When the pandemic was declared in March 2020, few organizations were prepared for the disruption to business operations. Fewer still had the resources to adapt to the unimaginable circumstances. In the months since, individuals and businesses alike have anxiously awaited a return to normalcy. It has become painfully clear, however, that most previous modes of “normal” have become obsolete.

Skilled nursing facilities (SNFs) that have been clinging to their previous, time-tested business practices in anticipation of restoring business as usual are in for a struggle. The time is now to have discussions about your overall business strategy and ask the question, “Where do we go from here?”

With census still down significantly from pre-COVID-19 levels and a major staffing crisis to manage, tactical decisions about your day-to-day operations are likely all-consuming. Nevertheless, if your management team isn’t having discussions about strategic modifications, your revenue cycle will have difficulty recovering.

SNF census levels are down for a number of reasons, including a preference for home healthcare that began before 2020. Now, with the Centers for Medicare & Medicaid Services (CMS) waivers designed to increase access to home health still in effect and new legislation, including the Choose Home Care Act of 2021 and the Credit for Caring Act, in the works, home health may be the care option of choice for an increasing number of patients.

Furthermore, those patients who would have been discharged to skilled nursing may, in the near future, stay in hospitals that have opened their own skilled nursing wings and home health agencies in-house. Evolving within the post-pandemic environment depends upon the strength of your strategy.

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Critical Points to Address in Your Strategic Discussions

What is your strategy going forward? In view of the volatility of the current healthcare landscape, this is a question you should be able to answer. If you’re not meeting current strategic goals, and your key performance indicators (KPIs) are revealing weaknesses within your business objectives, you should be having strategic discussions. Furthermore, any discussion about strategy needs data in order to be beneficial. While you may or may not have access to extensive analytics, you can retrieve valuable patient demographic information from your operating systems.

There are four key resident demographics to assess as part of your discussions about strategy, including:

Knowing what types of residents you have is important to reevaluating your business strategy. Start by doing a case study of your residents based on zip code and broken down by primary diagnosis. Have the needs of the majority of your residents today changed from what they were pre-COVID-19? Is there a pattern to your patient base?

In the past, you may have cast a wide net in regard to the residents you sought. If your resident base clearly shows a trend toward a certain primary diagnosis, however, you may want to focus on a particular specialty. For example, specializing in memory care can help you attract more memory care residents rather than trying to be all things to all types of patients. Furthermore, certain diagnoses receive more Medicaid reimbursement than others, making specialties such as ventilation units valuable areas of focus. Part of this discussion would necessarily include whether you have the resources – staff in particular – to adapt to new or focused strategies. Nevertheless, establishing a niche among SNFs in your market may be a worthwhile discussion. 

Where are your residents coming from? It’s likely your referral sources have changed with the pandemic. Take a look at your relationships with hospitals, physicians and other referring organizations. If your previous partnerships are resulting in less referrals, it may be time to talk about expanding into other markets, particularly if you intend to promote a specialized service.

While SNFs have had low census levels, many acute care providers have been struggling to place certain patients who have been denied care. There may be a need that your facility can fulfill, if you have the resources to do so.

Do you see a trend among your primary payers? You may be seeing a shift among Medicare, Medicaid, managed care or private pay. Take an inventory of your payer contracts and the insurances you offer. Your data can help you to determine which payer contracts to prioritize and where you may need to build new partnerships. Look for admissions that are denied because a resident is out-of-network as an indication of contracts you may want to pursue. You could be lacking in insurance offerings that could bring a new demographic to your resident base.

As the number of Medicare and Medicaid beneficiaries enrolled in a managed care plan continue to increase, you should aim to bulk up your contracts with managed care payers. A thorough understanding of managed care plans is crucial, however, in order to build effective contracts. Furthermore, you will need data about your business and resident demographics in order to engage payers in a discussion.

Knowing the average length of stay (LOS) for your residents is important for a number of reasons. Payers look for SNFs to effectively manage their residents’ LOS. An LOS that is too short can lead to hospital readmissions while an overly long LOS may result in overpayment.

You should also be using LOS data to make decisions about census. For example, if you have continued low census levels you may decide to decertify beds into long-term beds. Considering the initial licensing process, this is a significant decision but it is also indicative of the types of strategic decisions necessary today.

The Bottom Line

The business practices of SNFs have been permanently altered by the global health crisis. While you may yet be focused on responding to immediate, COVID-19-related concerns, it’s critical that you plan for the future. Identify relevant business goals, measure performance with meaningful KPIs and create a long-term strategy to ensure a well-functioning revenue cycle throughout the changing healthcare industry.

Richter can partner with you to identify the data you should review on a regular basis and to initiate the strategic conversations that can help you recover from the current health crisis and secure the future of your organization.

Contact Richter’s Skilled Nursing Facility Consultants

If you’d like to learn more about our RCM services and the approach we could recommend for your organization, please call us at 866-806-0799 or request a free initial consultation.