Understanding what key benchmarks signal about operating results and the broader market can help SNFs identify opportunities and build a strategic path to a financially viable future.
CLA (CliftonLarsonAllen LLP), one of the leading professional services firms in the United States, has issued its 36th edition of the Skilled Nursing Facility (SNF) Cost Comparison and Industry Trends Report. This report, based on 2020 data, provides national operating and financial metrics for SNFs, allowing facilities to see how their performance compares to others.
The report identifies three key factors affecting the ability for SNF operators to endure the pressures of the COVID-19 pandemic: financial health leading into the pandemic, impact on operating revenues and expenses, and the amount of funding received through the various public health emergency (PHE) funding sources.
“The challenges of the COVID-19 pandemic first presented as a clinical crisis and have expanded to become a business crisis of evolving financial and operational components,” said Stephen Taylor, leader of CLA’s senior living and care practice. “The number of variables impacting operations and finances have made it difficult for many operators and owners to decipher what issues require a quick tactical fix and which have a more profound impact requiring a long-term strategic approach.”
SNF operators and owners conducting a thorough review of national operating and financial metrics can uncover valuable perspective and help determine how a facility or market is performing overall. However, in an environment full of disruption and extraordinary financial and operational challenges, CLA sends a consistent message: you cannot simply look at margins or ratios in isolation, you absolutely must understand the trends and the underlying factors that are driving the numbers.
Key trends to consider include:
- PHE programs and funding sources — While these provided many operators and owners with critical financial lifelines, these programs and funding sources will not exist in perpetuity. In addition, the diversity of programs results in inconsistencies in the amount of funding received, and when and how funds are recognized in a facility’s financials.
- Occupancy reductions — SNFs experienced immediate and severe occupancy reductions; however, the recapture has been slow and inconsistent among states, counties, and operators.
- Access to workforce — Workforce challenges have created a conundrum, with a compounding impact on margins. This can limit operators’ ability to recapture census and impose significant pressure on operators’ operating expenses.
- Cost structure — Cost structure is under significant pressure, most notably due to infection control and labor.
“Our report elevates these key trends in the industry, along with the numbers to support them,” continued Taylor. “With a better understanding of key benchmarks, we help SNFs create performance expectations, gain a stronger handle on their competitive landscape, and apply relevant knowledge about local market conditions. That is the true value of our 36th SNF Cost Comparison and Industry Trends Report — a concise source of financial and operational SNF insights and indicators.”
Download the 36th SNF Cost Comparison and Industry Trends Report at CLAconnect.com/SNF21.
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