Long Term Care Education.com

Long term care hospitals, you may remember,  (the bread and butter of Kindred and Select Medical Holdings) receive from CMS dramatically higher per diems with far fewer restrictions than do typical nursing facilities (hence Long Term Care Hospitals are a highly profitable reimbursement niche)………

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Wall Street Journal   April 25, 2012

By Nathalie Tadena

   Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)—Shares of Kindred Healthcare Inc. (KND) and Select Medical Holdings Corp. (SEM) jumped in after-hours trading as the Centers for Medicare & Medicaid Services proposed phasing in over a three-year period a cut to reimbursement-payment rates for in-patient stays at long-term care hospitals.

In its draft, CMS proposed a 1.3% reduction in the first year of a proposed three-year phase-in period for a budget neutrality adjustment, which is calculated to offset higher Medicare payments, giving the companies more time to adapt to the shift in payment policy. The budget neutrality adjustment reduces the update from 2.1% to 0.8%. CMS has proposed in the past a budget neutrality cut as high as 3.75% over a one-year period starting next year.

The agency will issue a final decision by Aug. 1.

In a note last month, Avondale Partners LLC had expected a negative adjustment of 2.75% to 3.75%. On Tuesday, analyst Kevin Campbell said the three-year phase-in allows the companies more time to adjust business practices to offset any other obstacles from the rate cut.

Kindred shares surged 20% to $10 after hours, while Select Medical jumped 9.6% to $8.60. Kindred has lost two-thirds of its value over the past year, and Select Medical is down 3.9%.

Representatives for Kindred and Select Medical weren’t immediately available to comment.

Both companies provide long-term health-care services at nursing homes and hospitals.

“We’re pleased about the proposed rule and appreciate CMS hearing us on several issues, like the budget neutrality issue which, if it had been implemented in one year, would have caused great instability for LTC hospitals,” said Bill Walters, chief executive of Acute Long Term Hospital Association, a trade association whose members include Kindred and Select Medical. “By phasing the budget neutrality in over three years, LTC hospitals will have time to adapt to this fairly significant change in payment policy.”

Wells Fargo and Susquehanna analysts lowered their stock-investment ratings on the companies late last month ahead of Tuesday’s proposal, expecting a tough rule that could weigh on the stocks all year.

Medicare said last summer it would cut payment rates to skilled nursing facilities by 11.1% for the current fiscal year, slightly below its April draft proposal, enacting Wall Street’s worst-case scenario and putting shares of the health-care providers under pressure.

The initial proposal is generally the worst for the industry.

In February, Kindred said it would suspend its practice of providing quarterly earnings guidance in light of significant volatility tied to recent changes in Medicare reimbursements.

CMS projects general acute-care hospital payment rates will increase by 2.3% in fiscal 2013, while long-term care hospital payments will increase by approximately $100 million, or 1.9%.

-By Nathalie Tadena, Dow Jones Newswires; 212-416-3287; nathalie.tadena@dowjones.com

Financially, how healthy?

Study this financial report.  Check out all the terminology……how healthy is this company’s financial condition?

If you had cash to invest, would you buy this company’s stock?

If you were looking for an administrator position, would you want to work for this company?

Is this company’s debt load too big, big but manageable,  or just about right?

It Had to Happen!!

This Time article describes a new wrinkle in the U. S. long term care fabric…….there appear to be about 100 niche communities in the U.S. (and the number is expanding) which offer life care beginning at age 40: standard housing, assisted living, skilled nursing care.  This is the Life Care Community (Continuing Care Retirement Community) idea taken one logical step further.  Move at age 40 into the community in which you expect to die.  Fewer rules such as “one spouse must be 65”, “you must pass the health physical standards set by the CCRC,” and similar restrictions.

In this scenario the big builders become the “owners” of record of the “Community.”    Is this likely to be a more benevolent “owner” than the shareholders of the large corporations that own 2/3rds plus of all assisted and skilled nursing facilities……?

Would you like to move at age 40 into the community you expect to live in the rest of your life?

With the traditional American community of 100+ years ago disappearing, this might not be a bad option….if the builder/owner is a nice guy and doesn’t go belly up about the time you need health care in your senior years………

Sexual activity among residents: who decides the consent, legality, permissibility, etc. questions….?

….this is a hotly debated topic.  Feelings about sexual behaviors among residents (and between residents and others) tend to be strongly held.   Does a person lose the right to consent to sexual activity upon entering a nursing home?

Who makes the decision as to whether either or both parties are consenting adults exercising their personal rights?    As the attached article suggests, this is an area which each nursing home administrator has to think through, develop policies and successfully implement those policies.  Additionally, depending on the state, there are reporting and actions required laws that must be obeyed regardless of what policy or beliefs any facility owners or administrators may put into place……..how would you have handled the two situations described in this article?

Managed care….the future?

PACE the federal program to keep residents in their home setting as long as possible has been on the scene for several decades…..but the push by the Federal and state governments to delay entry into nursing homes (to save money) together with the expected billions of dollars cuts in Medicare and Medicaid over the next few years likely means that the resident population of nursing facilities will continue to consist mostly of very sick residents.  Tough financial (and possibly occupancy rate) times appear to be on the horizon as seen in this New York Times article….what do you think?

The $200,000,000 Fall…….

This article about Ms. Nunziata provides insights into the everyday economic realities of our current long term care industry……..the right to sue anyone is a valuable right we all enjoy (and likely ought to preserve), but this right to sue also stimulates defensive behaviors for nursing facility owners and managers such as those described here……