Skilled nursing revenues lower but Five Star sees electronic records as salvation

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Though its nursing home revenues dropped significantly in 2017, Five Star Senior Living leaders sounded convinced Wednesday that efforts to improve electronic record keeping and data tracking will lead to more lucrative provider partnerships.

The Massachusetts-based company reported overall revenues of $1.12 billion for the year ended December 31, 2017, just a 0.1%  decrease from 2016. But falling occupancy rates (now at 78%) and reduced referrals for Medicare-covered stays are putting more pressure on Five Star's skilled nursing components.

"We saw a $2.7 million decrease in skilled nursing revenue, with the majority of that coming from our leased, stand-alone skilled nursing communities,” President and CEO Bruch J. Mackey Jr. said on a morning call announcing fourth-quarter and year-end earnings Wednesday morning. “As we have discussed in the past, government reimbursement rates continue to be under pressure, resulting in lower margins. Efforts led by accountable care organizations and managed care programs are resulting in decreased lengths of stay [and] lower reimbursement rates and in many cases are requiring people to bypass a stay at the skilled nursing facility and go home for care as a lower-cost alternative.”

But Mackey said the company's standalone, leased skilled nursing communities are still profitable, with income covering twice their rent commitments.

To mitigate shrinking shrinking margins, Five Star in 2017 completed the conversion of all its skilled nursing units — including those operating within larger continuing care retirement communities — to an electronic medical record platform. A second phase will do the same at all Five Star assisted living facilities.

“Being electronic with our medical records allows us to more easily share our outcomes with key referral sources, improves communications with physicians, reduces medication and transcription errors and is vital to participation in all of the organized healthcare programs," said R. Scott Herzig, senior vice president and chief operating officer.