December 16, 2019
Is SNF Spending Beginning to Stall?

Recent stats show decelerated spending for nursing home services

How SNFs can use competition as motivation Is SNF Spending Beginning to Stall?

In 2018, U.S. spending for skilled nursing services and continuing care retirement communities (CCRCs) was in the positive, netting a 1.4% increase for a total of $168.6 billion. While the numbers may seem a step in the right direction, growth has generally slowed, according to the Centers for Medicare & Medicaid Service Office of the Actuary.

The agency’s recently published data that compare last year’s spending growth to the year prior. Year over year, the country showed a decline in spending, with 2017 clocking a 2% increase, which is 0.6% higher than in 2018. While the dwindling stat isn’t a huge cause for concern, facilities need new strategies to compete in today’s cutthroat market.

 

Expenditure explained

Any growth is good. But a deeper analysis of the recent CMS report indicates that nursing home spending has subtly slowed. Since facilities possess a mere 5% share of all healthcare-related GDP, it’s important to understand the reason behind the stall.

“The slower growth in 2019 is largely attributable to slower spending growth in private health insurance spending,” says the agency. They also mention “a decline in Medicaid spending.”

With hospital, physician and personal (non-facility) care services capturing 58% of American healthcare expenditure, nursing homes need to find creative ways to lower costs and attract clientele. Filling beds is always a challenge, but tracking recent spending trends makes it easier to assess the level of effort required to compete.

Not to mention, operators face many other occupancy challenges. SpecialtyRx has covered these extensively in the past.

“Among the obstacles are a tight labor pool, driven by low unemployment and competition from other businesses,” says Chris McKenna of the Times Herald-Record, Middletown, New York. “Then, there’s a Medicaid rate that hasn’t budged in years, which has strained a main funding source for many homes.”

We will continue to monitor the various factors affecting nursing care facilities and their ability to survive and thrive through 2020 and beyond. In the meantime, owners and administrators should keep close watch of emerging trends and movements throughout the industry. It’s the only way to stay a step ahead of the competition.