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Senior Housing > Blog > 2014 > February

Factors Leading to Skilled Nursing Facility Bankruptcies

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The skilled nursing facility industry has been dealt several successive blows in recent years, leaving many SNF owners with few options to keep struggling facilities afloat. As a result, SNF bankruptcy is becoming increasingly commonplace.

Financial Realities Lead to Tough Circumstances

The economic downturn seems to have impacted everyone, but a series of laws, amendments, and shifts in the market have been especially difficult for those in the skilled nursing industry. Here’s a brief list of what has occurred:

  • 1997 – Balanced Budget Amendment Act allows states to mandate managed care plans for individuals wanting Medicaid coverage for nursing home services, resulting in extremely low negotiated reimbursement rates
  • 1999 – Health Care Financing Administration changes Medicare reimbursement, almost immediately triggering a round of SNF bankruptcies
  • 2008 – Economic downturn and official “bursting” of the housing bubble guts many retirement savings accounts, negates home equity, and makes selling a home difficult for seniors
  • 2010 – Patient Protection and Affordable Care Act increases benefits for in-home care, reducing overall demand for SNFs and effectively ensuring that those who are in SNFs will be frailer and in need of more care
  • 2011 – Centers for Medicare & Medicaid Services announced an 11.1% reduction in reimbursement rates, which was twice as bad as what had been predicted
  • 2011 – As a direct result of this announcement, stock prices for publicly traded SNFs plummet
  • 2012 – Medicare Payment Advisory Commission recommended an additional 4% cut in reimbursement to SNFs that will go into effect in 2014 and recommended no cost of living adjustment for 2013

Debt and expenses remains high among SNFs. This is particularly difficult to manage as the majority of unpaid Medicare co-payments are owned by state governments, and states lack the financial resources and the will to reimburse SNFs for the money owed. Some nursing home brokerage firms have been able to help clients buy a skilled nursing facility when it’s in distress, saving their clients money and helping the previous owners avoid a messy financial conclusion.

The Bankruptcy Process

When a skilled nursing facility is no longer financially solvent, bankruptcy may be the only route. Working with financial and legal experts, the SNF will choose between two types of bankruptcy: Chapter 7 (liquidation) and Chapter 11 (reorganization). With a Chapter 7 bankruptcy, a trustee is appointed to assess the company’s debts and assets and to collect and reduce property to raise cash, which is then distributed to those who are owed money. A trustee is also appointed to ensure patients are responsibly transferred before the SNF closes. In Chapter 11, the owner acts in lieu of a trustee, and works with a committee of creditors. They find ways to work with vendors and pay employees while continuing to operate, with the ultimate goal being to regain firm financial footing – usually by restructuring the business and selling off some of the company’s property.

Bankruptcy can provide an opportunity for those who plan to buy nursing homes. They may find a SNF for sale at a substantially reduced price, which can enable them to make improvements or operate in the black that much more quickly.

Assisted Living Homes for Sale: New Standards

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With the baby boomers aging, assisted living homes are needed more than any other type of property in New York. This helped lead to a creation of new standards to improve care received. Whether you already own a community like this or are searching through assisted living homes for sale, ensure your codes are up to date to meet these new standards.

Nurse on Staff

Residential care homes for sale must now maintain a nurse who meets certain criteria on staff if it is for enhanced or special needs persons. This means the senior living there is unable to care for themselves generally due to health concerns. While nurses are already required to be part of the staff in these facilities, new standards say the staff must pass assessment skills and professional training to offer higher quality care.

Stronger Enforcement

Unfortunately, negligence is still a concern in some facilities. Your senior living brokerage professional has a record of any past occurrences in homes you are interested in purchasing. When negligence occurs, a fine is due, though this has not been raised in over three decades. Currently, fines can also be fixed within 30 days to avoid the fine unless it is detrimental to a resident directly. New standards increase fines up to $5,000 and allow the New York Department of Health to decide if these 30 days should be offered. Fines can be given per day as well as per violation.

Direct Care Aides Training

Though Direct Care Aides are often on the bottom of the chain, they interact with the patients more than anyone else. Some of the care these workers provide includes helping with

  • walking
  • medications
  • bathroom needs
  • dressing
  • general safety

Due to this involvement, New York is changing the requirements to train as a Direct Care Aide. Though training programs do exist, there are no standards that must be met in order to receive certification. Now, aides must meet a certain number of training hours that end up being half of the requirement for nursing home aids. This ensures your care home for sale meets standards for providing safety and respect to its residents.

The new standards New York applied to assisted care homes for sale and currently owned are meant to increase the care provided. When a senior decides to live in an assisted living home, it is often a hard decision because he, and his family, can no longer meet their needs. This is why it is so important to establish a minimum level of respect and care that must be met and this minimum is high reaching. The elderly deserve a top quality facility that not only provides care, but is also their home.

Five Tips to Make Smart Choices About Assisted Living

Five Tips to Make Smart Choices About Assisted Living

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Many seniors find themselves in an in-between land, where they are still capable of handling most of the daily tasks of living independently but may need help with housekeeping, preparing meals, or managing medications. If family members are unable to provide ongoing help, your loved one may fear that they will be forced to exchange their independence for 24-hour medical supervision in a skilled nursing facility. Luckily, there’s an alternative: assisted living.

How can you make smart choices about the assisted living facility you choose for yourself or a loved one? Consider these five tips, many of which are the same factors assisted living brokerage clients would consider when looking to buy an assisted living or skilled nursing facility.

1. Make Sure Assisted Living is Appropriate

An assisted living facility provides a monitored living environment, housekeeping, medication management, all of you meals, assistance with transportation and help with the activities of daily living. The more independent residents have the option to handle the majority of daily activities on their own. Seniors with serious medical issues and those who are restricted in their ability to take care of themselves may be better suited for a skilled nursing or long term care facility, which offers skilled supervision and will have medical staff members to handle residents’ needs.

2. Carefully Observe the Facility When You Visit

It’s easy to be swayed by an elegant foyer and a lovely chandelier in the dining room, but use the same critical eye you would if you were a buyer looking at residential care homes for sale. Are all of the rooms clean and in good condition? Are furnishings, doors, and windows in good shape? Are there safety features like grab bars located throughout the facility? Are there anti-slip flooring materials everywhere a resident is likely walk? Overall, do you get the impression that it is well maintained?

3. Carefully Observe the Staff When You Visit

Turn your attention to interactions between staff members and residents. Are they friendly, cheerful, and respectful? Would you be comfortable if you were routinely talked to in the same way the residents are?

4. Look for Places Where Residents Gather

Are there places provided for easy socializing and planned activities for residents? Residents should not be reluctant to leave their rooms. If recreation spaces are empty, it could also mean the facility is not full, which does not bode well for its financial stability and may indicate that there are issues that lead other seniors to choose to live elsewhere.

5. Ask to Review the State Surveys & Admissions Agreement If the administrator is reluctant to share this information , consider it a warning sign, just as a health care brokerage professional would. The annual State surveys will show you and your family if the facility is in compliance with the State rules and regulations.  The residence Admission Agreement will explain the rules explain fees, costs, and residents’ rights. It will also outline expectations about medical reassessments and circumstances when a resident may be asked to move to a facility that could provide medical services and supervision that the assisted living facility does not. These documents will help you compare costs and offerings with other assisted living facilities.

Multiple Ways to Grow Your Skilled Nursing and Assisted Living Business

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Multiple Ways to Grow Your Skilled Nursing and Assisted Living Business

People who successfully operate skilled nursing and assisted living facilities often assume that the only sure way to continue to grow is through mergers and acquisitions. But before you start looking for new residential care homes or retirement homes for sale, consider taking a more organic approach to growth.

Why M&A Appeals

When your favorite nursing home brokerage firm approaches you with tales of an underperforming or distressed facility that can be purchased at a steep discount, it’s hard to resist. Refurbishing the property and improving operational efficiency can seem like a direct route to increasing your bottom line. You may also choose to pair up with your assisted living brokerage company to make strategic acquisitions that enable you to reposition your company within the residential care market. But according to a recent report from the Assisted Living Federation of America, you may want to consider multiple approaches to growth as the market changes over time.

Alternative Routes to Growth

Organic growth provides another avenue to explore. Instead of choosing to buy a new skilled nursing or assisted living facility, choose to focus on building your census and payor quality mix at your existing facilities.  You may also want to consider the value added play, by adding on to your existing facilities.. The development of independent living cottages or a memory care unit can allow you to attract younger residents or allow you to retain your residents as their level of care increases.  New construction will be especially helpful for those seeking growth in “high end” or “upscale” residential care markets, as their potential clients are likely to be unimpressed with conversions of less opulent facilities. Being able to explain that from the foundation to the roof, the building was designed for the express purpose of providing high-end senior living options.  This could prove invaluable.

Another way to grow your skilled nursing or assisted care company can be revealed by evaluating the services you provide and comparing them to current demand in your market. If your facility frequently receives referrals for seniors seeking a particular type of care, it may make sense to specialize. This way, you can focus your resources on the areas that keep beds full and pull resources away from areas that generate less profit.

Along those lines, you can also look into offering additional services for additional fees. Examples might include wellness activities, fitness facilities, and spa services. You could also convert space that is currently underutilized to provide higher value-added services, such as a memory care unit.

Make Growth Work For You

Whatever path you choose to expand your business, it’s important to work with competent professionals who will share their expertise to help you make the best decision possible. Among It is important, to partner with a senior housing brokerage firm that is known for both integrity and innovation.