Drastic Times Call for Creative Methods for Nursing Homes

Nursing homes need to be creative in the way they operate and staff their facilities to prepare for looming budget cuts, say some industry administrative consultants. Training staff in new ways may be the key, even if it means higher up front costs and fewer persons on the payroll.

Skilled care facilities will be impacted by an upcoming 11.1% reduction in Medicare reimbursement rates, starting October 1, 2011, and they may be hit by a further 2% cut pending the congressional “Super Committee’s” attempt at debt deficit reduction.

“Every time there’s any kind of a cut like that, and those particular cuts hurt us even worse on the Medicare side (as the funding is used to take care of extremely ill people who require more therapy, staff, and attention), when we take that cut, we still have to make the payroll, still have to make the bills, we still have to make the budget,” says Cheryl Parsons, a registered nurse and a licensed nursing home administrator and consultant based in Missouri. “We have to look at ways we can be creative where we can continue to offer a quality of service and a quality of care within those restraints.”


Improving the quality of care given to residents transitioning from hospitals back to home is a must, says Steve Shields, CEO of Action Pact, a Manhattan, Kan.-based company that helps organizations transform their institutional nursing homes into a more home-like model of care.

“Providers need to have a more far-ranging look at the situation and realize that the best thing they can do, even more important than trimming their staff costs, they need to really maximize the quality of what they’re doing in these short term stays,” Shields says, adding that preventing hospitalization is key.

Often times, elderly patients are released from hospitals into nursing homes where they can be cared for until they’re well enough to go home. Sometimes, things don’t go as planned, as an April 2009 study from the New England Journal of Medicine shows nearly 20% of Medicare beneficiaries being rehospitalized within 30 days. That number goes up to 34% within three months, and these unplanned rehospitalizations cost Medicare billions of dollars.


Using a more integrative, holistic model of service provides a more effective sense of care and lets residents achieve a sense of well being by the time they go home, says Shields. This can be done through cross-training staff, an innovation Parsons says some Missouri nursing homes are starting to implement.

“The primary reason was because of the need to change the culture of the long-term care skilled facility,” says Parsons. “What facilities are finding is that, in doing that, they are beginning to streamline their budgets a little more, and basically increasing man power without increasing staff dollars. It became kind of an added benefit to the process.”

Training laundry and housecleaning staff increases the ranks of certified nursing assistants (CNAs) and deepens the pool of employees, says Parsons, while limiting the number of people on payroll.

Instead of a CNA needing to attend to an average of 10 to 15 residents, a large number when considering many patients require fairly high levels of care, she would become a steady caregiver for about five residents.

“The permanent assignment looks better when we have cross-training. It’s kind of more like in a home health situation where the CNA may do more, including cooking and cleaning for smaller groups, like dividing a hall into a neighborhood,” says Parsons. “The CNA has more responsibility, but because we’ve taken staff from other departments, it improves the ratio of direct caregiver to resident, without ultimately changing the staffing budget (beyond training costs).”

Shields mentioned a recent, significant growth in community based services, as opposed to a decrease in the numbers of seniors moving into nursing homes.

“Overall, per capita demand for nursing homes is going to decrease. But numbers of nursing home beds are not going to dwindle as much as everyone’s forecasting,” says Shields. “New models of service are needed to overcome the institutional message and environment that they’re providing, or they won’t survive.”

In addition to cross-training staff, Parsons says she expects to see nursing homes spending more time training minimum data set (MDS) assessment coordinators, and she thinks there hasn’t been a great enough push for adequate training.

“Some of that lack of knowledge is probably costing us money,” she says. “If we have someone who knows the process, they’ll be more able to generate a better rate. There needs to be more of a push to make sure we’re accurately reflecting what that resident needs, which could make a difference in the revenue.”

Medicaid, not Medicare, is the biggest source of government funding in nursing homes, which means the upcoming cuts won’t be as “dramatic” as they could be. However, Parsons says facilities often use Medicare funds to subsidize the loss on Medicaid payments, which often under-reimburse.

Despite the capacity for creativity when it comes to staying on budget and profitability, ratings companies do not have an optimistic outlook for nursing homes, thanks to Medicare reimbursement reductions and the looming threat of further cuts depending on the nation’s debt deficit. Moody’s Investors Service recently announced the possibility of future ratings downgrades for not-for-profit nursing homes, and shortly before that, Standard & Poor’s put all six of its nursing home chains on CreditWatch with a negative outlook.

Written by Alyssa Gerace