A banking expert is predicting that the skilled nursing industry’s new payment model is going to create a world of “haves” and “have-nots.”
Taaha Shaikh, a Cain Brothers director, made that forecast in a commentary released earlier this week. He noted the impending arrival of the new Patient Driven Payment Model in October, and said that to survive, savvy operators must integrate themselves with their hospital partners and invest further in technology to track patients.
Meeting PDPM’s demands may prove challenging, though, for providers already grappling with dwindling reimbursements, he wrote.
“Those SNFs that are able to make these investments together with a commitment to maintain quality metrics will ultimately attract acute care partners,” Shaikh said. “However, years of thin and declining operating margins coupled with highly leveraged balance sheets will divide the SNF industry into groups of ‘haves’ and ‘have-nots’ with the former able to command a larger share of patient cost savings.”
Shaikh noted that a “significant” portion of SNF operators do not have the debt capacity to reinvest in their facilities or the necessary technology to remain relevant as new value-based models are implemented. However, he offered reason for optimism, with many hospitals seeing nursing facilities as the best setting to send patients after discharge. As proof, he pointed to a recent study, which concluded that SNFs demonstrated lower readmit rates than home health.
“Acute care providers have realized that to successfully reduce average length of stay and readmission risk, they will need to partner with high-quality SNF operators,” Shaikh said.
