Managing managed care: a new numbers game for nursing homes

“What’s the census?” used to be the only question a nursing home administrator had to ask to monitor the revenue side of his or her facility’s budget. That was back in the days when nursing homes had a standard rate received for care that did not vary very much. In fact, nursing homes worked hard to make sure that they didn’t admit anyone who would make that care vary too much.

Today, with the advent of Medicare PPS and the explosive growth of managed care, the metrics are more dynamic. Sub-acute programs require facilities to take a variety of patients with a wide range of care needs. Reimbursement varies by patient needs and insurer. A patient who brings high rehab needs and potential for good reimbursement may have astronomical drug costs. So what are the questions the administrator needs to ask now in addition to the census question?

What is our revenue per day per patient? …and break it down by payer class (Medicare, each managed care company, Medicaid)

What is our cost per day per patient by payer class? …factor in supplies, drugs, nursing, rehab staffing, etc.

Are we billing and collecting for all the revenue we are entitled? …watch the managed care agreements very carefully for exclusions on drugs, DME, specialized equipment and therapies, etc.

Are we satisfying our patients and payers? …payers want short lengths of stay even if they mean more aggressive rehab…this can be a plus with a higher revenue per day, but it requires a greater effort to keep beds full when length of stay is shorter

Which brings us to the bottom line, which is the bottom line. A very high census is not good if the expenses of caring for the patients are higher than the revenue associated with them. Likewise, a low census is not necessarily bad if the revenue is exceeding the costs. What used to be an open-and-shut case of “if the beds are full we are in good shape” is no longer the case. A new skill set is required to successfully manage today’s nursing home.

About the Author

Joseph Tomaino is a patient care executive, educator, and consultant. The Tomaino Group offers innovative and practical solutions to the challenges facing long term care organizations at www.continuingcareinsite.info .

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