An investment firm with vast expertise in long-term care is recommending six strategies that nursing homes can pursue to battle shrinking margins.
Ziegler released the recommendations to help skilled nursing facilities diversify their revenue streams. The Chicago based firm noted a recent report that found the median operating margin for nursing homes last year was 0% — meaning that half of providers ended 2017 in the red. SNFs are battling this trend with everything from putting more dollars into independent living to doing some consulting work on the side.
“There is no secret sauce or magic bullet, but there are options for providers to consider,” wrote Lisa McCracken, director of senior living research and development.
Along with building in-house expertise and delving into senior living, other items on Ziegler’s list include: managing properties as a third party for other operators, delving more into sub-populations and specialty care, expanding into more home- and community-based services, and forming joint ventures with other companies on alternative business lines.
“Each of these growth areas has its own set of advantages and disadvantages. What each does, however, is offer some form of diversification of revenue and spreads risk across more than one business line. These are not easy fixes and are not platforms that are created overnight,” McCracken concluded.
