Financial performance indicators for nursing homes are changing at this point in the pandemic — instead of interest, depreciation, and amortization (EBIDA)—operators should instead be looking at alternative drivers of performance: occupancy, skilled mix and staffing, as well as external market fundamentals.
CliftonLarsonAllen (CLA) prefers these drivers over more traditional means, because they cut through all the “noise” of COVID-19 funding sources.
CLA’s SNF Cost Comparison and Industry Trends report this week released initial findings after dissecting the Centers for Medicare & Medicaid Services (CMS) SNF cost report data as of July 2021; the full CLA report is set to publish later this year.
Median price per bed, considered an external market fundamental, decreased 6% from January through June of this year, and about 8% year-over-year.
The broad market trend helps “paint a picture” of where the industry is headed. CLA ties in occupancy to price per bed as an indicator of operational performance; occupancy trended below the national medial level, signalling an increase in transferred ownership.
CLA added merger and acquisition market was more active this year, with 103 transactions compared to 94 between the first quarter in 2021 and 2020.
“Through the first eight months of 2021, seven states are recovering at a rate of approximately one percentage point per month,” CLA said in its report teaser. “Operators in these states may find comfort in this rate of recovery, provided they have been able to maintain appropriate staffing levels to care for the patients they are admitting.”
CLA refers to West Virginia, California, Massachusetts, Rhode Island, Kansas, Delaware and New Mexico.
Facilities that reduced occupancy lost “operational leverage” that SNFs had pre-pandemic, CLA said.
Occupancy is dependent on staffing numbers, the report went on, when it comes to utilizing the two as financial performance indicators.
Nursing hours per patient day decreased from the first financial quarter of 2020 compared to the remainder of the year: “A variety of factors helped drive this, including the decline in occupancy and additional labor related to infection control,” the report said.
An increase in contract nursing since 2016, a trend expected to continue, saw nursing pool hours take up more of the total nursing pie: 1.6% in 2016 compared to 2.8% in 2020.
More than 50% of reporting facilities said they used agency nurses last year.
Paying attention to the mix of long- and short-term patients helps provide insights into resources needed in future. Short-stay patients coming from a hospital need “substantial” resources compared to long-term care residents.
Nursing hours increased from 3.7 in the beginning of 2020 to hover around 4 hours through Q1 of 2021, CLA found.
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