The top executive of an assisted living community and rehab facility in Martinsville, Virginia, is soon to be out of a job, and it’s by his own design.
Blue Ridge Village CEO Chris Oswald cut his own position in an effort to reduce costs, the Martinsville Bulletin was first to report. The community—which has 300 beds licensed for rehab and 60 beds licensed for assisted living— was facing declining revenues due to the increasing penetration of privately-run Medicare Advantage (MA) plans, which generally offer lower reimbursement rates for skilled nursing services than traditional Medicare.
“Medicare Advantage was formed not to improve patient care, but to cut costs, and they are doing an excellent job of it,” Oswald told Senior Housing News. “They are reducing average length of stay by sometimes double-digit numbers.”
While some residents used to stay between 40 and 70 days for rehab services, the facility’s average length of stay is now just shy of 21 days.
“I have to replace them with three times as many residents [as before] to break even, and they’re just not out there,” Oswald said.
And that has eaten away at Blue Ridge’s bottom line. The community’s annual total revenues dropped from roughly $15 million two years ago to about $12 million now.
Planned cost-cutting measures include laying off some non-clinical employees, renegotiating better terms and pricing with business partners, and arranging a possible lease reduction with the community’s lienholder.
But it could have been more drastic.
“We had talked extensively about severely slashing wages, severely cutting ratios on the units,” Oswald explained. “If we reduce our quality of care, then we step into a death spiral.”
Combined with nixing the CEO role, the moves could save the community as much as $300,000 to $400,000 per year, which is just enough to break even. Blue Ridge is also exploring ramping up its behavioral health offerings. Already, the community has taken on 20 such residents, with plans to add even more.
Moving forward, a licensed administrator will lead the rehab facility, while an executive director will manage the assisted living community. Both employees formerly reported to Oswald.
“I’m leaving here on an up note. I really think we have positioned this facility to be successful,” Oswald said. “It’s a celebration today and not a funeral.”
Oswald said he hoped his story would push more leaders across the industry to get creative in slashing operational costs.
“I would hope that I would inspire them to look at other options besides cutting wages for the lowest paid individuals, [such as] your rank-and-file LPNs, CNAs, nursing assistants, dishwashers, and dietary employees,” he said. “Because at the end of the day, if this facility is going to ultimately make it … it’s going to be on the backs of those kinds of people.”
Blue Ridge Village is one of many retirement communities facing strong headwinds related to Medicare changes. Managed Medicare revenue per patient day (RPPD) dropped nationwide to $431, as compared to $522 for traditional Medicare residents, according to recent data from the National Investment Center for Seniors Housing & Care (NIC).
While some private-pay senior living communities haven’t given as much thought to Medicare Advantage plans over the years, that could soon change. A new policy finalized by the Centers for Medicare & Medicaid Services (CMS) would allow senior living companies to receive MA reimbursement for certain types of care provided to residents who are enrolled in plans that offer this benefit.
Written by Tim Regan