Second Nursing Home Report Explores Impacts of Economic Crisis

Today’s blog is provided by Deb Emerson, a Principal in our Senior Living Practice.

An American Health Care Association’s (AHCA) report produced by CLA released in May further analyzes the state of the nursing home industry and builds on an earlier report released in March. The new report provides a deeper look into the economic crisis facing the nursing home industry while also considering the potential impact on access to care and health equity for thousands of nursing homes if proposed reimbursement cuts to Medicare (and Medicaid at state levels) are implemented.

As seen in the 2022 outlook, Skilled Nursing Facility (SNF) providers face a series of unprecedented financial challenges. While the 2022 outlook reflects financial challenges to date, the second report looks at increases in labor costs and rising inflation rates as influencers of local access to care and health inequities. The potential consequences of this increased SNF financial risk create a distinct set of challenges. The entire industry will be faced with the difficult task of balancing available capacity while maintaining health equity and serving health needs of nursing home residents.

Four key findings were identified in the report that impact access and health equity – two findings on financial risk and two findings related to health equity and access issues.

• Financial Findings. There continues to be a significant increase in the number of counties across the country that have SNFs at financial risk, with financial risk defined as a facility with an operating margin at negative 7.5% or lower. Second, for the report CLA surveyed over 330 facilities across twenty-four states on labor costs and found continued increases in direct care/nursing costs. These costs further challenge operating margins.
• Access, Health Equity Findings. Financial pressures and eroding financial performance create the potential for greater negative impact on racial and ethnic minority groups. The data suggest counties with facilities at financial risk have a materially higher percentage of racial and ethnic minority population and nursing home residents than counties with no facilities at financial risk. Further, states and counties have varying challenges related to respective available capacity and health equity needs.

We know access and health equity are priorities for the Centers for Medicare & Medicaid Services (CMS). On April 20, CMS released a health equity action plan to address access to health care for all individuals, regardless of their background. The SNF sector has already responded to CMS’s priorities. For example: the SNF industry is: 

#1.  Committed to hiring and educating direct care staff in areas challenged by health care access. Organizations are getting creative in the approach to recruiting and retaining staff. Solutions such as creating and offering specific career paths with support for continuing education will assist in retention. In addition, some organizations are creating their own staffing agencies or a scheduling approach that more aligns with the staffing agency model to provide flexibility for the staff and better controlling cost.

#2. Supportive of Care Compare (formerly Nursing Home Compare) and standardizing reporting of cost report data. CMS is committed to the use of Care Compare and cost report data to expand the collection and use of data. Additional data points have and continue to be added to the Care Compare website particularly related to staffing and quality metrics. Organizations should understand the data behind the quality metrics, particularly metrics derived from the Minimum Data Set (MDS) and the staffing information provided through the Payroll Based Journal (PBJ) reporting. Understanding these areas can provide insight into both the operational and financial aspects of an organization.

#3. Working collaboratively with stakeholders and agencies like CMS. CMS has also prioritized engagement with and accountability to communities served by Medicare or Medicaid. The SNF communities can continue to work proactively and collaboratively with advocacy organizations to communicate with CMS and states on the specific needs and challenges of the industry.

#4.  Committed to providing quality care. CMS is dedicated to promoting the high quality outcomes and safe care for all individuals. The SNF industry continues to focus on quality metrics and adequate staffing to provide high quality care for residents. As noted in #2 above, understanding quality metrics and staff reporting is critical to maintaining and improving quality outcomes of individuals within the SNF community.

Although the SNF industry continues to manage through numerous challenges, through collaboration, effort, and grit SNFs can continue to provide quality care and meet the needs of this vulnerable population.

CLA can help

At CLA we have a dedicated team of professionals- consultants, clinicians, accountants, as well as other industry specialists that are poised to assist in the success of the SNF industry. As thought leaders in the post-acute care space we continue to work diligently to help with all the above stated problems (as well as others) that the industry is facing, such as:

Operational assessments:

• Determining right sized staffing
• Bond covenants
• Expense and revenue cycle evaluation
• Workflow assessment
• Review of the clinical policies and procedures
• Admission and discharge review process
• Five-star analysis
• Quality measure analysis

PDPM assessments:

• Assess accuracy of patient billing
• Identification of revenue losses or insufficient documentation
• Assess documentation systems for clarity, best practice, and revenue analysis
• Monthly claims review and development of a triple check system
• VBP and QRP risk and how to manage
• Benchmarking PDPM rates and case mix groups and national averages