Benchmarks now show care homes have room to grow using new strategies
LONDON: New benchmarks show that residential care homes have room to grow by using new strategies.
During a period of heightened demand and risk for long-term care providers, a new report highlights sector trends and the strategies nursing homes should pursue to stay healthy.
Themes that will “dominate” this year are financial constraints, workforce disruption and keeping up with changing regulatory requirements, authors noted in the 2024 Skilled Nursing Facility Benchmark Report from consulting company Plante Moran.
“There is a clear bifurcation of post-acute and long-term care services within a SNF, and it’s becoming increasingly difficult to achieve financial success in both service lines,” they added.
Findings were based on data from more than 12,000 nursing homes taken from 2019 through 2022.
The report specifically put a spotlight on Medicare Advantage plans undercutting nursing homes options for post-acute care, while low Medicaid reimbursement rates and stiff competition from home- and community-based care alternatives eat away at the profitability of long-term care.
Nursing homes have struggled to maintain their operating margins in a post-COVID era where provider relief funding has dried up. Residual staffing, occupancy and Medicaid funding challenges remain. The national net profit margin for nursing homes fell by nearly 3% in 2022.
In 2022, the Mountain region — Idaho, Montana, Colorado, Wyoming, Utah, Nevada, Arizona and New Mexico — was the only area of the US where nursing homes had recovered to pre-pandemic occupancy levels on average. Meanwhile, the routine costs of care per patient per day rose 33% nationally between 2019 and 2022, in large part due to soaring staffing costs.
The news is not all concerning, Plante Moran noted, with projections indicating that some post-pandemic trends continue pointing toward recovery. Occupancy should recover to pre-pandemic rates fully in 2024, thanks to a seemingly inevitable long-term increase in demand from an aging US population, researchers said in the report.
However, occupancy and staffing challenges also have spilled over to affect other issues, such as attempts to keep accounts receivable balances in check while working with complicated authorization and billing procedures.
“There is significant variability in contract terms, authorization requirements, billing timeliness time frames and post-payment review between health plans,” the report explained. “Many organizations don’t have the appropriate resources — resulting in growing accounts receivable balances. Occupancy challenges have also caused many facilities to relax preadmission financial assessment procedures.”
Report authors suggested that providers should examine their region’s data and focus on individual strategies for either post-acute or long-term care. Cost and revenue data across the country is broken down by region in the report.
Revamping financial procedures to minimize unintentional losses and maximize efficiency was another key focus area. Plante Moran’s analysts also joined the chorus of voices emphasizing the vital importance of employee retention.
“Build cultures that promote employee engagement and retention,” the report advises. “A strong culture can help prevent burnout, relieve stress, and create a sense of cohesion across your facilities. And a healthy, nurturing workplace environment helps staff provide higher levels of patient care.”
