Say Cheese: It’s Nothing To Smile About October 31, 2013

The politicians in Washington are keeping the LTC industry on its toes with the new Affordable Healthcare Act and it’s complete revamping of the marketplace.

But that’s not the only thing we should be looking at uneasily.

An unrelated fight over renewing the nation’s farm bill has centered on cuts to the $80 billion-a-year food stamp program. But there could be unintended consequences if no agreement is reached: higher milk prices.

Should LTC operators be nervous or is this just politics as usual? If milk prices do indeed soar higher, it remains to be seen how badly it’ll hit our industry. Will this affect all dairy products such as cheese and dairy-based sauces? In the dietary arena, these items can make up for approximately 25% of your total food expenditures.

Check out the full story with this link:

http://www.foxnews.com/politics/2013/10/28/farm-bill-stalemate-could-send-milk-prices-skyward/

The bottom line? While our industry had a similar scare like this a while back, it remains doubtful that an upcoming spike in dairy products is happening anytime soon. But it’s worth keeping an eye out on these interesting developments.

Stay tuned.

Double Trouble or Double Profits? October 16, 2013

Two Industry Leaders Join Forces To Help SNF Industry Ahead Of Anticipated Medicare and Medicaid Cuts

 

With the looming potential of huge Medicare cuts on the congressional budgetary table, the SNF industry has what to be worried about.

According to a recent article in McKight’s magazine, the American Health Care Association has warned that if the congressional budget deficit committee fails to find other ways to save $1.5 trillion over 10 years, there will be automatic across-the-board cuts.

This would mean a 2% reduction in Medicare reimbursement starting in 2013, which the association said would slam struggling skilled nursing facilities. Combined with the 11.1% Medicare rate cut scheduled to hit in October, AHCA estimates that a typical 100-bed SNF could stand to lose up to $50,000, or the equivalent of two direct-care workers.

“These cuts don’t occur in a vacuum,” said AHCA President and CEO Mark Parkinson. “We hope Congress and the administration understand this latest proposal comes on the heels of several other deep reductions in provider funding – cuts that have taken their toll on our sector.”

In the wake of these significant developments, two industry powerhouses – Prime Source GPO and Caretech Group – have recently announced the formation of a strategic alliance to provide the SNF community with provide broader savings opportunities.

Prime Source is a rapidly expanding GPO servicing SNF and LTC facilities throughout the United States.  The company offers cost reduction services, access to an exclusive network of vendors, informational tools and customized solutions to help clientele lower costs and increase profitability.

Caretech Group, founded in 1994, is a procurement services group that has garnered recognition as a pioneer in long-term care, providing innovative supply chain solutions and data-driven analytical software tools to facilities. The company specializes in combining traditional purchasing services with hi-tech business intelligence to improve the overall financial health and operational performance of facilities, empowering administrators to make smarter decisions and effectively manage cash flow.

“Prime Source’s exclusive vendor contracts and consolidated buying power are a perfect complement to our extensive procurement experience and advanced technology solutions,” says Paul Hellman, Founder and CEO of Caretech Group.  “This alliance will offer significant advantages to customers across the country, which will directly translate into bigger savings for their facilities.” 

Michael Greenfield of Prime Source agrees with those sentiments and optimistically points out why this situation may actually be a benefit for many.

“In these turbulent times, every SNF out there has got to start being more aggressive about cutting costs,” he notes.

“The inevitable Medicare cuts will force them to make do with less funding. We are here to help our industry weather the upcoming fiscal storm by discovering new ways to continuously slash costs – and allow these facilities to come out stronger and more profitable as a result.”

                                                                     

 

 

 

Partnership- the Solution to Your Needs March 7, 2011

The politics surrounding this year’s budget are extraordinary and already different from recent years. This is a year of budget battles throughout the country as so many states struggle with lower tax revenues and escalated program costs. The impact of the recession and the end of the federal aid that softened the impact of the recession (it runs out in June) intensifies the politics around the budget. In NY, Governor Cuomo has positioned himself to withstand political and special interest group pressures that have influenced previous annual budget processes. He created a Medicaid Redesign team composed of industry leaders to come up with the necessary adjustment to reduce Medicaid. No matter how the politics play out, Medicaid reimbursement will be cut.

Based upon an analysis from NYAHSA, the impact of the proposed Medicaid cuts to nursing homes is $820 million in 2011-12 and $1.2 billion is 2012-13. These are clearly worse case numbers, although the final budget is a work in progress. The Medicaid Redesign Team has proposed alternatives to such cuts and their cuts are slightly lower than the Governor’s proposal. These proposals have the Governor and the Senate’s support, while the Assembly’s position remains unknown, at the time of this writing.

Facilities may have to consider further draconian cuts. Since the “fat” in facilities is gone, nursing home executives are faced with the difficult decisions related to direct care staff reductions. No other alternative seems to be left. The dangers in these kinds of reductions are significant. Clinical outcomes may be negatively impacted. Which in turn will impact Quality Indicators, the QIS and the nursing home’s Five Star Rating. With Value Based Reimbursement on the horizon, these outcomes may have a significant affect on both Medicaid and Medicare reimbursement. Therefore, cutting direct care staff may create more long term fiscal problems that are independent of the NYS Budget. Yet nursing homes need to find additional efficiencies and the right strategic partner.

While this approach has been crucial in the past, this year the need for a new kind of strategic partner is more important. Caretech can be your strategic partner, offering ways to reduce operating expenses. As a value added service provider, Caretech goes beyond securing the best price for supplies. It assures that supplies are being consumed appropriately and effectively. It provides real time expense versus budget data available as a dashboard (that can receive data feeds from your contract pharmacy, laundry and linen vendors among others). Caretech can be your outsourcing solution for Purchasing and Accounts Payable. This means reductions in back of the house staffing instead to direct care workers. The impact of this alternative is significant.

It is a useful exercise to exam the labor expense differential, when comparing fiscal support staff to direct care workers. How does the total cost of one fiscal support worker compare to that of the direct care worker? Is it a one to one ratio, or does the fiscal support worker cost more than the direct care worker. Now consider giving the “back of the house” labor costs reductions a greater focus. Caretech empowers you with these options.

As your outsourcing solution, Caretech reduces these staffing expenses, while assisting your facility with the overall systems to control and monitor supply usage. Out Caretrak ™ Ordering Systems and Dashboards assure that on any day, and any time of the day, you can know how compliant your organization is with its supply budgets. These are Caretech’s superior fiscal analytics, which supports timely decision. Caretech’s research and development is also focused on predictive analytics that help illuminate the potential clinical patterns that could negatively impact supply expenses, clinical outcomes and Value Based Reimbursement. Since this is a forecast, it allows a facility to investigate these patterns preventing them from becoming a trend that is either flagged by the Quality Indicators or picked up as part of QIS. As your strategic partner, Caretech is ready to provide alternatives and solutions.

Conducting business as usual is no longer an option. Caretech offer’s many choices and innovative pricing arrangements that maximize certainty for the nursing home, while establishing an incentive for Caretech to be very creative on your behalf. While the budget making process moves forward in NY and facilities consider the best case and worst case scenarios, make Caretech your strategic partner that will help facilities cope in this challenging environment.

Succeeding During Challenging Times September 22, 2010

by Steve Katz

Facing challenging times, the smarter nursing home a strategic partner. It is extremely difficult in today’s environment to face these difficult times in isolation. Many facilities have strong relationships with their trade associations, labor attorneys and key vendors. However many of these relationships are project/problem oriented. They don’t help a nursing home deal with the day to day challenges. Rethinking relationships around ordinary day to day operations strategic partnerships help nursing homes to function more effectively. With new obstacles to face in 2011, rethinking standard operating procedure makes very good sense.

Two recent nursing home liability cases are sending shock waves to nursing home expense budgets. A recent decision in a landmark class action lawsuit against Eureka Healthcare & Rehabilitation in California awarded $27 million dollars to the Plaintiffs in a nursing home liability case and it is the largest award for nursing home liability to date. While this case illustrates what most would assert are extremes in neglect, the case highlights the potential results of a very real challenge to nursing homes across the United States. As nursing homes become profit centers, or alternatively challenged to cover expenses by lagging reimbursement, the cost of Skilled Healthcare becomes more challenging to sustain. Yet the point the jury made in the delivery of this verdict is that sacrificing care to save dollars will not be tolerated. Another case, (Richard Scampone, Executor of the Estate of Madeline Scampone v. Highland Park Care Center, LLC d/b/a Highland Park Care Center, Grave Healthcare Company, Grave Associates, L.P., Trebro, Incorporated) in Pennsylvania, expands corporate liability to include a nursing home’s parent company and/or the owner. Both of these cases dealt with negative outcomes related to staffing. These decisions will increase a nursing home’s liability expense significantly more than previously expected. The 2011 operating budget also has to contend with other hurdles.

As facilities dive into their budget process for 2011, the challenge becomes very daunting. The reality of changing reimbursement processes and reduced tax revenues are now impacting projected bottom-lines. Nursing home executives are looking at their payer mix and trying to find ways to mitigate these stark realities. New reimbursement issues are present in both Medicaid and Medicare. Medicaid rate sheets are in the hands of the facility CFO. The impact of Medicaid only case mix calculation is becoming apparent to those that are negatively affected. Since the CMI adjustment is only one time per year, facilities are now working to adjust their procedures to assure that they are in position to maximize their rates. Medicare changes are also on the horizon with the implementation of MDS 3.0. The related implementation of RUGS IV, though not imminent will also be on the minds of the administrative and clinical leadership. Value Based Reimbursement and Regional Pricing should also be on their minds as it is likely that we will see these new systems implemented soon.

Then there are the routine issues that require attention as well. These routine issues include: the Survey, the DAVE process, monitoring Nursing Home Compare/Five Star Rating System, Corporate Compliance and the latest revision to the OMIG Work Plan, recruiting and retaining staff to name just a few of the significant challenges that are now part of the routine. This is the micro backdrop for this year’s budget preparation.  The macro backdrop that bears watching is the recovery from the recession. According to the Rockefeller Institute, NYS tax collections were up over fifteen (15.4%) in the first quarter and only slightly less than two percent (1.8%) in the second quarter. However, tax revenues have still not returned to pre-recession levels according the Rockefeller institute. With Federal Stimulus funding scheduled to end next June, State revenues for programs like Medicaid will be significantly less than pre-recession levels, unless there is a sudden and dramatic improvement in the economy. So the prospects for our Medicaid rates for 2011 are troubling. There are so many barriers to overcome, so many challenges to face, its advantageous to face them with an innovative approach – strategic collaboration.

Challenging times often serve as a catalyst for innovation. Difficult times force us to think in new ways which propel us out of our comfort zones. Standard operating procedures are no longer the most efficient and effective way to operate our facility, now one of the scarcest resources time for management to focus on issues.   With so many “big ticket” challenges and changes facing us, it is likely that supply expenses are relegated to the bottom of any priority list. The problem with this construct is that with the financial challenges that our industry faces, the “nickel and dimes,” that are supply expenses add up quickly. Nursing homes cannot ignore them and monitor them sporadically. They now require constant attention and so does liability insurance expenses. Caretech has creative technological and intellectual solutions for supply and liability expenses. The solution involves technology, an innovative partnership, and our ability to focus on these issues on your behalf. With the enormity of these issues nursing homes benefit from our focus and distinct approach to managing them. Facing challenging times, a smarter nursing home has a strategic partner. Let Caretech be your strategic partner.

What Works; What Makes it Work Better September 1, 2010

by Steve Katz

You would think that an Internet search on cost savings and its impact on quality in nursing homes would reveal a long list of articles and resources including commentary on innovative programs implemented in past and recent years. Yet with decades of nursing home executives facing significant regulatory and reimbursement changes, coupled with their concern about the potential impact of these cuts on quality of care; changes in technology and internal management have not kept up adequately with the demand for change. Ancillary stresses include the likelihood of reductions in reimbursement from Medicaid and Medicare over the next five years as well as impending changes in reimbursement methods. Value Based Reimbursement (Pay for Performance) will link payment and quality even as facilities grapple with lower reimbursement. Given this construct, it is prudent for nursing home executives to reconsider articles and research that link expense reduction and quality. Surprisingly there is a dearth of articles that deal with this topic.

A significant study conducted in 1998 has considerable merit when responding to challenges that our industry faces today. The study published in 1998, “91 Ideas for Reducing Costs, Enhancing Revenues, and Maintaining Quality in Nursing Homes,” was written by nursing home consumer advocate Cynthia Rudder, PhD and Charles Phillips, PhD, MPH and funded by the Fan Fox Samuels Foundation. Some readers might find it ironic that one of the most outspoken consumer advocates could also co-author such an analysis. Dr. Rudder’s passion for quality in nursing homes remains well known, as is her unique relationship with the industry. This study offered many constructive ideas to reduce expenses, increase revenues and promote better quality. In reading this paper as well as the related summary document, it is notable that many of the recommendations still ring true. Interestingly, it highlights the ways in which companies like Caretech, using its’ Caretrak procurement software, executive level support, as well as outsourcing options impact the bottom line of the nursing homes it supports.

Given the cyclical nature of the economy, nursing homes are all too familiar with similar circumstances from the past, although scope and severity of revenue cuts may be more intense in the latest economic downturn. Another major difference to be considered (and mentioned in “91 Ideas”), is the power and the potential for efficiencies from information technology. While nursing homes do utilize technology more than they did twelve years ago, overall they lag considerably behind the rest of the healthcare sector in the implementation of technological tools. Many of the suggestions detailed in the 1998 study are consistent with how Caretech naturally serves its customers. As a strategic partner, Caretech advises its clients that reducing expenses requires consistent focus. To support that focus, it additionally provides innovative tools which support Nursing Home professionals. These resources include online procurement software, advanced reporting and the constant analysis of expenditures. Combined with practical experience, this system produces results that blend aggressive cost savings approaches together with the tools that enable management to keep their finger on the pulse of their facilities. As you read “91 Ideas” it’s clear that the “sustained and consistent focus” concept is a cornerstone to the success of these initiatives. When the positive impact of information technology is included in this construct, opportunities to reduce expenses and not only maintain quality, but improve it become obvious!

The results of the research conducted by Dr. Rudder and Phillips were categorized into five major lessons;

1. Reducing costs does not require one to reduce quality of care.
2. Focus expense reduction efforts broadly.
3. Make your expense reduction efforts systematic.
4. Use a balance of expense control and revenue enhancement.
5. Systematically evaluate all changes.

According to Rudder and Phillips, reducing expenses should not have a negative impact on the quality of care. They urged facilities to become more cost effective and used reductions on the use of psychotropic medications as a tangible example of reducing expenses and improving quality. By reviewing the use of these drugs and simultaneously offering an increased level of attention in the delivery of activities, the residents dramatically benefitted from being active, as well as the time increase for clinical focus returned to their nursing staff. Benefits were threefold, clinical, therapeutic as well as financial.

From Caretech’s experience, using an incontinence brief product that is fitted appropriately and has a high absorbency is an example of reducing expenses and improving quality outcomes. What is crucial for consideration is the focus necessary to assure that incontinent residents are using the correctly sized product consistently. Technology and its analysis of data play an important role in providing an early warning signal that usage is going in the wrong direction, and with the proper format and ease of use – results in administration noticing the red flag much sooner.

Rudder and Phillips also suggest that controlling expense initiatives should be systematic. They recommend empowering front line managers and hands-on staff in these initiatives. The results from this kind of empowerment can be enhanced with appropriate accountabilities because of advances in information technology. Policies and procedures are standardized in the configuration of the software that’s used to support the facility. Forms and documents are generated without managerial intervention. Focus, once again, is the crucial element in assuring that expense reduction initiatives are systematic, both in terms of design and implementation.

With the specific use of Caretrak, Caretech provides its clients not only with the ability to perform all of these functions but many of them are automatically applied. The use of Order Guides (vendor and product templates approved for cost, efficiency, product availability, approved order quantity and order frequency polices) certainly controls expenditures. Automatically generated inventory guides prevent waste on multiple levels as inventory levels are recorded and the documentation to locate supplies is immediately available. Reporting on order practices is consistent and easy to perform and immediately available. Reports are customizable by facility. Ordering practices also reveal opportunities for new sources of income, or lost sources of revenue that can be corrected. Ongoing reviews of purchasing practices reveal the success levels of experimental changes.

The last lesson for consideration relates to evaluation. Does a facility consider the impact of the initiative after they have been implemented? If so, what are the time frames that such reviews occur? Too often facilities don’t consider the full impact of an initiative. Rudder and Phillips’ report describes common sense steps that lower expenses without negatively impacting quality. From Caretech’s perspective, combining industry expertise while leveraging technological tools provide the fulcrum in the nursing home executives balancing act. The challenge Caretech met is maintaining the focus necessary to carry initiatives through to their full benefit, analyzing the initiatives and modifying as necessary. The outcome is a repetitive process of refinement.

Yet, there are two opportunities available to improve the success of these actions: and the second is outsourcing. Caretech’s industry expertise and resources allow its’ partner facilities to focus upon a timely review of data and to capitalize upon early warnings that outcomes and expenses are going in the wrong direction (see our article in the April 2010 edition of Provider). While price is always a consideration, as the “91 Suggestions” reiterates over and over again the focus on utilization means paying attention to financial, clinical, therapeutic and quality of life priorities.

Value Based Reimbursement creates a challenge and an opportunity for facilities. Relating quality and payment rates will challenge facilities to improve outcomes even though payment is reduced as a result of reduced tax collections. For those facilities that are above average in quality, payment rates will be increased to reward these outcomes. The journey to this positive outcome is mapped out. Caretech’s approach allows organizations to successfully make this journey, one that reduces expenses, improves quality and ultimately increase revenue.

Facility Responses to Macro Economic Seismic Activity July 29, 2010

by Steve Katz

The second half of the year means it’s time to begin to prepare the 2011 Budget.  Background information is being assembled, expense projections are being calculated and the process that each facility uses is at the ready.  The supply expense side of the budget is relatively easy to compute.  The amount available for each category is certainly going to be problematic for 2011 as reimbursement from government payers is reduced.

According to the Rockefeller Institute (www.rockinst.org), the projected NYS Budget for fiscal 2011-2012 is $14.3 Billion.  The size of the deficit reflects the end of federal subsidy from the American Recovery and Reinvestment Act of 2009.  NYS received $25 Billion from this intervention and used $11 Billion for Medicaid.  In the current political climate, it seems unlikely that the federal government will provide an extension to this act.  This fiscal reality assures that next year’s NYS budget will be both a political and economic nightmare. 

Medicare may provide a brief respite for nursing homes next year, since Medicare reimbursement for nursing homes will increase by 1.7%.  However MDS 3.0 and revisions to RUGS reimbursement may make it harder for facilities to see an increase in this revenue source.  The RUGS system will eliminate the hospital look-back period, change the ADL scoring process and reduce the number of treatments that place an individual in the Extensive categories.  Although Medicare remains the best payer source, its beneficial impact will be reduced.

For those facilities that consider operating budgets for future years, the picture is grim.  Projected deficits in NYS increase significantly in the next five years.  Beginning in 2014, PPACA (i.e.: Health Care Reform) will reduce federal funding for Medicare and Medicaid as well.  So we enter the second half of 2010 facing a difficult road for the next several years.  It is reasonable for facility executives to be focused on the macroeconomic issues described very briefly above. However, there are microeconomic interventions that can have a positive impact on the overall operation of a facility. 

Second quarter 2010 profit and loss results for publically traded organizations are now available.  The trend is clearly described in the NY Times; aggressive reduction and control of expenses can bring a facility profits even when sales revenues are not growing and even falling.  Controlling supply costs is part of this aggressive business practice.  It is an important question for nursing home executives to consider particularly when facilities are in the process of retrenchment and consider its impact on staff and the use of supplies.

How is the cost of supply expense affected by the collective psychology of the staff?  Does the staff hoard supplies as a response to the perception that a facility is having financial trouble?  Although there is little seminal research that deals with this phenomenon, anyone in operations has a sense of this reality.  An article in the July 11, 2010 NY Times Sunday Business, “Factory Finesse, at the Hospital,” describes this occurrence.  The article discusses how the staff stashed supplies when they believed they will have problems gaining access to them.   When the staff believes that they will have difficulty accessing supplies, a negative feedback loop that artificially increases supply costs occurs.  Staff members have their personal stash and keep the location to themselves.  As a result it appears that there are not enough supplies, which causes the acquisition of unnecessary materials, which adversely affects the financial performance, which forces expense reduction programs, which effects staff psychology, which fuels hoarding.  The article describes a simple solution to this problem and notes significant savings for the hospital presented in the article.  Controlling supply expenses is never rocket science; it is about focus.

Caretech understands the challenges facing nursing home executives.  There is a limited amount of executive and management focus available.  The significant changes that are confronting nursing homes place a great strain on management’s time. Attention is focused on recruitment of Medicare admissions, maximizing RUGS reimbursement, culture change, and implementation of the electronic medical record, the revision of the survey process, competitive pressures and many other macro issues.  Often Caretech hears that when a facility focuses its efforts on supplies it is able to reduce these expenses.  However when Caretech asks about the sustainability of this initiative, the response is less definitive.  Staff psychology is fragile and hoarding can reappear very quickly.

The solution to hoarding and control of supply expenses is clear:  implement systems to assure staff that they will have the supplies that they need and provide oversight.  There is nothing astonishing in this statement except that unless these interventions are maintained constantly, facilities will have problems with their supply expenses.  There are so many priorities that supply expenses don’t get the consistent scrutiny they require.

The solution is to both focus and to outsource aspects of the operation that will benefit the overall integrity of the organization.  Outsourcing supply expenses (purchasing, oversight, and payables) is a way to maximize efficiencies.  Facilities can reduce back of the house expenses, reduce the price of supplies and reduce the excess utilization that can come from staff hoarding supplies.  Caretech provides these options and can deliver a customized solution that works for your facilities.  With over 10,000 beds under the Caretech umbrella, Caretech is able to help you maintain the micro focus as you address the macro issues that await the industry.

Fragmented Fiscal Focus Frustrates Facilities (say that ten times fast!) June 29, 2010

by Steve Katz

Management is constantly making economic decisions about one of its scarcest resources: its time. Quality and care delivery, regulatory compliance, ethical business practices, fiscally sound operations and competing effectively in the market place seem to be the top issues that management focuses on. Yet we see that the ebb and flow of change continue to impact this economic decision. In a recent discussion, a CEO commented on the rarity today to focus on anything for “more than five minutes.” This same CEO also mentioned that supply chain issues could be “low hanging fruit opportunities, if only we had time to examine them.” This is likely to be a sentiment shared by many CEOs until they are willing to try another approach. Medicaid cuts have been enacted and so once again The Budgetwire looks at the fiscal challenge and opportunities to reduce supply expenses.

The cumulative impact of budget cuts is reported in all of the trade association communications: $5.0 Billion cut from health care over the last three years. While our industry is supposed to see an infusion of funds, the economy neutralized the impact. Rebasing was that infusion and “the scale-back,” is the state’s initiative to reduce the cost of updating Medicaid’s base year. As the budget drama comes to its painful conclusion, it is likely that the industry will have an assessment that includes a portion of expenses that is not reimbursed. The circle complete, once again the financial terrain becomes one of the overriding issues that claim a significant portion of management’s time.

Regulatory changes are moving forward as well. MDS 3.0 is set for implementation October 1, 2010. The summer is now set for many direct care managers: master the changes so that the facility can maximize Medicare reimbursement. Although RUGS IV will not be implemented at the same time, the industry can expect RUGS IIIA, the bridge to RUGS IV, to begin the migration to the new payment system. It will be harder to qualify for the RUGS IV Extensive Categories, since IV meds and fluids, suctioning and transfusions will no longer be included. The Hospital look-back period, which the industry used to maximize reimbursement, is eliminated in the MDS 3.0. Section T of the MDS 2.0 is eliminated: which means facilities can no longer project rehabilitation categories. There are changes in the ADL section that will also make it more difficult to qualify for the higher reimbursing categories. So the industry will spend its summer planning and adjusting to the impact of changes in the MDS and RUGS IV.

The summer will also be spent on other activities: Culture Change initiatives, recruiting RNs since there is a temporary glut as a result of hospital closings/reductions in inpatient beds, implementing HEAL grants or preparing for the next round, tracking DOH Survey trends and preparing for them, and beginning of the 2011 budget process (yes it’s that time). Where does controlling supply expense fit in the assignment of management time?

Many facilities have dealt with this dilemma indirectly. By outsourcing Food Service and Housekeeping, they’ve outsourced the oversight of these supply expenses. The oversight of Medical/Surgical supplies remains in the hands of Nursing Administration in most facilities. With MDS 3.0/RUGS IIIA/IV coming, managing these supplies will continue to be a lower priority. Yet in an economic environment, where tax revenues will continue to require reductions in reimbursement, no facility can afford to have any expense as a low priority. Caretech provides this as an opportunity to address this dilemma.

Outsourcing has worked for Food Service and Housekeeping. Why not for supplies under the supervision of Nursing Administration? Outsourcing is the logical extension for Nursing Management, capable of providing the time and attention to appropriately control utilization. When it comes to controlling supply expense, it’s not just about price; it is also about assuring utilization is appropriate. The savings from such oversight are considerable; the quality/outcomes improvements are also notable. Too often facilities are satisfied with price savings and don’t consider the dual benefits from better control of utilization. Caretech is positioned to help an organization optimize the benefits from appropriately controlling utilization.

The summer will be over before we know it. Preparation for another extremely difficult year will move to the top of the priority list. Caretech can be a strategic partner that helps a facility find ways to be more efficient and effective with its supplies. All of us at Caretech wish you a good summer and are ready to help you face the difficult road ahead of us.

It’s Time for a Paradigm Shift May 28, 2010

by Steve Katz

It’s a recurring theme in Caretech’s Budgetwire Blog: where and how to focus management’s resources and attention. This theme has appeared in this blog since its inception, and there are good reasons why Caretech continues to bring this to our reader’s attention. New issues continue to develop and confront the industry. They often come from government regulation and new competitors that offer services that substitute for nursing home care. These rapid changes are like the experience of navigating white water rapids. This blog will present two items that some may be aware of; the industry will have to allocate some time for these issues to fit into management’s awareness.

Health Care Reform, enacted earlier this year, contains new provisions to help the government continue its efforts to reduce health care fraud and recover Medicare/Medicaid funds. The new provisions include additional funds for enforcement, longer prison sentences in criminal cases, withholding payment to Medicare of Medicaid providers in a pending investigation, finger printing key individuals/criminal background checks before authorization to bill Medicare and refocusing resources to areas of the country that are deemed problematic from a Medicare/Medicaid fraud prospective. Brooklyn is one of those areas where additional resources will be focused to combat fraud. The government’s efforts have resulted in significant recoveries: $1.6 billion in 2009 and $1.9 billion in 2008. Several thousand individual/entities are undergoing criminal investigation as well. It is clear that efforts to combat fraud are showing significant results.

Corporate Compliance is an area that organizations allocate increasing amounts of time and attention towards. The challenge for providers is to find the time to assure Corporate Compliance programs are operating effectively. More and more organizations are using outside resources to support their Corporate Compliance programs. It is clear that both the Federal and State Inspector General will receive the resources to reduce fraud and abuse and facilities will rise to this challenge and in some cases bring in outside entities to live up to the responsibility and legislative mandate to eliminate fraud and abuse from Medicare and Medicaid. Corporate Compliance is not a new challenge albeit it is more intense. Competition from substitutes to nursing home care is not a new challenge either, although it may become more intense if a new post acute substitute enacted by Congress.

There is an initiative in Washington to create a Medicare reimbursed Medical Model Adult Day Health Care post acute alternative. This model, which has considerable support in the House of Representatives would create another alternative to inpatient, Medicare reimbursed sub acute care. If enacted, this initiative would create a new substitute for nursing home care. Not only does this potential program potentially reduce referrals, it is likely to have a negative impact on the pool of Medicare admissions that nursing homes count on. The intensity of competition for these referrals, already at a fever pitch, could escalate even more.

So consider these two issues in the context of the many issues that the industry faces. These include but are not limited to: Budget for the State of New York, MDS and RUGS III, survey issues, provisions in the Health Care Reform, Value Based Reimbursement (Regional Pricing) and all the issues that are unique to an individual facility including local competition, staffing challenges (many facilities have aging staff members in their Nursing Departments). It is not Caretech’s intent to be redundant in the blog; although Caretech admits that it is being redundant nonetheless. Whether facilities are facing inertia or they are overwhelmed with issues, questions of time and attention plaques nursing homes. There is no relief in sight from the rigors of regulation and competition. As facilities look at a variety of paradigm shifts, like Culture Change/Green House, outsourcing is one that has particular benefits. Perhaps the paradigm shift should also focus more on how outsourcing becomes both a reasonable and necessary alternative to certain functions like supply chain management.

Management is constantly making an economic decision about one of its scarcest resources: its time. Quality and care delivery, regulatory compliance, ethical business practices, fiscally sound operations and competing effectively in the market place seem to be the top issues that management focuses on. Yet we see that the ebb and flow of change continue to impact this economic decision. In a recent discussion, a CEO commented on the rarity today to focus on anything for “more than five minutes.” This same CEO also mentioned that supply chain issues could be “low hanging fruit opportunities, if only we had time to examine them.” This is likely to be a sentiment shared by many CEOs unless they are willing to try another approach.

A consistent theme of this blog is that extracting savings from the supply chain is a matter of consistent attention and follow through – enemies of short attention spans. It’s all about price and utilization, which require more time and attention. Organizations in all industries face this reality and find outsourcing to be a reasonable alternative that brings considerable savings, improves operational effectiveness and supports how management allocates is precious economic resources – its dedication and focus. In these difficult times, Caretech is a superior strategic supply chain management partner. Caretech has several approaches that meet facilities specific needs. As paradigms change, Caretech brings a fresh approach that helps you to manage better and more effectively. Caretech will help you capture the low hanging fruit while your organization enhances Corporate Compliance, prepared to compete with Sub acute Medical Model Adult Day Care, adjust to RUGS III, the new MDS, Value Based Reimbursement, the impact of the recession and whatever new challenges come your way.

The Road to Reform is Set April 26, 2010

 by Steve Katz

A perilous path is set to begin for nursing homes. Previous Budgetwire Blogs speculated and now the industry has a clear view of the future of reimbursement. The passage of the Patient Protection and Affordable Care Act (PPACA) is health care reform’s official name, and a growing commitment on the part of the Legislature to the Ravitch Plan to bring New York State’s budget into balance over the next five years solidifies the challenge. There will be less reimbursement from Medicaid and Medicare, with some opportunities to offset revenue losses with better than average quality. The following 2010-2011 Finance/ Reimbursement Reform To Do List  summarizes key provisions affecting long term care that are part of health care reform (summarized very conveniently by the Kaiser Family Foundation – http://www.kff.org).

New York State has its work cut out for it with a demanding to do list to meet budgetary demands.

The Ravitch Plan (follow this link for a full copy of the plan: http://assets.bizjournals.com/cms_media/albany/Ravitch%20Five%20Year%20Fiscal%20Plan.pdf ) will reduce program costs across the board in New York State. Since Medicaid is the largest program in New York, it is likely that it will absorb the largest reimbursement reduction over the next five years. Value Based Reimbursement (P4P) for Medicaid will also make it premier most likely in 2011. When the dust settles nursing homes will see less reimbursement (this can be minimized if the facility is better than average according to P4P criteria) and there will be new programs developed, as well as simplified access, to promote more community alternatives to nursing homes.

Nursing home executives face an enormous task: manage with less revenue, while improving quality and compete against new or enhanced community based alternatives. To assure that nursing home executives don’t get bored, they will also implement MDS 3.0 and a new survey system. So how does an administrator maximize his/her time and can we do all that needs to be done?

While it is not Caretech’s intent to be redundant in Budgetwire Blog, we must admit that it might appear that way. The simple reality facing the industry is that it is imperative for Administrators to do more with less and to find creative ways to accomplish this task. While supply expenses will always be smaller than labor and long term liabilities, they are more flexible. Managed aggressively the individual pennies become significant dollars. Managed more creatively and they become an early warning system signaling clinical changes. These are the unique strengths that Caretech brings to a facility that is its strategic partner.

A combination of analysis, planning and follow through serve to provide both an immediate and enhanced strength behind budgetary dollars. This month, Caretech’s CEO, Paul Hellman and Steve Katz were featured guest authors in the Technology Column in Provider Magazine. There we discuss the advent of financial dashboards and their creative use in the management of tight nursing home budgets. To read our article, please link from our home page at www.caretechgroup.com.

How Tough Is It – How Tough Will It Be? March 26, 2010

by Steve Katz

For nursing homes it truly is tough all over. A recent Google News Alert, reported on a nursing home in northern Sweden that is coping with reductions in government funding. As part of its expense reduction initiative, this nursing home is rationing coffee. Its residents will be limited to two (2) cups of coffee per day. Many nursing home executives are shuddering at the thought of such action, yet realize how tough things are here.

NYS faces a $9 billion deficit in fiscal 2010-2011, NJ faces nearly $11 billion deficit and Connecticut is grappling with a $600 million deficit. NYS also faces a projected $13 billion deficit for 2011-12. When New York State’s fiscal 2010-11 is reviewed in detail, it is clear that recurring revenues (i.e. corporate, personal taxes) alone create a $13 billion dollar deficit. One time gimmicks reduce the deficit to $ 9 billion and mask the depths of the severe nature of the fiscal crisis. With the economic recovery murky, it is likely that recurring revenues will not be able to offset projected program costs as they currently exist. This reality will probably force State Governments to take definitive action.

In New York, the action may come from a plan proposed by Lieutenant Governor Richard Ravitch. Since he was one of intimately involved with the financial turnaround of NYC in the 70’s his plan has particular credibility. As reported in most newspapers, the Legislature is giving the plan serious consideration. The plan is a five year journey to fundamentally change how NY creates its annual budget. The Ravitch plan includes: following GAAP rules, changing the fiscal year to July 1 to June 30 to have a more accurate assessment of revenue, limiting annual borrowing to close deficits, short term borrowing ($6 billion) to help in the transition, eliminating gimmicks in the annual budget process, as well as significant and difficult program cuts. Governor Christie proposes a 9% cut in the State Budget to address the NJ deficit.

It is likely that many nursing home executives are considering doomsday budget scenarios. The problem for them is how to plan for the next five years? Parts of the plan will likely address labor expenses in facilities that are unionized. They will seek to reopen existing contracts and reduce labor related expenses. 1199-SEIU has signaled its willingness to go down this road with recent concessions in its contract with St. Vincent Catholic Medical Center. With so many facilities on the brink of insolvency, 1199 is acting prudently to keep its members employed. However, this fiscal scenario requires facilities to look at all possible avenues to reduce expenses. Are facilities planning back of the house operations and supply expenses reductions? These cost centers can provide real savings as organizations reorganize how they operate.

The greatest challenge to capturing the potential savings in the back of the house and supply cost for organizations may be their own inertia. A common perception is that these costs are pennies compared to labor expenses. Once these big expenses are handled, organizations promise themselves that they will address these other expenses. While this perception is true, pennies add up quickly and too often, organizations never get to address these expense reduction opportunities. Because they view them as small, other issues take priority. The reality of the next five years makes savings pennies more important than ever before.

The impact of the recession and the potential of the Ravitch Plan in New York State, New Jersey’s Governor Christie’s Budget initiative all signal a paradigm shift for nursing home executives. How these facilities manage all their expenses will require ongoing focus and attention. However, the realities of government regulations (Survey’s Corporate Compliance, Quality Indicators, MDS 3.0, Value Based Reimbursement) and market pressures create a framework where facilities don’t have the time and the focus to aggressively manage all their expenses all the time. Caretech is ready to pick up the slack and as your strategic partner assist you with this new reality.

There are plenty of opportunities to reduce expense that facilitate the quality of care and quality of life that facilities want to deliver. Managing expenses is now rocket science; its focus and attention. A relationship with a strategic partner like Caretech means a facility is outsourcing the focus and attention to Caretech. Using a procurement and reporting system, Caretrak ™, Caretech is able to provide real time data that helps facilities lower their expense appropriately and maintain that level of spending. Facilities don’t have to sacrifice quality in the process. As an example, one of Caretech’s client partners was able to reduce its food service supply expense by fifteen percent (15%) and maintain its Five Star rating. Appropriately controlling food service expense does not mean that Resident Council Complaints will lead to a Survey Deficiency. Assuring that residents are sized correctly for disposable incontinence briefs not only controls current supply expenses, it also prevents unnecessary expenses that stem from leakage (i.e.: extra linen, med/surg supplies necessary to address pressure sores).

In these difficult times, strategic partnership provides significant resources; multi-tiered, flexible, approaches which meet specific facility needs. As the funding paradigm changes, Caretech’s example of innovative and fresh approaches help Administrators to manage better and more effectively. Caretech is committed to assuring that residents will have as much coffee as they want!