Chief financial officers of skilled nursing facilities are increasingly collaborating with the front line while paying close attention to key operational metrics. Such evolutions in the role are crucial, given immense financial pressures caused by the skyrocketing cost of care and low Medicaid reimbursement rates.
CFOs in the space would do well to collect real-time metrics including care, cost, census, accounts receivable and culture, according to Gale Boice with North Carolina-based Principle LTC.
Boice, who currently serves Principle in the role of CFO, discussed with Skilled Nursing News the evolution of this position since the pandemic began, and stressed how crucial metrics are in order to stay above water even as cost of care continues to rise. Boice also provided input on the likelihood of Medicaid support, inflationary pressures and recent rate hikes by the Federal Reserve.
Boice has more than 30 years of experience in finance, revenue cycle management, operations, consulting, accounting, internal audit and compliance. Principle provides skilled nursing services at 45 facilities across North Carolina, Kentucky and Virginia, and hospice care through its subsidiary, Cardinal Hospice Care.
The transcript below has been edited for length and clarity.
SNN: What are your top priorities at the moment?
Gale: Our top priorities are simple. After the destruction of the pandemic, as we continue to evolve as an organization, we are laser-beam focused on balancing quality of care with good people, strategy and finances. We are stabilizing our care and services, hiring staff so we are no longer relying on agency and continue to grow our census back to pre-pandemic day levels.
We would love to get a little more detail on how the finance team is collaborating with the front line. How is this being done? Is technology involved?
Principle has invested in facility and regional based real-time dashboards to highlight key metrics including care, cost, census, accounts receivable and culture. These metrics are reviewed in real time at the facility level, weekly with regional VPs and monthly as an organization to identify top performers across our organization and areas for continuous quality improvement.
Additionally, we facilitate ongoing training to ensure all administrators know the “why” behind these metrics, what they mean, and why achieving a balanced approach for key metrics is critical to the overall success of their facility.
Do you see the CFO role as having evolved at all through Covid?
Yes, my role has evolved at Principle during the five years I have been here and through the pandemic. The collaboration between the CFO and the operators is critical to overall business success. We have been collaborating with our front-line operators with purchasing, budgeting processes, transparency, teaching and training, and working closely with the strategy team to ensure the financial information that we provide is used to assist the organization to make informed decisions.
If a CFO does not collaborate with operations, then I would imagine they would not have all the information they need to make patient and employee-centered decisions.
What do you see as the biggest financial pressure areas for your organization, or for the industry as a whole?
Over the course of the pandemic, the cost to deliver and to provide services has gone up dramatically and without matching reimbursement — the financial pressures will be immense.
Specifically, in North Carolina the support given during the pandemic at the state level was notable and was instrumental in keeping up with our ongoing costs. Our other states also provided support as did the federal government. As that support is being pulled back, we are
genuinely concerned about meeting our Medicaid costs. We have heard this message from most other SNF providers and know that the industry in general will be at significant risk if this does not occur.
Where do you see the biggest opportunities for “wins” from a financial perspective?
Medicaid reimbursing our cost, redeveloping our census, and eliminating contract labor.
What are your expectations for inflation and interest rates for 2023?
The cost of everything has gone up — food costs have gone up 12%, for example. Labor, medical supplies, insurance, etc., have increased. Inflation is just a small portion of the overall issue as costs have increased across the board.
We saw the Fed raise interest rates by 25 basis points last week. Was this in line with what you expected, and does the banking system turmoil lately add to your concerns about ongoing financial pressures and availability of reasonably priced capital in 2023?
Given the increase in costs across the board in the U.S., this is in line with what we anticipated.
Will inflation ease, and how notably? How much have rising interest rates created a financial squeeze for your company and how are you reading the tea leaves about what the Fed will do throughout this year?
Our expectation is that the environment is not going to improve soon. Everything has gone up and we do not see any immediate relief on this issue. Inflation easing depends a lot on how the U.S. economy does overall and whether the workforce will re-enter the nursing industry as many fled during the pandemic.
How bullish are you on Medicaid rate increases and how concerned are you about the rise of managed care? (Or do you see the rise of managed care as a positive?)
As a company that takes care of many Medicaid residents, we are cautiously optimistic that Medicaid will increase reimbursement to ensure our basic cost to provide quality care is covered. Managed care has been around a long time, and we have had a positive experience at Principle with our MCO partners. In North Carolina, for example, reimbursement from our managed care providers is aligned with our Medicaid reimbursement rates. Therefore, we
see managed care as an opportunity and as a positive.