It seems like as quickly as ever; summer is coming to a close. As we usher in sweater weather, apple picking, and Halloween excitement, there are several considerations to keep in mind as we approach the year-end and prepare for the year-to-come.
Navigating ongoing challenges
Most post-acute care providers are tasked with wrapping up this year and planning for the one to come. Government assistance in the form of Paycheck Protection Program (PPP) loans, Employee Retention Tax Credits (ERTC), and Provider Relief Funds (PRF) have ended, forcing post-acute care providers to survive on their operating results. The effects of the COVID-19 pandemic still linger as occupancy and census for post-acute care providers continues to slowly recover in hopes of achieving pre-pandemic levels.
The most critical issue affecting post-acute care providers head on is the ability to generate sufficient cash flow to pay its employees, its vendors, and to provide high quality care to its residents. Post-acute care providers have been experiencing rising costs of payroll, food, and supplies while reimbursement remains relatively stagnant. The monetary investments and time efforts to recruit, hire, and retain staff have risen immensely since the pandemic. The limited supply of staff for hire has caused post-acute care providers to use costly contracted staffing.
Planning for success
Although as daunting as it may seem, these challenges can be mitigated with creative thinking, innovative planning, and careful preparation. Here are some reminders to consider as the leaves begin to change:
Re-imagine your fundraising strategy: Autumn is typically a season when fundraising efforts ramp up for healthcare organizations. It is a great time to take advantage of the holiday spirit of giving while creating potential tax planning opportunities for individuals. Rather than sticking with the traditional mailings, dinners, and galas, this may be a good time to re-evaluate the fundraising process and design it around a genuine, meaningful, and compelling story that personally touches donors to elicit donations.
Budgeting for financial results: Budgets, when realistic and practical, are a highly effective tool to monitor financial results. It is an effective practice to continuously obtain feedback from all departments who are responsible for managing their portion of the budget. Tracking actual results against the budget on a regular, recurring basis will assist in making informed decisions. Incorporate trends in the census, especially the shift from traditional Medicare towards Medicare Advantage plans, which may result in lower reimbursements and shorter lengths of stay.
Consider changes to reimbursement: While developing the budget, it is also important to consider changes to reimbursement. For Medicaid fee for service, effective October 1, 2023, nursing home providers will receive a 6.9% increase, which is comprised of 5.4% inflation and 1.5% labor pass through. Rhode Island will perform a rebasing of costs effective for October 1, 2024; however, it is unknown at this time what the impact to reimbursement will be. For traditional Medicare, nursing home providers will receive a 4% increase effective October 1, 2023, and the 2% sequestration will continue into 2024. Occupancy levels, the census mix, and the associated reimbursement changes may drive certain spending levels, such as staffing, food, and supplies.
Review revenue generation: Another area to factor into the budget is revenue generation. Traditional skilled referrals have diminished over the years leaving post-acute care providers to find alternative revenue streams to fund the gap in Medicaid reimbursements. Post acute-care providers continue to look for opportunities to promote themselves as a preferred provider in specialty areas, particular acuity levels and niches.
Consider covenant compliance reporting: As part of year end preparations, consider any covenant compliance reporting. Perform preliminary calculations to gauge financial results and have proactive discussions with your banking network so there are no surprises with year-end results and expectations for the new year.
As we transition from sandy beaches to the football field, use the fall season as a time to reflect on the last three quarters of the year and re-establish goals for the fourth quarter and into the new year. Taking the time to think ahead and anticipate potential roadblocks will be helpful in a successful year-end and year-to-come. Citrin Cooperman has a dedicated Healthcare Industry Practice focused on providing professional services and industry insights to organizations across the healthcare ecosystem including providers, payors, and investors. For more information on year-end preparations, reach out to Lauren Florio at email@example.com.
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