Why is it so important for a Nursing Home Owner or Board of Directors to have an alert and prepared management team at the helm of their organization?

The Long Term Care Industry since 1995, has experienced some of the most sweeping changes of any industry in the United States. These changes have created rough waters for all long term care providers, but for those who continued to steer their organization complacently along the same course, oblivious to the impact these changes might have, the results have been devastating. According to statistics provided by The American Health Care Association, "over 30% of all nursing home providers have filed for bankruptcy protection since 1998".

The most significant regulatory and reimbursement changes include the following:

The Omnibus Reconciliation Act of 1995, "OBRA", contained the most sweeping regulatory changes in the history of the long term care industry. The Act which has taken years to implement impacted both the Medicare regulatory process and its reimbursement system.

Repeal of the Boren Act in 1997 removed a federal mandate that "States provide nursing homes reasonable and adequate reimbursement to meet the costs incurred by nursing homes in order to provide care and services in conformity with applicable state and federal laws, regulations, and quality and safety standards". Repeal of the Act effectively allowed States and the Federal Government to issue regulatory mandates without funding to pay for the changes.

In 1998 HCFA began to move the SNF Medicare Reimbursement Program from one based upon a facility's actual cost to a prospective payment system based upon a flat rate for specific "bundled services". PPS effectively reduced an average nursing home's Medicare rate by 20% to 40% by year four of its implementation.

"BBRA" and "BIPA": Recognizing the devastating effects caused to nursing home providers by PPS, in 1999 and 2000 Congress passed two acts effectively restoring some of the cuts, however, in October 2002, both acts were allowed to expire resulting in what became known as the "Medicare Cliff". The "Medicare Cliff" left nursing homes with an average daily decrease in Medicare reimbursement of $35.00.

"Insurance Crisis": Skyrocketing liability claims against nursing homes in several States have made it almost impossible for providers to obtain affordable professional and general liability insurance. Additionally, the events of September 11, 2001 had a significant impact on the insurance industry in general, resulting in a increase in property insurance, workers' compensation, and employee health insurance for all businesses including nursing homes.