The skilled nursing occupancy rate plummeted from 85.5% in February 2020 to 71.3% in January 2021, according to data from the National Investment Center (NIC). While occupancy has been slowly inching back up during 2021, it is still near historic lows, and many skilled nursing facilities (SNFs) are struggling to fill beds and to repair the damage COVID-19 inflicted upon their balance sheets.
How Do Referrals Tie In?
The struggle for occupancy is in part due to a shift that occurred in 2020. Amid the tumult of the pandemic, many hospitals began to discharge more patients to home health rather than to skilled nursing, largely to avoid facilities that were overrun by the virus. In fact, recent data from CarePort Health shows that hospital referrals are split, with roughly 60% of patients discharged to home health and 40% to skilled nursing.
Less referrals to skilled nursing, narrowing referral networks and a large pool of local SNFs competing against one another all combine to create a perfect storm for skilled nursing providers. Providers must ensure that they are at the top of every possible preferred provider list within their referral network in order to keep referrals flowing and increase occupancy. Is your facility up for the challenge?
Rather than spin your wheels, take a look at five key metrics that we’ve compiled. These are the metrics that are most important for you to focus on today to differentiate your facility from the competition and gain the referrals you need for long-term viability.
Top 5 Metrics That Can Make You Stand Out
1. Length of Stay
It takes precision to find the optimal length of stay for a skilled nursing resident. You want to provide all the care that a resident requires upon arrival and for as long as needed. As soon as that care is no longer necessary, however, he or she should be transferred out.
Each resident should have the right length of stay to result in a successful discharge. To that end, you must ensure that residents are well enough to be transferred to a low level of care. Clinically speaking, it’s imperative to have staff that understand the functional ability goals and other markers that indicate that a resident is ready for discharge from the SNF. A stay that is too short can result in a readmission either back to your facility or back to a referring hospital – an outcome that would not benefit either party. Furthermore, hospitals want to partner with SNFs that manage their LOS well.
2. Infection Rates
Never before has infection control been as important as it is today. The pandemic brought to light numerous flaws by providers to effectively abate new COVID-19 cases and keep infection rates low. High infection rates led to financial disaster for numerous providers, with costly fines imposed on many facilities by the Centers for Medicare & Medicaid Services (CMS).
Hospitals are unlikely to refer patients to SNFs with high infection rates, whether COVID-19 or other infections. It’s critical that providers maintain good infection control practices by effectively managing both virus and multidrug resistant organisms (MDROs) and preventing outbreaks. Furthermore, all staff must be properly trained on infection prevention and control (IPC), and adequate staff and supplies must be available to ensure disease prevention. Although maintaining an IPC program can be costly, the lack of an appropriate and effective program could cost you revenue, referrals, employees and, potentially, your residents.
When PDPM was introduced in October 2019, it changed the structure of Medicare reimbursements for SNFs. Payment is now calculated based on residents’ clinical characteristics (not therapy minutes provided) and on an overall case mix index (CMI) for the facility. To maximize Medicare reimbursement, you need to optimize your CMI, which requires increased scrutiny of MDS coding and documentation. A skilled MDS nurse should be completing assessments at a time during the quarter when residents are receiving the highest amount of care and treatment such that case mix reimbursement is optimally matched to resident acuity.
Due to the anticipated cut in reimbursement rates in 2022, it’s critical that you are capturing every revenue opportunity by maximizing reimbursements. Therefore, increased revenue hinges on having MDS nurses who have a comprehension of case mix reimbursement and of the PDPM system and who are fully trained to complete resident assessments.
Average cost of care reflects the total cost of caring for a typical resident in an SNF. Your aim should be to decrease costs wherever possible without affecting the quality of care provided to residents or overall resident outcomes. It’s often a slippery slope that can be navigated by good case management. While carrying out a resident’s healthcare plan, a skilled case manager will take care to avoid any unnecessary costs and to lower costs by knowing your insurance “carve-outs” – negotiated prices for additional services or high-cost medications.
Average cost of care is a metric that hospitals can use to gauge your desirability as a referral partner. If you can demonstrate that your facility is maintaining a low cost of care while still providing the best healthcare to residents, it could place you higher on a hospital’s preferred provider list.
5. Medicare Spending Per Beneficiary (MSPB)
MSPB assesses the cost to Medicare for an episode of care at your facility and measures your facility against the national average. This is a significant metric for hospitals, and they will be looking for facilities with a low MSPB. Because a hospital and an SNF may share payment for a single episode of care, hospitals want to partner with SNFs that can keep costs low without causing readmissions. Therefore, SNFs can use MSPB to demonstrate their value as a referral partner.
If you’re not paying attention to this metric now, you should be. MSPB provides another way for your facility to showcase its capabilities, and it is currently being closely reviewed by CMS.
To improve occupancy, you need to prove to referral sources that you are their best option as a post-acute care provider. You can demonstrate your credentials using the following best practices:
Continually market your facility. Tell potential referral sources what you’re good at. Get a meeting with hospitals administrators and have a conversation about why you belong at the top of their preferred referral list.
Include analytics. Hospitals don’t want lip service, they want data. When soliciting hospitals, make sure you have the analytics to back up your claims.
Offer an interface. The ability to interface with hospital systems is a plus. Consider partnering with a software vendor to compile your data.
Refine your admissions process. Hospital discharge centers are often focused on getting patients out as quickly as possible. Show them why they need to care where they refer patients, but also make sure your admissions team is efficient at handling the intake process.
The Bottom Line
The skilled nursing occupancy rate was already in decline before the pandemic hit in 2020. To maintain viability, SNFs need to increase occupancy. A focus on referrals can have a positive ripple effect that may increase your resident population and ensure the growth of your facility.