Adapt or Shut Down: How Smaller, Rural SNFs Can Ride Out the Storm

While rural skilled nursing facilities are facing the same reimbursement and regulatory challenges as their urban peers, they’re going to have to take some extra steps to survive the pressures.

For one thing, rural SNFs are often dealing with a critical access hospital (CAH), defined among other criteria as being located more than 35 miles from another hospital. Going to a CAH with metrics — something SNFs have been told to do for hospitals with increasing frequency — isn’t likely to have as much benefit for a SNF when that hospital is the only one for many miles.

And because of rural SNFs’ location, the typical pressures of staffing and occupancy take on even greater intensity.


That’s according to Erin Shvetzoff Hennessey, CEO of the consulting firm and operator Health Dimensions Group (HDG), in a presentation at the American Health Care Association’s annual conference and expo in San Diego on Wednesday.

HDG operates or manages 64 health care facilities in eight states. Some of the facilities are skilled, and close to half are located in rural area.

CAHs have outsize significance for rural SNFs


Dealing with CAHs are a particular challenge for rural facilities, Hennessey noted.

“CAHs are your partner,” she said. “You probably use them for therapy, and your lab, so they’re a very critical partner. They’re also your competitor … A lot of CAHs have SNF care — it is almost half.”

The fact that rural SNFs mostly deal with critical access hospitals also means that for many, the national conversation about payment reform and alternative models didn’t touch them as closely as their urban counterparts, Hennessey noted. In those conversations, leaders emphasize using data to earn spots in hospitals’ preferred provider networks — but in the rural health world, there aren’t that many SNFs or hospitals to choose from, and those national trends don’t quite apply.

Though the impact of value-based payments has been delayed for rural SNFs, this actually provides them with an opportunity, Hennessey argued.

“We know that [value-based payment] is a train that has left the station with CMS,” she said in the presentation. “There’s going to be value-based payment, there’s going to be penalties for those who can’t provide great care at lower costs, and there will be rewards for those who can.”

Even though SNFs can’t be episode initiators under the Bundled Payments for Care Improvement Advanced (BPCI Advanced) model, they still can partner with the acute-care hospitals and physician groups that can take the lead. A rural facility can go to bigger-city hospitals and ask if they are having trouble with patients that that SNF could take in, Hennessey said.

She also noted that because SNFs have to navigate a fairly complex set of rules and regulations to make money, they can establish themselves as a resource on payments for their hospital partners.

“SNF reimbursement is just so complex, so be the expert,” Hennessey said. “Understand value-based payments.”

Cutting hours, focusing on size

Staffing pressures hit rural facilities particularly hard, simply because the available pool of workers is much smaller. There are numerous grants available to help with staffing in rural areas, Hennessey pointed out, and there are ways to centralize certain functions, such as human resources. That’s particularly important given where resources need to go: the patient.

“When you’re understaffed, you have to focus all available man-hours on resident care,” she said. “Someone who would normally be a full-time biller at one community can bill for two communities if they’re centralized.”

Another option is one that Hennessey noted will require some hard talks with local leadership: a shared staffing model that sees department heads taking on multiple roles.

“What’s really hard is reducing the number of hours for leadership staff, but that’s where the bigger dollars are,” she explained. “In a 40-bed community, do you really need 12 department heads?”

For this step, Hennessey recommended tallying how many hours each task takes at various communities and using full-time equivalent (FTE) — the number of hours worked by one employee on a full-time basis — to help figure out how to allocate tasks.

“Because these smaller communities have shrunk, they can’t support that level of overhead,” Hennessey said. “Department heads aren’t providing that level of strict hands-on care, and that’s where we need to provide our resources.”

Size and the silver tsunami

It’s a truism in senior housing and care that as the population ages, a wave of retirees and seniors will lead to a spike in demand for services — the so-called “silver tsunami.” But rural SNFs cannot sit still and wait for this expected surge, Hennessey said.

“The silver tsunami is going to be here, but it’s not coming as fast as people think,” she said. “It’s going to be a while before people need our services. We need to think of the tsunami as being 10 to 15 years offshore, and we need to think about the undercurrent: the baby boomers leaving our employment roster.”

In fact, rural SNFs should seriously consider shutting down or leasing out units over the next five years, she argued.

“We need to think about strategic sizing,” she said. “How you going to survive for another 15 years until you can have some census?”

Written by Maggie Flynn

Companies featured in this article: