Turning Point in Long-Term Care Reimbursement

Recognizing a turning point in any industry is much easier once it’s already happened than it is to recognize a turning point at the inflection point itself.

SHN reporter, Emily Study ( http://bit.ly/VyHz7i ) writes about “HCN’s New Big Bet on Post-Acute Care Signals Industry Sea Change.”  This is an insightful article and if one is doing a SWOT (Strengths, Weakness, Opportunity, Threat) Analysis for a nursing home, one would classify this in the “Threat” category.

Nursing homes that provide primarily long-term care rely on private pay and Medicare via short-term rehab to make up for the revenue short-fall that is built into the Medicaid reimbursement calculation (Medicaid is calculated to provide roughly 80% of the cost of providing nursing home care).  That leaves a 20% cost gap that has to be made up by the care providers by other types of payors.  Those other “payors” are private individuals and Medicare.

The reason this is a sea change (or one may call it a “turning point” or a “competitive threat”) is that when a significant number of new buildings that are purpose-built to provide services specifically to private individuals and Medicare residents, that leaves the traditional nursing home without a revenue source that they have relied on for years to make up the short-fall of Medicaid reimbursement.

It might seem like a long, complicated chain of reimbursement that is difficult to follow (and it is), but the competitive threat to traditional long-term care nursing homes is real and properties with mostly Medicaid residents will need to find a way to compete with the Post-Acute “new guy on the block” as represented by Health Care REIT and Main Street.

Link to the article:  http://bit.ly/1uPM2OX