The changing face — and care — of skilled nursing facilities

In the past, the phrase “nursing home” evoked images of grandmothers knitting in rocking chairs, having tea time in the afternoon and playing bingo. Many people do not realize that today’s nursing facilities are a far cry from the homes where their grandparents may have lived out their final days.

These facilities are now called “skilled nursing facilities” and are often referred to in the healthcare community as SNFs (pronounced sniffs). The name change is not merely a rebranding, but illustrative of the increasing levels of care provided at these facilities.

SNFs care for patients who used to remain in the hospital because they were too sick to be discharged. SNFs care for patients with catheters and feeding tubes. They even care for patients on ventilators.

For this reason, SNFs play a critical role in the health of our healthcare delivery system. A patient in a skilled nursing home can be cared for at a lower cost per day than if that same patient remained in the hospital. Therefore, the increasing levels of care offered at skilled nursing facilities allow patients to be discharged from the hospital sooner with the goal that they will be rehabilitated at the skilled nursing facility and returned to as high a level of independence as possible. The overall financial impact of a hospitalization can often be reduced if patients are moved out of the hospital and into a skilled nursing facility. Because many patients receive Medicaid, dollars saved in this manner help alleviate the financial strain on the heavily burdened Medicaid system.

Some people may also be surprised to learn that SNFs are not just for the elderly. Some SNFs care for infants and children needing highly skilled long term nursing care and rehabilitation. Indeed, the age of residents in a SNF can span nearly a hundred years!

Headlines discussing the Affordable Care Act are numerous and the ultimate effect of the myriad of legal changes, rate cuts and sequestration can be difficult to follow. Sometimes it seems like a lot of smoke and mirrors — or a carnival shell game. Yet, one of the biggest potential impacts is on the skilled nursing industry, the critical bridge between the hospital and the community.

When skilled nursing proponents wring their hands and talk about being underfunded, people find it hard to believe a facility could stay in business when the payments they receive for services are less than the cost to provide them. Yet, this is exactly what SNFs do — they provide care for Medicaid patients and receive less from the government than it costs to provide that care. In order to stay in business, SNFs must diversify their patient mix so that they receive payments from sources other than Medicaid, such as Medicare and private insurance, in order to offset the deficit from caring for Medicaid patients. Many SNFs also seek grant funding to train their staff in order to provide higher quality of care. SNFs, like many other healthcare providers, are working harder than ever to stretch healthcare dollars.

However, as federal Medicare dollars are cut and commercial payors follow suit, the ability to offset Medicaid losses is reduced. SNFs then require more Medicare and commercially insured patients to be able to stay open for business. As more beds are filled with Medicare and commercially insured patients, there are fewer beds for Medicaid patients, causing Medicaid patients to remain in the hospital longer at a higher overall cost to Medicaid. This taxes an already precariously-balanced system.

SNFs provide a critical bridge between the hospital and the community and that bridge needs to be accessible to all people, not just those with Medicare or private insurance. As the face of the skilled nursing industry changes, the manner by which the government provides reimbursement needs to evolve as well. The healthcare industry and elected officials alike must all strive to protect the skilled nursing industry. It is a versatile and critical part of our healthcare system.

Erin Flynn is a shareholder in the business law department of Lionel Sawyer & Collins, where her practice focuses on health care. Contact her at eflynn@lionelsawyer.com.