Providers mull options following plunge in stocks
Following news of a planned slash in Medicare reimbursements, skilled nursing facility operators have spent the last few days reassessing their financial strategy.
Skilled Healthcare Group Inc. said Monday it was taking the company off the selling block, the same day the company's shares plunged by 56%. Chairman and CEO Boyd Hendrickson said in a conference call that the 11.1% rate cut would lower revenues for the company by approximately $28 million. Program changes for therapy will have a combined negative impact of between $12 and $17 million, he said.
Moody's Investor Service said Wednesday that Skilled Healthcare and HCR Healthcare LLC likely will be hit hard by the reimbursement reductions due to a greater dependence on high-acuity Medicare patients, Dow Jones Newswire reported. Still, Moody's said it does not expect the cuts to impact credit ratings. It added that nursing home operators are still expected to have modest growth over the next 12 to 18 months.
Like Skilled Healthcare, whose shares rebounded modestly Tuesday, Sun Healthcare Group shares went back up 7.5% after a 52% loss on Monday. Kindred Healthcare gained back nearly 5% on Tuesday after losing a quarter of its value on Monday. The company will announce its second-quarter earnings Monday.
Both Sun and Skilled Healthcare said they would reassess 2011 guidance based on the cuts. William A. Mathies, Sun's chairman and CEO, said Tuesday the rule was “contrary to nursing home's value proposition.”
“There's not a lot of wiggle room to absorb this type of hit,” he warned. “From our perspective, it's totally unacceptable. It's unfair and it's not right.”