SURVIVAL OF THE FITTEST: Optimizing Operational and Financial Performance
March 24, 2016

SURVIVAL OF THE FITTEST: Optimizing Operational and Financial Performance

A quest for skilled nursing facility (SNF) providers is to stay competitive and in the game of providing exceptional skilled care while experiencing solvent financial outcomes. As challenging as it may sound, there are strategies a SNF provider must have in their defensive and offensive plans to achieve optimal operational and financial performance.

SNF providers are well aware that the Centers for Medicare and Medicaid Services (CMS) has made many revisions to the prospective payment system, such as refining case mix indexes (CMI), shifting dollars towards nursing care and away from therapy services, and basing payments on the cost associated with the care residents received. Although CMS has made these revisions, MDS coding and activities of daily living splits continue to be key revenue drivers.

With the emergence of alternative payment models and commercial health plans entering into the Medicare replacement scope of business, SNF providers must closely monitor contract terms, revenue drivers, and revenue pitfalls. Revenue drivers within the commercial plans may vary, while revenue pitfalls can be associated with shortened length of stay, reduced rates, and high-cost outliers. Contract terms, if not adhered to, can be very costly and an administrative nuisance.

Now more than ever, nursing care delivery, nurse staffing, and quality metrics drive facility five-star quality ratings and play an integral role in payor and resident relationships. With CMS’s recent announcement of the quality metrics that go into effect in April 2016, more emphasis will be needed to monitor the outcomes of short-stay residents related to hospital readmission, emergency department visits, and improvement in resident function. For long-stay residents, a SNF provider’s five-star quality rating will be ranked on the ability of residents to move independently and on the use of antianxiety or hypnotic medications.

Savvy SNF providers will determine their game plans through strategic planning efforts; however, strategic plans that do not address the top-line operational performance levers may leave a provider’s operations on the sidelines and unable to meet performance goals necessary to survive. SNF providers can take on a defensive role by becoming sound operational stewards that stay fully engaged in the game. SNF providers can achieve the goal line by assuming the overall responsibility in seeking and securing strategic partnerships, having an efficient and effective skilled work force, and employing departmental responsibility and standardization, as well as having the ability to deliver an advanced clinical platform.

As the game becomes more competitive and revenues become more restrictive, SNF providers must seek solutions to secure their business portfolios. The game forecast indicates game changers to be: reduced readmissions, increased employee and resident satisfaction, coordinated care alternatives, and continued adherence to regulatory compliance. By embedding the game changers into the SNF value proposition and integrating the game changers into the operational strategic plans, providers will secure solutions for optimizing operational and financial performance.

Overall, the operational game plan must effectively include fiscal stewardship and resident advocacy in tandem to secure the win and to successfully navigate the daily challenges for skilled nursing care providers.

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