Management/Operational Analysis

Transcription

1 To: From: Operating Board of Directors DeKalb County Rehab & Nursing Center Andrew D. Buffenbarger, MBA, LNHA Manager Date: March 5, 2014 Re: FY13 Year-End Report Management/Operational Analysis Occupancy Total occupancy remains above 90% as preferred and budgeted. The last five years of occupancy data shows a decline in our long-term care services and an increase in our short- term rehab services. This is not unusual as the popularity of alternative care options - including assisted/supportive living and home care provided in the home or in an independent living facility - grows. These options exist in the DeKalb County community. With increasing frequency, seniors are choosing DCRNC for long-term care after exhausting the alternatives. The evidence is in the increasing age and frailty of new residents. Short- term rehab popularity is growing as we provide on-site case management, therapy with a state-of-the-art gym, and a wide range of clinical services. The occupancy data in the Medicare category supports this conclusion with an average daily census jump from 18.1 in 2009 to 23.6 in Rehab stays average about 30 days, though some diagnoses require longer courses of treatment. The payor mix trend offers some insight into the community s needs. DCRNC is attracting more people in the Medicare payor category, specifically caring for short-term rehab patients. The Medicaid and Private Pay categories were stable until FY13 when there was a shift toward Private Pay. FY14 will bear out whether this is an anomaly or the result of a community preference. It appears DCRNC is suddenly attracting a greater proportion of the Private Pay market, which would correlate to our customer service score results. More on that later DCRNC year-end report, issued March, 2014 Page 1

2 Regulatory Changes Medicare/Medicaid Alignment Initiative Most of the residents of DCRNC are eligible for Medicare. More than 50% are also eligible for Medicaid. Residents eligible for both of these programs are identified as dual eligible by the Centers for Medicare and Medicaid Services (CMS). Illinois is participating in a federal program called the Medicare/Medicaid Alignment Initiative (MMAI) where dual eligible residents, in select areas of Illinois, will have medical services managed by an insurance company instead of the state or federal government. The medical services being managed will include acute (hospital) and postacute (skilled nursing facility, home care, etc) care. In effect, the case management is outsourced to private insurance companies. The insurers are working with skilled nursing facilities to develop a network of post-acute care providers. While DeKalb County is not in the catchment area for this program, our neighbor to the East, Kane County, is included. Residents of Kane County that choose DCRNC and are dual eligible can only join us if DCRNC is a preferred provider of the insurance company representing that resident. Insurance companies have been running managed care programs for decades. This shift for government entitlement programs is significant. Insurers are constantly looking for ways to reduce the cost of care, and are more effective at it than CMS and the State of Illinois. Inpatient hospital care is much more expensive than staying at DCRNC. Insurers are interested in partnering with skilled nursing facilities that minimize use of hospitals for medical services. Specifically, insurers are looking for facilities that have the best clinical outcomes and the lowest rates of re-hospitalizations. That is where we come in. DCRNC has a long history of outstanding clinical outcomes. We are listed in the US News & World Report among the best nursing homes in the country in 2013 and are identified by Medicare as a 4-star facility (out of a possible 5-stars). We are wellpositioned to explain how our facility will take great care of an insurer s patients. Right now we are negotiating with insurers to become a preferred provider. Long term, we suspect the program will grow to include DeKalb County, at which point we hope to already be on the preferred provider list. While the above discussion states the opportunities for DCRNC in the managed care program, there is also a downside. The managed care programs are incentivized to provide care at the lowest and cheapest level possible. While that means down streaming members from the hospital to the skilled nursing facility (SNF), it also means down streaming residents from the SNF to home or community based alternatives. Welcome to managed care. The goal is simple, keep them coming in faster then they leave. Fiscal Strength 2013 DCRNC year-end report, issued March 2014 Page 2

3 DCRNC remains financially independent and solvent, with an existing cash balance in excess of $4 million. On a cash basis DCRNC showed positive earnings of approximately $600,000 in FY13. While that amount is preliminary and unaudited, we have confidence it will be close to actual. On an accrual basis DCRNC was very near break-even for FY13. By comparison, FY12 was similar with positive cash earnings near $700,000 and, on an accrual basis, was just above break even. As we look forward to the end of our debt service in 2016, DCRNC is looking at ways to expand our services to meet the changing needs of our community and our existing residents. There is a clear preference for DCRNC rehab services and we are becoming more focused on how to ensure we remain the preferred rehab provider of our community. At the same time, we are analyzing those services provided to current residents outside of DCRNC to determine if existing residents would benefit from having those services provide in-house. DCRNC was constructed with a forward-looking approach. The placement of the facility on the campus and the shared space within our building provide a myriad of opportunities to expand or change the services we offer. Dialysis is a perfect example. DCRNC residents currently receive hemo-dialysis services from a local dialysis provider. Residents with End Stage Renal Disease must travel to the local provider three days per week at a specific time. There are no exceptions holidays, snowstorms, subzero temperatures residents must have the dialysis service. It is possible to partner with a dialysis provider to offer dialysis within our facility, eliminating the disruptive and exhausting travel. Offering dialysis in-house would require changes to our physical plant, but it represents a service that could benefit members of our existing population and the community. The analysis of our existing and potential services is underway and will be a focus of FY14. Customer Service FY13 was our first full year of using a third party to conduct customer satisfaction surveys. The results are categorized and scored on a 5 point scale, with 5 being the most satisfied. Customer comments are also recorded. DCRNC scores are compared to other facilities using the same service from across the country. The results are impressive. Amongst the fifteen satisfaction categories, DCRNC 2013 average scores range from The Overall Satisfaction category scored a 4.48, with a categorical score average of The top score in the country for Overall Satisfaction, averaged in 2013, was a DCRNC continues to have some of the highest resident and family satisfaction scores. Our mission is alive and well. Compliance 2013 DCRNC year-end report, issued March 2014 Page 3

4 The recent focus on the cost of healthcare, particularly with regard to Medicare, has ignited the Office of Inspector General s office into action. With amazing frequency nursing homes are being audited for possible Medicare or Medicaid overbilling, false claims, kickbacks and inducements, or any other opportunities to take back government dollars. The return on investment is remarkable. The OIG returns approximately $7 to the government for every $1 they spend in enforcement action. The reason for this level of return is obvious the OIG uses treble damages and hefty fines. Facilities that bill Medicare or Medicaid are at risk of an audit and must be prepared with solid corporate compliance programs, trained staff, and transparent financial and clinical processes. One Illinois nursing home was hit with a $28 million dollar fine as a result of an OIG audit. The recovery amounts show that the OIG is serious and we must be prepared. At DCRNC, we are. In FY13 we became laser-focused on corporate compliance. Policies and procedures were reviewed by compliance experts, changes made as necessary, staff training was bolstered, and audits were improved. That effort continues into FY14 as we continue to monitor the published OIG reports and work plans for enforcement focal points, and keep our efforts similarly focused. This effort will be non-stop for the foreseeable future. Statistics FY2013 Summary (as of December 31, 2013) Occupancy Rate 90.9% Medicare 23.6 Medicaid 88.3 Private Pay 60.7 Total Medicare 13.7% Medicaid 51.1% Private Pay 35.2% 2013 DCRNC year-end report, issued March 2014 Page 4

5 Occupancy Rate FY DCRNC year-end report, issued March 2014 Page 5

6 FY13 Comparative Data Payor Source FY09 FY10 FY11 FY12 FY13 Medicare Medicaid Private Pay Total Total % 93.4% 94.3% 92.1% 90.4% 90.8% Payor Source FY09 FY10 FY11 FY12 FY DCRNC year-end report, issued March 2014 Page 6

7 Medicare 10.2% 12.7% 14.6% 14.8% 13.7% Medicaid 60.7% 58.8% 58.1% 60.4% 51.1% Private Pay 29.1% 28.5% 27.3% 24.7% 35.2% Summary DCRNC continues to be a stable, respected community resource. The medical community trusts our services, the residents and families recognize our efforts, and the DCRNC staff do a great job. We have the best staff, without question. FY14 will require us to re-examine what additional services we will offer into the future, and develop concrete plans to offer those services at the same quality level we offer services today. Our responsibility to offer the best possible healthcare requires us to be diligent in long-term planning, and this year we will take recognizable steps toward securing our future by meeting the changing needs of the community we serve. If you have any questions, please call me at , x11 or me directly at adb@healthcareperformance.com. Respectfully submitted, Andrew Buffenbarger MPA 2013 DCRNC year-end report, issued March 2014 Page 7