S&P downgrades nursing home ratings; SNFs lose jobs
Alan Rosenbloom, president of the Alliance for Quality Nursing Home Care
Ratings agency Standard & Poor's has put all six of its rated for-profit nursing home operators on Credit Watch with a negative outlook.
As provider groups had warned, the rating change was a direct result of the Centers for Medicare & Medicaid Services announcement last month that Medicare payments to skilled nursing facilities would be reduced by 11.1% starting Oct. 1. The S&P six are: the holding company for Golden Living, Genoa Healthcare Group, HCR Healthcare, Kindred Healthcare, Skilled Healthcare and Sun Healthcare.
In anticipation of the S & P's rating change, The Alliance for Quality Nursing Home Care President Alan Rosenbloom warned it would have a “negative, immediate impact on small and large operators alike.”
“Banks who lend to regional and other local providers monitor actions by S&P, and this will increase their reluctance to lend to the sector, as well as increase costs for borrowers,” he said. “As the lowest margin provider, nursing homes face rising costs and plummeting Medicaid payments.”
Rosenbloom also warned that more cuts could be on the way for skilled nursing facilities when the newly created congressional “super committee” mulls further deficit-reductions strategies due by the end of the year.
Kindred Healthcare CEO and President Paul Diaz echoed Rosenbloom's sentiments upon the company's second-quarter earnings release Monday. While heralding the company's 2011 financial performance amid the RehabCare acquisition (“integration ahead of expectations”), Diaz warned in a statement that “the same rush to implementation that led to the current [Medicare] overpayments will now likely lead to an overcorrection that will negatively impact the interests of patients, residents, staff and job creation.” The company was set to hold its second-quarter earnings conference call at 9 a.m. today.
Monday was the worst day for stock markets since 2008, with the Dow dropping 635 points. In other economic news, while U.S. Bureau of Labor job-growth statistics showed the “nursing and residential-care facilities” category gained 3,200 jobs overall in July, the “nursing homes” lost 500 jobs, according to the job report.