How far can we stretch?

If you are a faithful reader of my Blog, you are aware that at Kirkhaven we have been "patiently" waiting for the State to retroactively begin paying nursing homes the new, updated Medicaid rate effective all the way back to April 1, 2009.


For Kirkhaven, this promises to increase our rate approximately $25 a day and retroactively reimburse us for nearly 1.5 million dollars. Since the State is merely shifting capped Medicaid dollars between nursing homes across the state, they can actually afford to do this. There will be winners and losers when the new rates are paid, and fortunately Kirkhaven is among the expected winners.


The reason for this is in part because Kirkhaven is one of only a few nursing homes who is still receiving a cost-based Medicaid rate calculated from its initial 6 months of operations back in 1984. A lot has changed since then and our cost structure today is very different from what it was back then. While our rates include an inflation factor adjustment, it hasn't kept pace with our real cost increases or inflation.


A recent survey of our peer nursing homes showed that our $155/day Medicaid rate is well below the $183/day peer average. As a result, we are forced to operate at a lower cost per day than our peers while still providing the same high quality of care. This same peer survey showed that over the past 10 years, Kirkhaven's operating costs have increased 36.3% versus the peer average of 64.5%. Our salary costs per bed increased 33.2% over the same 10 year span versus the peer average of 55.6%. And while the peer average staffing per bed increased at a rate of 10.5% over the past 10 years, Kirkhaven's staffing per bed decreased 2.4%.


These are not statistics we necessarily wanted to aim for, but rather had to hit in order to maintain fiscal integrity. With a federal quality rating from CMS of 4 stars, Kirkhaven has attained the envious status of a low cost-high quality nursing home. But how far can we stretch?



In 2010, we pushed our available line-of-credit to the limit and implemented a 6-month austerity budget to keep our cash flowing while we waited for the "imminent" Medicaid rate upgrade. We have literally used every option available to us to out wait the State, but how far can we stretch?


Our Board of Governors has authorized us to continue to leverage our operation in anticipation of the new Medicaid rates rather than cut our staffing and expenses even further. We have requested some level of relief from the State and will continue to do what we can to bridge the gap while we wait for the State to pay the new rates. But how far can we stretch?


2011 promises to start out in much the same fashion as 2010. Still getting paid $155/day for Medicaid residents, who comprise nearly 70% of our resident population and who cost us on average $216/day. We will continue to operate on an austerity budget and hold off on any wage increases, new positions and discretionary expenses. We will advocate and lobby for the State to fulfill its promise of updating the Medicaid rate. And we will wait and pray that we can continue to make ends meet while the State gets it's house in order.


But how far can we stretch?