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The Business Of Post Acute Care
By 2026, the market for long term care in the U.S. will reach more than $737 billion
- Yet, nursing homes have faced increasing closures over the last 2 decades
Nursing Homes: Struggling To Make Ends Meet
Half of Americans will need longmterm care in their lifetime
- 1 in 7 will need assistance for more than 5 years
- In 2018, 52 million Americans were 65+
- By 2060, that number will nearly double, with 95 million Americans over 65
Despite growing demand, nursing homes are closing their doors
From 1999 to 2008- 50% of hospital-based facilities closed
- 11% of freestanding facilities closed
- 10% of rural facilities closed
Why Do Nursing Homes Fail?
- Small facilities or those with low occupancy
- Poor quality of care and improper management
- High Medicaid occupancy and low reimbursement rates
Medicare, Medicaid & The Cost Of Care
- In 1935, the Social Security Act jumpstarted a private nursing home industry
- By 1965, 60% of residents received public assistance
- BUT, as federal funding increased, so did concern over quality of care
- In 1960, 44% of beds failed to meet fire and health standards
- In 1965, Medicare & Medicaid began tying public funding to a standard of care — Only 12% of nursing homes met certification standards that year
Medicare pays for 20 days of long term care and subsidizes the cost of days 21-100
- After that, residents paying
$50,000-100,000 a year — until they have exhausted their assets and Medicaid
begins to cover costs
- Today, 67% of nursing home care in
the U.S. is paid by Medicare and Medicaid
- Across the country, many states
have seen increases in long term care costs that outstripped inflation
- California, Florida, New York and Texas
- Across the country, many states
have seen increases in long term care costs that outstripped inflation
- Often, Medicaid reimbursements are
less than the cost of care
- 2017 Medicaid Shortfall Per
Patient
- $64 New York
- $64 Wisconsin
- $47 New Jersey
- $40 Massachusetts
- 2017 Medicaid Shortfall Per
Patient
- Today, 67% of nursing home care in
the U.S. is paid by Medicare and Medicaid
Long term care facilities face many of the same challenges — chief among them: managing costs and maintaining profits, without compromising quality of care
The Long Term Care Ecosystem
The Continuum Of Care
Independent Living
In-Home Care
- 2015-16: 3,651,400 patients
Adult Day Care
- 2015-16: 179,200 patients
Assisted Living
- 2015-16: 757,900 patients
Nursing Homes
- 2015-16: 1,166,400 patients
Why Costs Are Rising?
Labor Costs:
- Shortage of skilled caregivers means
- Higher wages needed to attract talent
- More overtime for limited staff
Payroll accounts for up to 75% of long term care operating costs — Cutting back on staff would mean cutting quality of care
Changing Needs:
- Aging Americans need more specialized care
- More diagnoses of Alzheimer’s and dementia li>Many wait to seek help, meaning their conditions are more advanced
1 in 10 Americans over 65 have been diagnosed with Alzheimer’s or dementia — conditions that require specialized memory care
Transitional Care: Since 2001, post-acute care has shifted from hospitals to nursing homesThis shift brought increases in therapy staffing and supply costs
To ensure quality, Medicare and Medicaid penalize hospitals if patients are readmitted within 30 days — Prompting hospitals to stop transfers to nursing homes with high readmission rates
The Old Solution: Group Purchasing
Cutting back on payroll could have a negative impact on quality of care — So facilities must look elsewhere to contain costs
- Group purchasing organization help
save on supply costs — up to 30%
- Food Service
- Pharmacy
- Medical, Surgical, Nursing, & Incontinence
- Housekeeping & Maintenance
- Rehabilitation
- Office supplies
- Construction
Group purchasing alone is no longer enough to bridge the gap
What’s Missing?
Expense Management Collect, evaluate, and report spending data to improve efficiency- Smaller, more frequent deliveries to reduce excess inventory and free up cash
- Reducing falls, infections, and mistakes to improves patient care
- Reduces the cost of these incidents and decreases Medicare/Medicaid penalties
CTA: How can advanced cost-benefit practices save nursing homes from failure?