3 Shots for a Quarter!

As I look back at the end of the first quarter of 2009, there are 3 primary initiatives that pretty much define the first 3 months of our 2009 operation at Seniorsfirst. Lets take a look at each and see how we fared.

First shot........ our state leaders finalized and approved a state budget that goes into effect April 1, 2009-March 31, 2010. As anticipated, it wasn't very kind to nursing homes as the Medicaid portion of the expense budget was slashed considerably to help offset a growing state deficit. The final budget did fulfill a previous promise to update the antiquated Medicaid rate-setting formula for nursing homes, and in doing so resulted in a significant increase in Kirkhaven's (and most other homes) Medicaid revenue.

However, at the same time they were putting money into our "right pocket", they were taking even more money out of our "left pocket". In short, they tweaked other elements of the Medicaid rate-setting formula that conveniently resulted in exactly the desired net savings the State established as their target objective for state-wide Medicaid cost reductions.

For Kirkhaven, we project that the net impact of the state budget will result in an estimated loss revenue of $134,000 from what we had originally budgeted for in 2009. To put that in perspective, Kirkhaven's total annual revenue is about 10 million dollars and we historically aim for an average margin of 1-2% ($100-200,00 net surplus a year). The state's action in affect, eliminated what little margin we attempt to operate on.

On a more positive note, Kirkhaven appears to have fared better than most. We were conservative in our Medicaid rate projections for 2009 and we also were positioned better than most to mitigate the negative implications of many of the Medicaid rate-setting revisions. Still, the reduction in Medicaid revenue represents a deficit for Kirkhaven that needs to be addressed.

Second shot........Kirkhaven has been actively pursuing a third-party reimbursement maximization initiative for over a year now. Our objective is to improve on our ability to legitimately maximize Medicare and Medicaid revenue through enhanced understanding and strategies within the reimbursement regulations. In short, the regulations are specific but there is a vast "area of opportunity" that can be taken advantage of if understood and used both wisely and appropriately.

For example, Medicare pays nursing homes different rates for different residents depending on the specific care acuity of and services provided for the resident. How this care acuity and service provided are documented and reported can result in significant differences in the Medicare rate you receive. This is no easy task though. It takes a lot of effort and coordination between the nursing and clinical staff who are the primary care givers of the services and requires extensive planning and documentation. Medicaid rates also have a component of the rate that is based on resident acuity and thus these maximization initiatives have a similar revenue enhancement potential with our Medicaid covered residents.

For the first quarter of 2009, our Medicare Maximization program has resulted in both an increase in Medicare covered days and an increase in our average Medicare rate. Additionally, our occupancy has soared to 98% of late. Further, our Medicaid resident acuity has increased significantly and appears to position us well for maximizing our share of the limited remaining "Medicaid pie". We project that the estimated positive impact of these results is approaching $100,000 on an annualized basis and we're not done yet.

In short, because of the efforts of our staff with the third-party reimbursement maximization program results, Kirkhaven is not in immediate jeopardy of requiring any layoffs or budget cuts as a result of the 2009 state budget and Medicaid program revisions. I don't believe this will be the case with all nursing homes across the State, so kudos to Kirkhaven for a job well done!

Third shot........at Valley Manor we have been pursuing an Occupancy Enhancement program aimed at increasing our occupancy to at least 90% (our 2009 budget is set to work at 88%). The Winter season is not historically a very active time for seniors to be moving into retirement communities and the recent challenging economy has slowed this process down even further. All the more reason for us to invest even more resources towards this initiative, which is the "life blood" of our Valley Manor operation.

The first quarter 2009 results are very promising. We had a net gain of 5 new apartment leases, moving our current occupancy to 86.8%. Additionally, we have 6 more committed apartment sales that are scheduled to move in by May and only 2 projected known move-outs, which will result in a 89.9% occupancy in the near future. We're only getting started, and with the onset of Spring and the continuation of our Occupancy Enhancement program, there is still a lot more upside to pursue. Great job Valley Manor!

A Parting shot........one quarter does not a success make. This is a volatile industry and we can't rest on our laurels or ever think that we have arrived at our destination. This is a continuing journey we're on and the risk of failure and the next big challenge is always just around the corner. The economy is healing, but still hurting. The 2010 State budget is already threatening to be devastating. Cash flow and expense budget controls will continue to be difficult.

But lets just take a moment to take a big collective sigh, catch our breath and maybe even celebrate all we have already accomplished amidst the vast challenges of our work.

Congratulations Seniorsfirst on an awesome first quarter and keep up the great work! Our efforts will eventually show up on the financial statements in the long run, but in the short run give yourself and the person working next to you a congratulatory pat on the back.

Thanks for all you do and for visiting my Blog. See you next week.........................