02/10/2022

SNF cost comparison and industry trends report

LeadingAge Ohio Associate Firm CliftonLarsonAllen LLP (CLA) has provided the following Skilled Nursing Facility (SNF) Cost Comparison and Industry Trends Report.

CLA has identified three key factors affecting the ability for SNF operators to endure the pressures of the COVID-19 pandemic: financial health leading into the pandemic, impact on operating revenues and expenses, and the amount of funding received through the various public health emergency (PHE) funding sources.

The challenges of the COVID-19 pandemic first presented as a clinical crisis and have expanded to become a business crisis of evolving financial and operational components. The number of variables impacting operations and finances have made it difficult for many operators and owners to decipher what issues require a quick tactical fix and which have a more profound impact requiring a long-term strategic approach.

SNF operators and owners conducting a thorough review of national operating and financial metrics can uncover valuable perspectives and help determine how a facility or market is performing overall. However, in an environment full of disruption and extraordinary financial and operational challenges, CLA sends this consistent message: You cannot simply look at margins or ratios in isolation. You absolutely must understand the trends and the underlying factors that are driving the numbers.

Key trends discussed include:

• PHE programs and funding sources — While these provided many operators and owners with critical financial lifelines, these programs and funding sources will not exist in perpetuity. In addition, the diversity of programs results in inconsistencies in the amount of funding received, and when and how funds are recognized in a facility’s financials.
• Occupancy reductions — SNFs experienced immediate and severe occupancy reductions; however, the recapture has been slow and inconsistent among states, counties, and operators.
• Access to workforce — Workforce challenges have created a conundrum, with a compounding impact on margins. This can limit operators’ ability to recapture census and impose significant pressure on operators’ operating expenses.
• Cost structure — Cost structure is under significant pressure, most notably due to infection control and labor.

The CLA report elevates these key trends in the industry, along with the numbers to support them. With a better understanding of key benchmarks, CLA helps SNFs create performance expectations, gain a stronger handle on their competitive landscape, and apply relevant knowledge about local market conditions. That is the true value of our 36th SNF Cost Comparison and Industry Trends Report — a concise source of financial and operational SNF insights and indicators.

If you have questions or need additional assistance, please reach out to Chad Kunze at chad.kunze@claconnect.com or Lisa Hilling at lisa.hilling@claconnect.com.