According to a recent Leading Age report, some skilled nursing facilities (SNFs) could face upwards of $15,000 per week in expenses related to testing staff for coronavirus (COVID-19) during 2021.

While rollout of COVID-19 vaccines continues, the pandemic is far from over—and SNFs continue to be on the front lines. Making matters even more difficult, surveys indicate that around 60% of SNF staff are refusing opportunities to get vaccinated. Consequently, they must continue to be tested—and in areas where community cases are exceptionally high, that must occur twice per week.

The human toll exacted by COVID-19 thus far is nearly incalculable. Yet, for SNFs of all sizes, it’s also having a severe impact on bottom lines—and testing expenses are a big factor.

Up to now, SNFs around the country have utilized free COVID-19 tests and testing machinery provided by the U.S. Department of Health and Human Services. Eventually, those tests will run out – they may have already for your facility – and at that point, SNFs are responsible for sourcing tests (and potentially machinery as well) from suppliers.

Your SNF should be singularly focused on the mission of optimizing resident care and enhancing outcomes. Yet, to pursue this, it’s vital to maintain the sound financial health of your organization so that optimal care can continue to be delivered into the future. COVID-19 testing expenses can put your facility in a financial bind and potentially endanger your mission.

In this respect, we urge you to consider seven strategies for managing costs around COVID-19 testing without compromising resident care or other operational areas.

1. Investigate your eligibility for second-round Payroll Protection Plan (PPP2) funds. PPP2 funds are designated for borrowers that have exhausted their share of first-round PPP funds. First-time borrowers are also eligible to apply for the loan. The PPP2 program also broadens the universe of forgivable expenses by including supplier costs, as well as investments in facility modifications and personal protective equipment (PPE) needed to operate a business safely.
   PPP2 funding is based on two-and-a-half months of payroll costs. The maximum loan amount is $2 million, and allowable expenses are similar to the first round of PPE, with the new addition of safety expenditures. Additionally, the 60%-40% allocation between payroll and non-payroll costs will be required for full forgiveness. 
2. Consider PCR molecular testing. Two primary COVID-19 test types are rapid response COVID-19 testing and lab-based PCR COVID-19 testing. As the name implies, rapid response testing yields results quickly—in fact, the fastest one currently delivers results in 13 minutes or less. Rapid testing also is conducted at point-of-care, which doesn’t require an outside laboratory for processing samples. That said, rapid testing generally is more expensive than PCR testing. If expenses are tight, this strategy could save significant dollars month after month.
   The downside: PCR COVID-19 test samples are sent to outside labs for processing, which can cause bottlenecks and potentially delay results for days. This means staff who may be infected could be in your facility interacting with residents and colleagues.
   In the end, decisions on testing methods should be made based primarily on clinical considerations—and done so in consultation with financial and accounting personnel. 
3. Try negotiating rates with testing labs. Generally speaking, discounts for test processing aren’t sizable, but when every dollar counts, they can help save money and free up cash for other uses. More often than not, discounts are applicable for bulk processing rather than small batches. Also, geography can play a role; labs in rural areas, for example, may not be able to negotiate on rates. 
4. Leverage the power of group purchasing. If you’re a small or midsize facility, chances are good you’ll save money on COVID-19 testing supplies by teaming up with other independent facilities nearby and negotiating group rates. Most facilities of these sizes can’t afford to purchase six months of supplies, so teaming up with outside facilities to negotiate and purchase in bulk can yield big savings. 
5. Weigh the benefits of purchasing vs. leasing. So many tangible items associated with a SNF facility can be purchased or leased—from office equipment to software, data services, medical/clinical equipment, specialized resident furniture and accessories…even the building(s) in which they operate and the land upon which they sit. Which is right for you? The answer depends on many factors—from the items themselves to their intended use, the expected duration of that use, your current cash flow situation, your tolerance for debt and other considerations. 
   For more insights on purchasing versus leasing, read our recent blog "LTPAC Accounting Strategies--Purchasing vs. Leasing."
6. Consolidate purchasing—ideally with a single source. A penny here, a penny there…after a while, it starts to add up and adversely impact your bottom line. Things can really start to spiral undesirably when multiple individuals in your organization have purchasing power and wield it using different purchasing methods (e.g., individual debit or credit cards) with little or no oversight.
   At Richter, we strongly recommend having one individual in your facility – ideally, someone whose job it is to oversee supplies – serve as the purchasing gatekeeper. Under this scenario, any purchase over, say, $50 would require advance approval. Having a gatekeeper in place helps ensure that (1) your organization has the cash on hand to afford the purchase; (2) proper consideration is given as to whether it should be purchased versus leased/rented; and (3) said item doesn’t already exist somewhere in the facility.
   Moreover, it’s wise to utilize a spend-down sheet that enables all purchases to be carefully logged—and helps keep department heads accountable for maintaining their budgets.
7. Maintain par levels on all supplies—including COVID-19 testing supplies. Always strive to keep adequate inventories of supplies on hand in every facet of your operation—and in the current pandemic, this absolutely includes COVID-19 testing supplies. You don’t want to overstock or understock; rather, you should try to ensure a predictable and consistent COVID-19 testing expense line item from month to month. This allows in-house accounting staff or outsourced contract controllers to budget accordingly and maintain good oversight on this (and other) expenses. It’s also important because running low on testing supplies could entail expedited – even overnight – delivery, which gets very expensive.

To aid you in navigating issues surrounding COVID-19, we have developed a COVID-19 Resource Center for skilled nursing facilities which is regularly updated with the latest information.

Learn More About Richter’s Skilled Nursing Facility Consulting Services

Do you have questions about managing expenses around COVID-19 testing, or other LTPAC clinical challenges? Learn more about Richter’s skilled nursing facility consulting services by contacting us here, or call 866-806-0799 to schedule a free consultation.

This article was co-authored by Jennifer Leatherbarrow RN, BSN, RAC-CT, IPCO, QCP, CIC, and Liz Lane, CPA.

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