The LTC Provider’s Playbook: Q1 2022 Edition

Happy New Year

We’re looking forward to a productive 2022, helping our friends care for beloved people across the many communities we touch in the work we do. Together, we have exceptional opportunities ahead of us to make positive changes across our industry after this extended period of disruption.

Over the last two decades in business, we’ve learned that major changes can come quickly and out of the blue. These last two years reinforced that truth. 

We’ve weathered a lot together and proven our resiliency. Let’s reflect on our successes and enter this new year with deserved confidence.

Forecasting 2022: Outlooks and Outliers

Acquisitions

Expect the fluctuations to continue. With shake-ups across the industry—from the largest names including Providence / Plum to small players building regional presences—the industry remains subject to constant changes in ownership. 

Mergers and acquisitions remain strong across the long-term care sector. In Q3 2021, 107 deals were completed, compared to 60 in Q3 of 2020. Mergers and acquisitions across the LTC sector represent the largest portion of total healthcare M&A activity at 18% of the total healthcare M&A spend. In addition, the value of LTC M&A deals is becoming progressively higher—deals were valued 18% higher than the previous quarter. Private equity remains the highest acquirer due to the current low cost of debt. 

LTC Consulting Service’s valuation and change of ownership services can assist facilities interested in growing or divesting during this time of increased market sector activity. 

With a market bullish for SNFs—and the average price per bed in 2021 up 22% compared to Q1 of 2020—valuations are proving to be unpredictable in the current atmosphere. LTCCS is a partner that combines local market insights with the latest M&A data to deliver realistic valuations.

In 2021 alone, LTCCS processed 189 CHOWs and Provider Enrollments nationally.

Our change of ownership (CHOW) services assist investors across the continuum of needs while completing an acquisition or merger. Nationwide, we identify and evaluate M&A opportunities, provide support during the acquisition and underwriting process, and facilitate the licensing and credentialing of new facilities or entities. Our goal is to transition operational assets to new ownership with minimal friction.

Managed Care

The shift to managed care contracts presents both challenges and opportunities for SNF operators. 

Across the nation, state Medicaid programs are increasingly working with managed care companies to deliver managed care long-term services and supports (MLTSS). SNF-managed care contracts provide value-based incentives for high-quality, low-cost care to decrease end-of-life spending and deliver budget predictability back to state Medicaid payers. While a few states have contracted under MLTSS for several years, there is recent momentum with state Medicaid programs to adopt this payment model.

As of year-end 2020, 25 states contracted with SNF facilities through managed care contracts, compared to 8 states in 2004.

Historically, LTC providers have resisted the shift to managed care contracts due to the challenges in transitioning and managing these contracts. At LTCCS, we leverage our breadth of experience to help leaders navigate the industry’s plethora of challenges, positioning facilities in ways that let them benefit from opportunities offered by managed care contracts.

We assist in the initial contract negotiation of MLTSS contracts for all provider types. During renewal periods, we provide contract re-credentialing services and renewal advisory. On an ongoing basis, our clients benefit from our advocacy on regulations and compliance changes. For facilities that need clinical support, our case management services provide utilization oversight.

Case Management  

Focus on patient care and outcomes to maximize reimbursements and improve resident experiences. Quality of care is becoming a prolific performance metric while time-consuming claim denials are rising. 

Payer contracts hold LTC facility operators accountable for providing effective patient care with positive outcomes while monitoring the cost of care. To receive maximum reimbursements, operators must ensure that proper authorizations and standards of care are met. The implications of poor case management in these areas result in claim denials during the billing process. 

Insurance denial rates are increasing across the board. 14% of all ACA-Marketplace in-network claims were denied in 2018. In 2019, that figure rose to 17%. While a reported two-thirds of denials are recoverable and 90% are preventable, this work places an increased burden on revenue cycle management teams, decreasing profit margins.

By partnering with LTCCS, facility operators can rely on a dedicated team to provide full-service case management services. We work to achieve optimal patient outcomes while managing the prerequisites to decrease denials and increase cash flow. 

The LTCCS case management team includes clinicians and reimbursement experts who review your census daily, coordinating between your staff and the insurance companies to provide quality assurance on documentation and the submission of records to meet extensions. We also monitor insurer allowances and provide comprehensive reporting to drive further efficiencies and oversight.

Within 3 months, LTCCS turned around a large group’s referral-to-admission rate from 30% to 80%.

Outsourcing

Staffing shortages continue across the board, beyond much-needed clinical staff. Securing trusted partners that integrate seamlessly with facilities increases bandwidth and streamlines access to experts. This is one of the best ways to fill clinical, administrative, and operational roles in this unprecedented labor market.

LTC industry reports estimate that 78% of nursing homes and assisted living communities are at risk of closure due to workforce challenges like staffing shortages and non-competitive wages. Forbes contributor Howard Gleckman summarizes the ramifications of this situation as, “The shortage of staff in long-term facilities and home care agencies has gone from a problem to a crisis.”

To cope with this crisis, LTC facilities are pivoting to outsourced roles as a mechanism to mitigate immediate and future risk. Benefits to outsourcing include a stable workforce and increased access to subject matter experts. LTCCS provides modular outsourcing solutions, allowing clients to be selective in the roles and responsibilities outsourced. 

By leaning on our CPA-led finance teams and dependable Revenue Cycle Management experts, facilities working with LTCCS help retain workers and preserve wages, particularly in-house clinical professionals. Outsourcing through LTCCS unburdens existing staff by coupling them with a dedicated team with broad industry expertise. 

We work closely with facility partners to ensure continuity in backend services, attain financial stability, and promote growth. Above all, LTCCS invests in technologies that bolster our expertise. The result: We achieve precise, cost-effective outcomes together.

Final Thoughts

The unforeseeable upside to all this disruption—and the opportunities we couldn’t see in 2020—is that market pressures have confirmed the need for well-oiled LTC operations. Those of you with excellently managed revenue have been able to adapt to the shifting tides that did not rise all boats.

A positive reaction to the pandemic has been the waiving of impeditive authorizations—telehealth in SNFs is one example—that had us questioning their efficacy in the first place. Our question today is how many of these changes are here to stay?

As stakeholders in this industry, the work we do reaches far and wide into communities across our nation. We couldn’t be prouder of our partners’ dedication to delivering exceptional care during exceptional times.

We look forward to an exciting and profitable 2022, full of opportunities to innovate and improve. Below are additional ways to get LTC insights and connect with us. 

Let’s do more together.


More Resources from LTCCS

Articles

Make sure you frequent our articles section on the website. Below are some recent insights that you may have missed.

Social Media

From announcements about upcoming seminars we’ll be attending to must-know industry updates, follow us on LinkedIn. We have a lively schedule planned for 2022.

Join us next quarter for another industry run-down with priceless analysis, trends and projections, and announcements about what’s new with LTCCS.


Founded in 2006, LTC Ally serves the long-term care industry with an unbound dedication to improving back office and financial operations. With a mission to reduce burdens and increase peace of mind, LTC Ally set out to revolutionize the way facilities handle their revenue cycle management. With a full suite of financial, case management, and contracting solutions for healthcare providers, LTC Ally is your partner in long-term care and skilled nursing.

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