2012NursingHomeTrendsReport. December20,2013

2012NursingHomeTrendsReport December20,2013

2012 Nursing Home Trends Report Executive Summary BlumShapiro presents the summary of the nursing home trends report for the year ended December 31, 2012, which includes all of Rhode Island s 84 nursing homes. This report provides a four-year history of patient mix, occupancy percentages and labor- and employee- related expenses on a per diem basis. These categories represent reliable benchmarks from which nursing home administrators, stakeholders and the financial community can analyze their facility operations against other organizations of similar scope and size. Also provided is a detailed per diem analysis by bed size range and overall per diem averages for the state of Rhode Island. These costs have been divided into cost centers that mirror the categories included in the price-based payment methodology in 2012. The last column on the right of the per diem analysis contains the state of Rhode Island payments in the related categories. This assumes a Medicaid case mix index of 1.0. Please be advised that the per diem analysis contains actual costs whereas the Medicaid payment is based upon allowable costs. The state of Rhode Island s payments are based upon 2010 allowed nursing home costs as follows: Direct Care Nursing: 101.54% of the statewide median weighted for Medicaid bed days Direct Care Other: 100.00% of statewide median weighted for Medicaid bed days Other Indirect Care: 93.48% of statewide median weighted for Medicaid bed days Trends While 2010 had a slight decrease in census, 2011 and 2012 sustained an upward trend. As one might expect, there has been a slight increase in the Medicaid occupancy with a corresponding decrease in private occupancy. Not surprisingly, Medicare occupancy has decreased from 2010 through 2012 due to issues that facilities have been encountering regarding observation days in the hospital. Total labor expenses on a per-day basis have increased from 2009 through 2012. However, the increase from 2011 to 2012 was only 1 percent. This is a direct result of a zero inflation factor adjustment from the state of Rhode Island on their payments to nursing home providers. Payroll taxes and workers compensation insurance has steadily increased from 2009 through 2012. Surprisingly, however, is the decrease in health insurance costs in 2012. This decrease is primarily due to facilities moving to higher deductible plans and shifting more of the costs to employees. healthcare.blumshapiro.com

Patient Mix 2012 Industry 2011 20.1% 20.3% 4.5% 4.5% 8.4% 67.0% 9.1% 66.1% 2010 2009 20.4% 20.5% 4.4% 5.5% 9.1% 66.1% 8.6% 65.3% Medicaid Medicare Hospice Private & Other

Occupancy Percentages Industry 2012 92.98% 2011 92.31% 2010 91.94% 2009 92.36% 91.40% 91.60% 91.80% 92.00% 92.20% 92.40% 92.60% 92.80% 93.00% 93.20%

Labor Expenses - Per Patient Day Industry 90.00 80.00 70.00 60.00 50.00 40.00 30.00 Industry '12 Industry '11 Industry '10 Industry '09 20.00 10.00 - Administrative Environmental Dietary Nursing Other Industry '12 10.88 10.27 9.90 82.94 6.33 Industry '11 10.92 10.15 9.90 82.10 6.00 Industry '10 10.48 9.93 9.63 80.22 5.66 Industry '09 10.34 9.87 9.60 77.56 5.29

Employee Related Expenses - Per Patient Day Industry 14.00 12.00 10.00 8.00 6.00 4.00 Industry '12 Industry '11 Industry '10 Industry '09 2.00 - Payroll Taxes Health Insurance Workers' Comp. Other Employee Benefits Industry '12 10.66 12.24 3.53 2.38 Industry '11 10.24 13.20 3.28 2.43 Industry '10 9.74 12.66 3.31 2.35 Industry '09 9.50 11.74 3.21 2.25

SULLIVAN & COMPANY CPAs AVERAGE AVERAGE AVERAGE AVERAGE OVERALL MEDICAID A DIVISION OF BLUMSHAPIRO BED SIZE BED SIZE BED SIZE BED SIZE AVERAGE PAYMENT ANALYSIS OF NURSING HOME PER DIEMS December 31, 2012 RANGE RANGE RANGE RANGE AT CMI 1.00 DIRECT CARE 1-50 51-100 101-150 151 -----> Direct Care - Nursing 4431 Health Insurance 12.59 12.29 10.85 12.40 11.94 4432 Other Employee Fringe Benefits 3.07 2.61 2.18 1.65 2.37 4440 Payroll Taxes 11.35 10.56 10.23 10.85 10.64 4442A Workers' Compensation Insurance 3.25 3.56 3.39 3.65 3.48 4601 Salaries - R.N. 28.96 28.29 26.08 26.50 27.41 4611 Salaries - L.P.N. 5.67 9.05 12.52 13.54 10.39 4621 Salaries - Aides and Other 40.00 39.22 40.38 41.99 40.21 4622 Purchased Nursing Services 4.47 1.58 1.29 0.85 1.81 Less: Direct Care - Other - Benefits (3.12) (2.31) (2.04) (1.73) (2.25) Less: Indirect Care - Benefits (8.21) (7.56) (5.68) (6.09) (6.83) Less: Ancillary - Benefits (0.32) (0.49) (0.36) (1.19) (0.56) Total Direct Care Costs 98.03 96.80 98.84 102.42 98.61 100.44 Direct Care - Other Direct Care - Other - Benefits 3.12 2.31 2.04 1.73 2.25 4600 Director of Nurses 6.29 3.77 2.21 1.66 3.31 4615 Physical Therapist - Medicaid 0.03 0.05 0.04 0.08 0.05 4715 Other Therapeutic Services - Medicaid 0.00 0.24 0.05 0.06 0.12 5522 Raw Food 7.12 7.46 6.77 6.86 7.09 5629 Nursing Supplies - Medicaid & House 5.17 5.06 4.49 4.95 4.89 5724 Pharmacy Supplies - Medicaid & House 0.59 0.36 0.68 0.66 0.55 6415 Medical Director Salary or Fees 1.20 0.61 0.58 0.57 0.69 6713 Social Worker Salaries or Fees 2.79 2.51 3.01 2.89 2.77 6751 Recreational Activity Salaries 3.90 3.27 3.46 3.00 3.37 Total Direct Care - Other Costs 30.21 25.64 23.33 22.46 25.09 23.74 Direct Care - Non-Medicaid Ancillaries Ancillary - Benefits 0.32 0.49 0.36 1.19 0.56 4615 Physical Therapist - Other 6.17 7.23 8.74 6.56 7.37 4715 Other Therapeutic Services - Other 5.97 9.22 9.55 12.01 9.35 5629 Nursing Supplies - Other 0.14 0.99 1.09 1.45 0.98 5724 Pharmacy Supplies - Other 3.65 5.57 5.96 6.22 5.51 Total Direct Care - Non-Medicaid Ancillaries 16.25 23.50 25.70 27.43 23.77 0.00 TOTAL DIRECT CARE 144.49 145.94 147.87 152.31 147.47 124.18

SULLIVAN & COMPANY CPAs AVERAGE AVERAGE AVERAGE AVERAGE OVERALL MEDICAID A DIVISION OF BLUMSHAPIRO BED SIZE BED SIZE BED SIZE BED SIZE AVERAGE PAYMENT ANALYSIS OF NURSING HOME PER DIEMS December 31, 2012 RANGE RANGE RANGE RANGE AT CMI 1.00 INDIRECT CARE 1-50 51-100 101-150 151 -----> Indirect Care - Benefits 8.42 8.13 6.20 6.22 7.25 2512 Fuel 0.37 0.41 0.55 0.20 0.41 2513 Gas 1.15 0.91 0.77 0.92 0.91 2514 Electricity 2.58 2.07 2.33 2.09 2.23 5442 Insurance 2.80 2.46 2.85 2.17 2.57 4511 Salaries - Plant Operations and Maintenance 3.27 3.33 2.35 2.39 2.86 4521 Salaries - Dietary 10.98 10.21 7.68 8.36 9.24 4524 Purchased Dietary Services 1.26 0.16 2.03 0.86 1.01 4531 Salaries - Laundry & Linen 0.43 1.71 1.09 1.59 1.31 4538 Purchased Laundry & Linen Services 2.02 1.09 1.58 0.57 1.28 4541 Salaries - Housekeeping 1.95 4.33 3.12 3.77 3.50 4548 Purchased Housekeeping Services 4.62 0.58 1.90 1.21 1.71 4728A Other Labor, Salaries, and Fees 1.23 0.89 1.06 1.09 1.03 5425 Office Supplies & Printing 1.21 0.88 1.02 0.79 0.96 5426 Communications 0.84 0.67 0.54 0.44 0.61 5427 Travel - Motor Vehicle 0.44 0.33 0.20 0.24 0.29 5428 Conventions & Meetings 0.03 0.07 0.07 0.09 0.07 5428A Education and Seminars 0.25 0.17 0.15 0.17 0.18 5429 Advertising & Public Relations 0.86 0.78 0.43 0.47 0.63 5429A Advertising - Help Wanted 0.10 0.10 0.09 0.07 0.09 5430 Licenses & Dues 0.53 0.36 0.38 0.38 0.40 5433 Home/Central Office 1.00 1.91 3.04 0.87 1.89 5443 State Franchise Tax 0.18 0.07 0.01 0.13 0.08 5449 Miscellaneous 2.79 2.86 2.84 2.39 2.75 5515 Water & Sewage 1.16 1.05 1.06 1.25 1.11 5516 Maintenance Supplies 0.82 0.81 0.72 0.91 0.80 5518 Purchased Services and Repairs 4.10 2.91 2.33 2.48 2.85 5529 Dietary Supplies 0.70 1.19 0.85 0.96 0.97 5532 Linens and Bedding Supplies 0.06 0.17 0.17 0.28 0.17 5539 Laundry Supplies 0.18 0.23 0.17 0.22 0.20 5549 Housekeeping Supplies 0.94 0.91 0.94 0.95 0.93 5728 Other Expenses 0.19 0.79 1.11 1.47 0.92 5758 Recreational Supplies 0.36 0.39 0.33 0.23 0.34 5759 Other 0.33 0.30 0.30 0.18 0.28 6711 Physicians' Salaries or Fees 0.07 0.05 0.11 0.05 0.07

SULLIVAN & COMPANY CPAs AVERAGE AVERAGE AVERAGE AVERAGE OVERALL MEDICAID A DIVISION OF BLUMSHAPIRO BED SIZE BED SIZE BED SIZE BED SIZE AVERAGE PAYMENT ANALYSIS OF NURSING HOME PER DIEMS December 31, 2012 RANGE RANGE RANGE RANGE AT CMI 1.00 1-50 51-100 101-150 151 -----> 7411-7421 Administrative Salaries 17.02 11.90 10.45 9.52 11.82 7433-7437 Purchased Services 3.73 5.97 6.19 8.71 6.21 7444A Utilization Review Medicaid Title XIX 0.00 0.00 0.00 0.00 0.00 7449A Miscellaneous Labor & Payroll Related 1.41 0.50 0.55 0.23 0.60 7523 Dietary Consultant 0.25 0.43 0.41 0.32 0.37 7712 Pharmacist - Salaries or Fees 0.17 0.16 0.19 0.23 0.18 TOTAL INDIRECT CARE 80.80 72.24 68.16 65.47 71.08 53.53 HEALTH CARE PROVIDER ASSESSMENT Based Upon 8470 Provider Assessment 13.74 13.45 13.84 13.95 13.71 Medicaid Rate PROPERTY TAXES 1451 Real Estate Taxes 1.59 1.78 2.57 3.50 2.31 1451A Personal Property Taxes 0.17 0.30 0.34 0.42 0.31 1451B Fire Tax 0.00 0.02 0.01 0.01 0.01 TOTAL PROPERTY TAXES 1.76 2.10 2.92 3.93 2.63 Facility Specific OTHER PROPERTY RELATED 3452 All Interest 2.09 6.37 4.54 4.38 4.79 3453 Rent 1.27 7.50 5.89 5.61 5.69 3453A Lease/Rental of Equipment 0.40 0.62 0.97 1.18 0.80 3454-3466 Amortization and Depreciation 6.31 5.73 6.11 5.75 5.93 TOTAL OTHER PROPERTY RELATED 10.07 20.22 17.51 16.92 17.21 Facility Specific TOTAL OPERATING EXPENSES 250.86 253.95 250.30 252.58 252.10

SULLIVAN & COMPANY CPAs AVERAGE AVERAGE AVERAGE AVERAGE OVERALL MEDICAID A DIVISION OF BLUMSHAPIRO BED SIZE BED SIZE BED SIZE BED SIZE AVERAGE PAYMENT ANALYSIS OF NURSING HOME PER DIEMS December 31, 2012 RANGE RANGE RANGE RANGE AT CMI 1.00 1-50 51-100 101-150 151 -----> SUMMARY OF PER DIEMS BY COST CENTER DIRECT CARE - NURSING 98.03 96.80 98.84 102.42 98.61 DIRECT CARE - OTHER 30.21 25.64 23.33 22.46 25.09 DIRECT CARE - NON-MEDICAID ANCILLARIES 16.25 23.50 25.70 27.43 23.77 TOTAL DIRECT CARE 144.49 145.94 147.87 152.31 147.47 INDIRECT CARE 80.80 72.24 68.16 65.47 71.08 HEALTH CARE PROVIDER ASSESSMENT 13.74 13.45 13.84 13.95 13.71 PROPERTY TAXES 1.76 2.10 2.92 3.93 2.63 OTHER PROPERTY RELATED 10.07 20.22 17.51 16.92 17.21 TOTAL OPERATING EXPENSES 250.86 253.95 250.30 252.58 252.10 PERCENTAGE OF OCCUPANCY FRINGE BENEFIT RATIO 94.7% 90.3% 93.9% 92.6% 93.0% 24.1% 24.7% 23.6% 23.8% 23.6%