We currently have 144 skilled nursing beds in operation at Kirkhaven that include a special care unit for residents with Alzheimer's or other related dementia and a short-term rehabilitation and transitional care unit.
The annual expense budget is 11.5 million dollars broken down as follows:
- Nursing services- 4.3 million
- Other professional services- 1.3 million (therapies, medical, pharmacy, etc)
- General services-2.2 million (dietary, environmental services, utilities, etc)
- Administrative services-1.0 million (administration, fiscal, HR, PR, etc)
- Employee Benefits- 1.7 million
- Property costs- 1.0 million
The revenue we earn to pay for these costs come from many sources as listed below:
- Private pay resident fees
- NYS Medicaid Assistance program
- Medicare & HMO insurance programs
- Donations
- Investment Income
Let's take a look at each to better understand our revenue sources.
Private pay residents are those who don't qualify for other insurance coverage and thus pay for their own care at our regular established per-diem rate. Our current rate is $320/day plus $15/day for a private room. This rate is revised annually in conjunction with our annual cost increases. We also monitor our rates against the market to ensure that they are reasonable and competitive. Approximately 20% of our residents are private pay.
Medicaid residents are those who meet specific resource and income limitations established by the state and thus can't afford to pay privately for their nursing home care needs. Upon application and approval for Medicaid Assistance, the resident's care is paid by the state at a facility specific Medicaid rate. Our current Medicaid rate averages about $164/day. Approximately 68% of our residents are on Medicaid Assistance.
Medicare/HMO residents are those who meet specific clinical guidelines with respect to their care and thus qualify for some limited coverage under Medicare or private HMO insurance policies. Coverage under these insurance programs is limited to high acuity skilled care needs only and often for a maximum of 100 days only within any one spell-of-illness. Short-term rehab and transitional care are generally what is covered by Medicare and HMO insurance. Medicare pays different rates for different residents depending on what rate category their acuity needs and care fall into. On average, our Medicare/HMO rates are about $420/day. Approximately 12% of our residents are on Medicare or HMO insurance.
So you can see that occupancy and payer class are key components to our nursing home revenue. We average about 95% occupancy and thus our average cost per day computes to about $225/day. With a Medicaid rate that averages $61/day below our costs, a private pay rate that averages $100 over cost and a Medicare/HMO rate that averages $195 over cost, payer class mix is a critical challenge that must be managed well.
Donations and investment income help to subsidize our program costs over time, but due to the volatility of the cash flow of this non-operating revenue, can't be counted on for on-going regular operating costs. Often, this income provides for capital improvements or venture capital for special programs.
As a not-for-profit organization, our goal is to create a modest operating margin of 1-2% to meet our cash flow needs. 100% of all revenue goes toward the cost of our services. We continually monitor customer satisfaction and we are subject to on-going regulatory compliance surveys by both the Medicare and Medicaid programs.
Our challenges are many, but primarily include the following:
- Occupancy and payer mix utilization
- Maximization of third-party insurance rates
- Decreasing Medicare and Medicaid program reimbursements
- Increasing care acuity of our residents
- Decreasing private pay resident market
- Aging and antiquated building
- Culture Change movement from the medical model of long term care
- Shortage of nurses and therapists
Despite these challenges, our work is a labor of love and we have very caring and dedicated staff that really make the difference. The mission of what we do is uncompromising, despite the many challenges.
And now you know a little more about the mechanics of our nursing home operation and how we make it work. Thanks for visiting my Blog this week!
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