Skilled nursing operators’ No. 1 priority should be to “focus on the fundamentals of what makes a SNF successful” to remain financially viable despite the sector’s ongoing COVID-19-related operational challenges.
That was the key theme CliftonLarsenAllen experts stressed for providers during a webinar Thursday that focused on current trends causing operational and financial struggles within the SNF industry and how providers can work their way out of troubled waters.
When looking at the state of the skilled nursing industry, current troubles include shifts in occupancy since COVID’s start, which led to a shift in payor mix along with staffing and wage challenges. The SNF workforce lost approximately 238,500 workers during the pandemic, while the average hourly nursing wages increased by 8.1% in 2021 alone.
“We acknowledge these challenges, but we believe that you can develop a strategy to succeed,” Seth Wilson, CLA data analyst manager, said during the session. “If you look at the trends, there’s kind of a combination of things that are outside of your control and things that you can control.”
To steer operations in the right direction, Wilson said providers must leverage internal and external data by turning it into actionable insights that allow them to develop and leverage relationships with trusted partners who may be experiencing similar issues. That means staying true to the fundamentals of business.
“That may seem like a bold thing for me to say,” Wilson said. “They’re fundamentals for a reason. These are the most critical aspects of the organization, your business [and] the business plan.”
SNFs’ focus should revolve around those in need of care, the caregivers and the basic economics of the business. That includes keeping a close eye on occupancy, revenue optimization, staffing and expense efficiency.
Wilson said occupancy is a primary driver of a facility’s financial viability. He called on providers to analyze their occupancy by comparing their recovery rates to their peers and the market, and understanding what the drivers are.
“Whatever it is, a strategy should be developed and implemented to close the gap between you and your competition,” he said.
As far as revenue optimization, he said providers should look for something efficient, effective and low-cost that will have a compounding impact on the revenue stream. He called on providers to compare some key data points, such as referrals, occupancy, average length of stay and skilled mix, their peers and the market to determine if a pay rate assessment can unlock hidden reimbursement opportunities.
He also said many operators are assessing occupancy recapture and revenue growth based on their access and cost of labor. Measures that help identify financial and operational opportunities for SNFs include: pay rates, paid hours per patient day, correlation with occupancy and agency utilization.
“Every dollar that you get per patient day really matters,” Wilson said. “You don’t want to be leaving anything on the table, so having a deep understanding of the rate systems and how to optimize them is really critical for success.”