Provider shares take a hit on news of CMS reimbursement cuts

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Provider shares take a hit on news of CMS reimbursement cuts
Provider shares take a hit on news of CMS reimbursement cuts

Shares of major skilled nursing facility operator stocks took a nosedive Monday morning following Friday's announcement that the Centers for Medicare & Medicaid Services are cutting Medicare reimbursements to SNFs by 11.1%, starting Oct. 1. Operators Sun Healthcare, Skilled Healthcare and Kindred Healthcare lost more than a quarter of their market value on Monday, according to published reports.

Sunrise Senior Living, which operates 317 communities in the United States, Canada and the United Kingdom, also saw its shares take a tumble. The company acknowledged that the CMS cuts would affect its operating results, based on a preliminary analysis.

Wall Street analysts said the CMS rule likely would have a “devastating impact” on the industry, with one analyst telling the Associated Press that the cuts represent a “worst case scenario.”

Alan G. Rosenbloom, president of the Alliance for Quality Nursing Home Care, warned that the CMS rule will “dangerously destabilize the nation's second largest health facility employer.”

“The SNF sector has contributed heavily to advancing healthcare reform and deficit reduction, and is confronted by multiple ongoing threats to funding stability,” he said. “The ill-considered nature of the rule and its dire implications to seniors, providers and jobs are significant, immediate and dangerous.”