Data illustrates post-pandemic economic challenges and impact to SNF finances and operations
Today, CLA (CliftonLarsonAllen LLP), the eighth largest accounting firm in the United States, announced it has issued its 37th edition of the Skilled Nursing Facility (SNF) Cost Comparison and Industry Trends Report. This report, based on 2021 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 withstand post-pandemic economic pressures: labor costs and access, tightening reimbursement, and occupancy gains.
“When looking at the SNF industry, the margins and trends do not paint a comforting picture,” said Stephen Taylor, leader of CLA’s senior living and care practice. “However, there are SNFs outperforming those trends within their local markets. Some of the leading factors that can impact an individual SNF’s financial results: a focus on being a top performing quality operator in the market, the state in which it operates, and the penetration and scale within the market.”
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, 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:
- Operating margin — Recapture of occupancy stagnated by availability and affordability of direct care nursing staff. And inflation escalating at the fastest pace in 40 years is putting significant pressure on the economics of operating SNFs.
- Labor and workforce — The SNF industry has a tougher time accessing labor and maintaining their workforce compared to other sectors of health care — and the post-COVID environment escalated this pressure point significantly.
- Occupancy — Rebuilding occupancy had a disproportionate impact on labor utilization. As occupancy rebounded, operators realized they were unable to secure workers back into the SNF.
- Cost structure and inflation — Quickly rising wage rates are still not resulting in enough labor capacity to increase occupancy without costly nursing contract labor hours.
- Reimbursement and revenue — The SNF per patient day reimbursement environment continues to tighten, which will be further enhanced as additional funding is removed with the inevitable end of the public health emergency.
“Ultimately, there is no silver bullet, but focusing on the fundamentals is key to navigating challenges and positioning for long-term opportunity,” continued Taylor. “Organizations that are outperforming in their markets know their key performance indicators, have access to consistent timely financials to make informed decisions, and demonstrate an ability to utilize actionable data.”
Check out the 37th SNF Cost Comparison and Industry Trends Report
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