The skilled nursing landscape in Kentucky has been under significant pressure, worsened by the COVID-19 pandemic, which intensified existing challenges such as staffing shortages and rising operational costs. Facilities have been stretched thin, leaving owners and operators with the difficult task of trying to balance quality care and financial viability. Fortunately, new funding support has recently gone into effect to help ease the burden.
The New Medicaid Rate Increase is Here – What Does It Mean for Providers in the State?
As of July 1st, the state’s Medicaid reimbursement rates have increased, offering much-needed financial relief and new opportunities for long-term care providers in Kentucky. This rate adjustment, which will result in approximately $99.6 million more for nursing homes in the next fiscal year, is crucial for facilities striving to maintain high-quality care and operational sustainability in this post-pandemic world.
The main goal behind the Medicaid reimbursement increase is to enable SNFs to offer top-notch care to their residents. This funding supports better staffing, enhanced services, and improved facilities, all aimed at benefiting those who rely on these communities.
For facility owners, the increase also enhances the market appeal of their properties. The boost in reimbursements leads to greater financial stability, making it a favorable time to explore their investment strategies. By leveraging this Medicaid rate increase, skilled nursing communities can rebuild stronger and more resilient facilities that better serve Kentucky's aging population.
Here’s How Kentucky Owners and Operators Can Make the Most of It:
Enhance Quality of Care
The additional funds from the Medicaid rate increase provide a significant opportunity to enhance the quality of care offered to residents.
Better Staffing: Use additional funds to attract and retain top talent, ensuring your residents receive the best possible care. Staffing has long been the top challenge in the industry, and has become even more pressing with the federal staffing mandate that went into effect last month.
Facility Upgrades: Invest in necessary improvements to modernize your facility and enhance the living experience for your residents. The increased reimbursement may also allow you to look ahead and focus on preventative facility maintenance as well.
Operational Efficiency: There's never been a better time to optimize your facility's operations. You can begin to spend more time focusing on streamlining your process, implementing cost-saving measures, and investing in staff training.
Stay Competitive
In the local skilled nursing market, using the increased funding wisely can help your facility stand out. This will attract more residents and boost your reputation in the area.
Market Position: Strengthen your edge by leveraging increased funds for superior services.
Growth Opportunities: Explore expansion into new services or markets with additional resources.
Strengthen Your Marketing: Use additional resources to put time into marketing your communities
Challenges That Will Remain in Kentucky Despite Extra Reimbursement
While this Medicaid increase has many positives, it will not solve all the issues faced by skilled nursing facilities in Kentucky. Operating a SNF in the state will continue to present a unique set of challenges compared to other regions.
Tort Law: Kentucky's Tort Laws presents many challenges for SNFs. The state has no caps on damages in malpractice cases, which can result in very large payouts. This legal environment increases insurance cost and financial risks for facilities.
Rural Population: Kentucky has a significant rural population with about 41% of residents living in rural areas. This rural distribution poses challenges in terms of accessing healthcare services and attracting qualified healthcare professionals to work in SNFs.
Healthcare Workforce Shortage: According to the Kentucky Hospital Association, the state has one of the highest nurse vacancy rates in the country, making it difficult for SNFs to maintain adequate staffing levels.
Regulatory Environment: The regulatory environment for SNFs in Kentucky is stringent, with frequent inspections and compliance requirements.
Medicaid Reimbursement Rates: While the most recent increase was significant, Kentucky's Medicaid reimbursement rates for SNFs have historically been relatively low compared to the national average. It is unlikely that Kentucky will see another rate increase of this size again in the foreseeable future.
Despite these ongoing challenges, there are proactive steps you can take to make the most of the new Medicaid rate increase.
Act Now to Position Your Communities for Success
It's not every day that Kentucky will see an 8% Medicaid rate increase happen. Large increases like this are hard to come by and require years of action. By acting now, Kentucky providers can ensure they are well-positioned to capitalize on these financial adjustments, and ultimately delivering best-in-class care to their residents and patients.
Here are a few ways to get started immediately:
Review Your Financial Situation: Assess your current financial health to identify areas where the increased funds can have the most impact.
Develop a Strategy: Create a plan for utilizing the additional resources to enhance care, improve staff retention, and upgrade facilities.
Let us do the work for you. ESI offers a complimentary, no-obligation benchmark analysis.
We have invested over a decade establishing our proprietary database of seniors housing and skilled nursing communities across the country. With robust operating revenue and expense metrics, we are able to compare a facility's performance against similar facilities locally, regionally, and nationally. Ultimately, our goal is to help providers better understand their finances to strategize where to allocate the increase in funds.
The Impact on SNF Market Values & The Importance of an Updated Valuation
For skilled nursing owners considering exiting the industry in the future, it's important to consider how this funding will increase the value of your Kentucky skilled nursing communities. When a state experiences a significant Medicaid rate increase like this, prices often skyrocket due to the heightened demand. This demand makes your communities more attractive to investors and buyers, driving top dollar for your investments.
Many owners only think about getting a valuation when they plan to sell. However, periodic valuations are an essential tool to take advantage of, particularly when your state has experienced a reimbursement increase. An updated valuation will ensure that your facility's worth reflects the current market conditions and the impact the Medicaid increase will have on your financial situation.
Reach out to us today to get started and take full advantage of the Medicaid rate increase for your community.