The LTC’s Provider’s Playbook: Q4 2022 Edition

Hope for Growth Surrounds Dismal Workforce Predictions

Moving into 2023, we see prolonged challenges facing the industry while maintaining a positive overall outlook that occupancy will continue returning to healthy levels. There is a high likelihood that we will see a tremendous demand for skilled nursing services for many years to come, which should give operators a reason to start thinking about how—and where—they are preparing to scale to meet this demand.

CMS’ Medicare Increase Meets Looming Staffing Mandate

The Centers for Medicaid and Medicare Services (CMS) announced it is increasing annual reimbursement rates by 2.7% for CY2023. The Patient-Driven Payment Model (PDPM) will see  rates reduced by 2.3% over the next two years. While the injection of $1.7 billion more is welcome news for long-term facility operators, in the context of historic inflation and stressors on staffing—including stubborn per diem rates remaining high—operational costs may still eclipse reimbursements. 

Awaiting finalization is CMS’ rule on an Administration-led staffing mandate that seeks to improve the quality of care in nursing homes while seemingly failing to account for the existential issue of an ongoing staffing crisis. AHCA’s Mark Parkinson stressed the importance of policymakers developing a strategy to help recruitment and retention in long-term care.

Staffing Levels Will Recover…in 2026

According to AHCA’s long-term care jobs report, the workforce will recover to pre-pandemic levels by 2026 if the rate at which jobs are currently being filled holds. According to the report, 362,700 jobs in long-term care have been lost since February 2020, its lowest level since 1994. 

Operators should expect prolonged stress on their workforce. With no clear fix in the near-term, clinical staff, in particular, will have to continue taking on extra shifts to fill the void. Efforts to increase retention should be supported by a people-first approach to managing your workforce and creative solutions for retaining existing staff

Read more about proven solutions for supporting your workforce here.

More Behavioral Health Providers Go In-Network

AHIP—a national association of health care providers—released a study showing a significant increase in the number of behavioral health providers joining health insurance plans in the last three years. The segment has seen a 48% increase in providers going in-network as health insurance providers look to improve services available to care for their members’ mental health. 

Facility-centered providers saw relatively slower growth, with 40% more going in-network than three years ago. This increase reflects a willingness of insurance providers to help address a longstanding need for inpatient care for substance use and mental health disorders. Many networks are reportedly offering higher reimbursement rates to attract quality providers. 

To learn more about how you can get your behavioral health facility in-network, talk to one of our contracting experts. LTC Ally is one of few industry experts in the nation that helps such facilities secure contracts with managed care payers.

Markets Correct, Skilled Nursing Remains Active—for How Long?

The average price per bed is up this year, at around $100,000 compared to $93,000 in 2019. Private buyers have been the primary force driving SNF sales, with public REITs representing those selling. 

Amid a tremendous amount of market activity, CMS is expanding its publication of nursing home ownership data as the White House pushes for greater transparency in the industry. CMS officials have stated the data would help them identify common owners and understand how ownership structures impact care.

The steady increase in SNF valuations shows strength in the market despite tremendous volatility in global markets (at press time) sending the Dow Jones Industrial Average, S&P 500, and NASDAQ to lows not seen since pandemic-era spending, supported by an influx of free money and historic-low interest rates, shot the major indices to record highs.

As central banks across the globe hike interest rates in unison, the Federal Reserve signals its intent to continue raising rates until “price stability” is restored. With the housing market being cooled by mortgage rates surpassing 6% for the first time since 2008, the question on our minds is when—or whether—facility acquisitions will follow suit.
In the long-term, demand for skilled nursing facilities is likely to outpace supply, with a peak supply shortage seen coming by 2049. Investors looking beyond market corrections will likely remain interested in skilled nursing as the industry inevitably recovers from the tumults of late.

Many Facilities. One Back Office Solution.

While some investors are busy selling their stakes in long-term care, we at LTC Ally have been investing in the industry by building and developing a leading back office solution tailored to the needs of operators. 

In doing so, we have helped support the growth of operators of all sizes by providing exceptional financial management and back office services with unmatched industry expertise.

Daily, we help clients renew their business’ financial health by recouping millions in aged claims, put our financial controllers to work to streamline AP and reporting duties, and have leveraged best-in-the-industry technology to oversee AR and billing for thousands of facilities.

Lift the stress of staffing your back office with proven experts off your chest. Partner with LTC Ally and enjoy greater peace of mind.

Contact Us Today

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Related Articles:

  1. Making Waves in LTC: Q3 Acquisitions and LTC Change of Ownerships
  2. Q&A With LTC Ally’s Finance Leadership: Part I
  3. Case Study: Optimizing a LTC Operator’s Billing + Collections

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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