Staffing Efficiency, Flexibility Key to Future Skilled Nursing Success

A recent report puts some hard numbers to the pressures skilled nursing facilities face — and offered a prediction of its own about the much-anticipated “silver tsunami.”

Though occupancy has been declining in skilled nursing facilities, falling from 87% in 2015 to 82% in 2016, the report from accounting and consulting firm Plante Moran projected a growth in occupancy over the next five to 10 years. Plante Moran’s analysis specifically pointed to the year 2030, when the entire baby boom population will be aged 65 and older — a segment that will account for 20% of the U.S. population.

Facilities that can provide cost-efficient, high-quality care have the best outlook in the face of this demographic trend, the report said. It listed two key attributes for success: Cost-effective management of an episode of care, and labor models that let providers move nimbly in response to occupancy changes.

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“In any given year, you’re going to have peaks in your census and you’re going to have a lot of valleys,” Betsy Rust, partner at Plante Moran and one of the report’s authors, told Skilled Nursing News. “Owners and operators have to be looking at ways to manage the volatility better, with different staffing solutions primarily.”

Regional standouts

The report included breakdowns of Medicare profitability, occupancy and payor mix, resource utilization group (RUG) concentrations, departmental cost per day and staffing cost per day — discussing each by region.

The Pacific region had by far the greatest Medicare profitability, defined as the operating results of caring for a Medicare Part A resident at a SNF, at $179 per patient day. This was double the national average of $89 in 2016.

The report included managed care payors in its “private” category for occupancy and payor mix. The West North Central region had the highest private pay concentration at 42%, and the lowest Medicare and Medicaid utilization at 47%.

The data represented more than 14,000 SNFs in the U.S.

Staffing challenges

The competitive nursing environment poses a major challenge for the industry and will continue to increase the cost of nursing wages, according to the report, which used data from 2015 and 2016 year-end Medicare cost reports from the Centers for Medicare & Medicaid Services (CMS).

Given already existing demand for RN services, wages have grown for direct nursing care, despite a decline in direct nursing care hours, the report said. The need to adjust staffing for the volatility of occupancy is the most important takeaway from the report for Rust, since declining occupancy in skilled nursing is well known.

“While I think it’s imperative to be looking at ways that you are going to fill your beds going forward, I think it’s equally imporatant to understand how you’re going to build your staffing models,” Rust said.

Managed care on the rise

Medicare margins are on the decline, with expenses increasing almost 3% and Medicare Part A rates increasing by about 2% from 2015 to 2016, the report found.

That wasn’t the only decline associated with Medicare; traditional Medicare use declined, while managed care use is still increasing. Both trends are expected to continue, according to Plante Moran. Medicare payor mix, or Medicare days divided by the total resident census, declined by 1% to a 15% national average.

This isn’t necessarily a good thing for providers or the industry; while CMS provides public Medicare cost reports, there are no public reporting or cost reports for Medicare Advantage, Rust explained.

“In my view, this is a fundamental problem with the shift to managed care, that there is not any transparency,” she said. “Providers end up negotiating with a managed care company, and they don’t really have any information at their disposal.”

Written by Maggie Flynn

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