of Marquee out of Portland, Oregon, has said numerous times that if covid has taught us all one thing and one of the most important things is that it's exposed the chronic underfunding of Medicaid, especially on the skilled side. Tell us a little bit about your specific Pennsylvania Medicaid rate there, and then tell us a little more about the money you were able to pull down for the stimulus money and how that benefited operators in Pennsylvania specifically.

Zach

Yeah, and again, I'm very proud of, of our association, our internal team here, and really our members throughout the state who refuse to let their voices go unheard the last two years. And I think to Phil Fogg's point about Medicaid, yes, the last two years have really shown us that there needs to be an investment in Medicaid and what the last two years have done, and unfortunately it took a pandemic to do this, but it did give long-term care, the spotlight, right? It gave us a bullhorn, a megaphone, a microphone, whatever you wanna call it. And the focus was put on us as associations, as providers, as advocacy groups to step up and use that bullhorn and call for the change that needed to be made. And in Pennsylvania, and I know throughout the country with my colleagues, that means an investment in Medicaid.

Here in Pennsylvania, the average daily Medicaid rate per resident is about $199 per day, but the actual cost of care is closer to $250. So do the math. If you're underfunded, per resident every single day by $50, what does that do to you as a provider? It doesn't allow you to invest in staff in your facilities, in the very care that you provide. And it's really put us on a collision course to not being able to keep our promise to those seniors in our aging population in Pennsylvania, who we've said will make sure you receive care on Medicaid. And again, we're getting very close to the point where that may not be able to happen. And given some of the challenges that we're having now, not just on the funding side, but on the workforce side, and I know this is occurring throughout the country, we've got providers who have basically had to close their doors to new admissions.

They can't take new residents, they're turning away vulnerable senior citizens because they don't have enough staff or enough resources to care for them. Now, you asked about the, the last two years in this federal stimulus funding that we were able to secure in 2020 with the CARES Act. It was 295 million total, 250 million went to nursing homes, 50 million went to assisted living in personal care, and that was the first of its kind payment to ALPC, which was fantastic. Last year it was 247 million from the American Rescue Plan to nursing homes, 30 million to assisted living and personal care. And on top of that, a 5 million investment for a HVAC grant program so that providers could invest in their HVAC system. So again, that's allowed us to survive. We need sustainability in 2022.

Scott

Well, Zach, thanks for going in some more detail about the stimulus dollars you were able to pull down for Pennsylvania operators. I know one of the few states so far that's been able to do so and in another other states are looking your stay as a model and a blueprint for possible opportunities for their states going forward in the future. So thanks for all your efforts, Zach. Congratulations. I want to turn to our main topic which is the workforce crisis, and then get into the agency staffing legislation you have have filed there. And if it's okay, I'm gonna go ahead and read a couple statistics to kinda lay the groundwork. There was a recent Bureau of Labor statistics report that came out that gave some really scary statistics on the current status of our workforce indicating that the workforce levels are really at their lowest in about 15 years. And just between the periods of time, February, 2020 and January, 2022 the sector has lost nearly 410,000 jobs. Again, that's 410,000 jobs in just two years. That decline was really significant on the skilled side with about a 15% loss in the workforce on the AL side, about 7%, and for home health about 2%. Zach, what are you seeing there in Pennsylvania? Are your operators and members seeing about the same numbers or even worse?

Zach

Yeah, we are and again, aside from a Medicaid investment workforce is the number one issue affecting long-term care providers in Pennsylvania. It's interesting. We surveyed our members back in September about this because we wanted to learn what was happening on the front lines and really how bad it really was for long-term care providers throughout the state. And what we learned was very, very alarming. And in fact, we sounded a public alarm to say, we need help, we need support, because again, we're on a collision course to not being able to provide care. Back in September, our members told us that since February, 2020, they had lost overall 20% of their total workforce. The vast majority of our providers, nursing homes, personal care and assisted living, had at that time 21 or more open positions that they simply could not fill. 68% of all facilities told us, or providers told us, they were having trouble just meeting minimum staffing requirements.

And I know we're gonna get into it, but back then, when that's six to seven months ago, the vast majority of our members said, we're not just utilizing contract agency staff, we're relying on contract agency staff to provide care each and every day. And ultimately, what does all that mean? It means that we are being forced to turn away vulnerable senior citizens in need of care because we don't have enough workers, we don't have enough workforce to care for them. And in one of the oldest states in the entire country, that is a real problem.

Scott

You know, Zach, your last point I think is a really critical one, which is, at the end of the day, what nobody wants is an access to care issue for seniors and families, right? These workforce issues are significant. The expenses associated with additional labor, both full-time and agency staff and contract staff are significant. And what we obviously wanna avoid is an access to care issue for seniors and families. And so let's get into the bill that you have proposed there in Pennsylvania to kind of attempt to address this agency staffing issue. And for our listeners to set the stage, I want to share some more statistics from a recent skilled nursing news poll. 37.5% respondents indicated that their organization would rely more heavily on agency staff in 2022 than the prior year. And those same respondents indicated that before the pandemic pandemic, they certainly did rely on agency staff to some extent but they were in the single digits sometimes as low as one or 2%, but now it can be up to 40, 50 and even 60% of their current workforce in any given building, any given day.

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So obviously a huge dynamic shift there. Omega reported recently that in quarter three of 2021 agency use for one of its very largest skilled nursing operators was up five times of what it was just two years before in a per patient, per resident day. So obviously, these types of situations not only create operational and clinical issues on the front lines, but can certainly add an additional cost and expense to the bottom line for operators. So Zach, why don't you tell us a little bit about the bill you've proposed there in Pennsylvania and what you hope to address?

Zach

Yeah, and Scott, you did a really good job of just illustrating that this is an unsustainable model moving forward for an industry, specifically nursing homes that are so dependent on a Medicaid rate that is paid every single day. This is not a model that can continue even six months from now. I also wanna be clear, you made the point that staffing agencies were around prior to the pandemic, and our providers utilized staffing agencies, but there has been a reliance on those agencies throughout the last two years, given that we've seen a mass exodus from our workforce and from our full-time employees. And certain staffing agencies in Pennsylvania have been terrific partners throughout the last two years, and we're grateful for that partnership. However, what we have seen unfortunately is that there are staffing agencies who have taken advantage of our providers and they've taken advantage of this situation and of this pandemic.

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And we're seeing hourly rates for CNAs, LPNs, and RNs being inflated by a hundred percent, 200%, 300, or even 400%. We're seeing CNA rates at $75 an hour. We're seeing LPN rates at $175 an hour. So again, I think that causes two real problems. One is it is an unsustainable model, providers are not gonna be able to afford it. And two, we are seeing the mass exodus from our workforce, and they're not just leaving for other service industries, they're going to staffing agencies. I've heard from countless providers over the last year or so who have told me they've lost an employee on Monday, and that employee is back on Tuesday working for the staffing agency. That can't continue. So we've gotta make this a fair fight. We've looked at what other states are doing around the country, and specifically two states, Minnesota and Massachusetts who have enacted law years ago that did two things, regulated the staffing agencies and basically given oversight over those staffing agencies, which I think is very important. And two, cap the rates that a staffing agency can charge. In both cases, I believe in those states rates are kept on average or by about 150% of the median wage rate depending on location throughout the state. That's exactly what we wanna do in Pennsylvania. We wanna provide predictability and we wanna provide oversight to make this a fair fight moving forward.

Scott

Zach, you mentioned Minnesota and Massachusetts as the two states that had statutes on their books already before covid, that would address price gouging situations among agency staffing companies. I know a number of states have been relying on more general price gouging statutes that predated Covid. Say a liabout if Pennsylvania had such a statute. And if so, why you decided to go ahead and file a separate bill?

Zach

Yeah, we need to go further and in working with our attorney general's office in Pennsylvania at the beginning of the pandemic back in March, April and May, 2020, which now Scott, I think you, you would agree, seems like 15 years ago working with them to determine what could be done to address this staffing agency issue. But unfortunately, in Pennsylvania, it's really only applicable that price gouging statute. It's really only applicable to goods, not necessarily services. And as we work through those levels of government, as we work through the attorney general's office, our Department of Health and members of the legislature, we ultimately came to the conclusion this has gotta be done via law. It's gotta be written in statute that is the way to get this done moving forward.

Scott

So Zach, just to play devil's advocate for a second I would imagine that those that would oppose this bill might say something along the lines that, hey, this is the free market and this is what the market prices are demanding, and the free market should be able to set its own prices. If somebody had just dropped into our sector on day one, right, today and not really understood our, how our operators are financed what would you say to them in kinda response to that, that thought?

Zach

It's not a free market when more than 70% of all care provided is dependent on the state's Medicaid rate and the state sets that rate year after year. The free market argument, in my opinion, goes out the window when you're talking about a provider group that's dependent on Medicaid.

Scott

Well, and I would imagine an another angle stepping back and kinda looking at big picture here, right, would be a comment to a state legislator, which would say you have taken steps already to protect the consumer and business owners in other industry lines during times of national emergencies and pandemics with respect to price gouging specifically gas pumps, for example. Why not look at healthcare and specifically long-term care for what it is, which is critical infrastructure during a national pandemic and provide some adequate protection as well. So again, Zach, thanks for that additional clarification and all you're doing there in Pennsylvania to help with this issue. Maybe say a little bit about your session right now. I forgot to ask this for the onset. Where are you in terms ofyour budget cycle? Is this a budget year, an off budget year? And what are some next steps with respect to this bill?

Zach

Yeah, so in Pennsylvania, we have two year sessions. We are in the second year of that, that two year session. So coming up to the election in November. We'll then start a new session in January 2023. We're looking right now in the number one issue in Harrisburg is the impending state budget. And here in Pennsylvania, Governor Tom Wolf is in his eighth and final year, he's termed out. So this is gonna be his budget, maybe his legacy budget to really invest in what he wants to invest in, what he wants to leave Pennsylvania with. As far as the big issues that we're facing. It's Medicaid, its workforce, and Scott, I think it's important to note for your listeners, Pennsylvania is also staring down the of an impending regulatory revision from our Department of Health that would raise staffing minimums in nursing homes to 4.1 PPD. And if you tell a provider, if you mention 4.1 PPD now in the midst of a workforce crisis that sets off the alarm, that sets off the red flag right there. So we're actively trying to defeat that regulation as well on top of everything else that we're doing with the legislature. So it's gonna be a very busy next few months for us, but that's a good thing.

Scott

Well, Zach, thanks for all you're doing there in Pennsylvania on behalf of the sector. I know for any of our listeners that wanna help you out during the session and anything going forward, they can contact you directly there at the Pennsylvania Healthcare Association. And hey, before we go I meant to ask you the outset about your family. So tell us about your family and then I've been asking our guests one question, which is what's on your nightstand? A book you're reading you'd like to recommend for our listeners? So tell us about your family and then maybe a recommendation of a good book.

Zach

So my wife and I just welcomed three months ago, our second daughter, Kennedy. We have an older daughter Vivian, who just turned two years old. So, Scott, in the pre-interview, you asked me what I have on my bedside table. My answer was gonna be aspirin with all the stuff, with all that's happening over the last two years and family life at home. But in terms of books and, and what I'm reading right now, there's actually a great book that was recommended to me by your first guest, Heath Boddy from Nebraska. It's called Race for Relevance. It's five radical changes for associations. And anybody in a state affiliate, anybody in an association, I would recommend it because certainly as we're looking back at the last two years and as we're looking forward, more importantly, we know we have to adapt. We know we have to change. We know we can't do the things that we've done year after year, day after day. And a book like this, Race for Relevance, basically says you need to reevaluate and you need to think about new things moving forward. It's all about being innovative and that's what we're all about at PHCA.

Scott

Well, Zach, you certainly have a lot on your plate. Say the least being a dad second time around and being in the midst of this very intense legislative session. Again, we can't thank you enough for taking time outta your day to suspend some moments with us to let us know what you're working on there in Pennsylvania and your thoughts about this very important topic of workforce and agency staffing. I wanna thank our listeners for tuning in to our second VIUM Capital podcast. Be sure to check back in soon for future sessions with key leaders in our profession that are shaping the sector during these very interesting times. This is VERSED.

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