Skilled nursing facilities are at risk for falling into negative revenue margins, analysis reveals

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Gov. Mark Parkinson
Gov. Mark Parkinson

Nursing homes could be pushed into negative margins if Congress passes proposed end-of-the-year legislation, a new analysis finds.

Skilled nursing facilities, many of which are already struggling to stay in the black, were operating at margin of 0.75% of aggregate overall revenues in 2009, according to an analysis completed by The Moran Company, on behalf of the American Health Care Association.

While the report reflects a negative outlook, the variability of some of the data leaves room for a brighter picture, Moran analysts say.

“While our analysis demonstrates the possibility that the industry might be able to weather reductions of this magnitude, it makes clear the substantial degree of uncertainty surrounding the industry's ability to actually do so,” analysts concluded in a statement.

For the study, called “Assessing the Financial Implications of Alternative Reimbursement Policies for Nursing Facilities,” analysts studied Medicare cost reports for free-standing nursing facilities submitted and included in the Health Care Cost Reporting Information System (HCRIS) for fiscal years ending in 2009.

The findings, based on current Medicare and Medicaid policies, suggest,  “going forward from 2009, nursing facility operating margins would be mildly positive.”  However, if Congress enacts the 2% automatic cuts, the analysis predicts that margins could range 0.64% of revenue in 2012 to 2.11% in 2021.

“Many may not want to mention margins when it relates to healthcare providers, but the fact of the matter is without a margin, it's just not possible to keep operating,” said AHCA President and CEO Mark Parkinson.

Click here to read the report.

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