In today’s regulatory environment, operating a skilled nursing facility (SNF) is a complex endeavor. Juggling patient care, regulatory requirements, staffing issues, and other fiscal concerns can be a round-the-clock challenge. Trying to run a successful operation while also preparing for a refinance, renovation, or recapitalization can be overwhelming.
For borrowers taking stock of priorities and realigning objectives, Lument’s Senior Care Advisory (SCA) team can provide value through the team’s unique ability to assess operations, suggest strategies to improve financial performance, and determine the best financing option. The group, (composed of a former nursing home operator, asset managers, and underwriters), uses its operational expertise to analyze conditions, benchmark them against top regional competitors, and then pinpoint practical ways to implement positive changes. This improvement can lead to a better financial outcome and make future financing opportunities more achievable and advantageous.
Best-in-Class Geographical Comparisons
Our unique approach uses a best-in-class comparison with select facilities operating in the same region along with standardized metrics to evaluate and compare facilities, track and trend performance, and ensure adequate staffing coverage. This allows for an apples-to-apples comparison across a competitive geographic landscape. Additionally, a per-resident day (PRD) financial examination aligns with Centers for Medicare & Medicaid Services (CMS) staffing data, allowing staffing patterns to be seamlessly integrated into the evaluation and considered alongside staffing star ratings.
To identify areas where a potential borrower may be overspending or inefficient, Lument’s SCA team conducts a comprehensive PRD comparison between the borrower’s SNF and other best-in-class facilities in the same geographical region. That informed, detailed comparative analysis provides the basis for meaningful operational improvements and helps identify where reductions can be made to boost net operating income (NOI) and increase the debt service coverage ratio (DSCR).
This methodology helps operators focus on factors that can be controlled, so leadership can quickly make operational changes that translate into immediate financial savings, increased revenues, and efficient resident care.
Patient Centered Care, Staffing and Reimbursement
Staffing is typically the largest expense and overall challenge for operators. A such, Lument’s analysis begins by examining staffing in detail on a unit-by-unit and shift-by-shift basis to ensure that each category is staffed to industry norms on a PRD basis, adjusted for patient acuity. Agency staffing, which is notoriously expensive, is heavily scrutinized to determine if the hours are truly needed to meet quality of care and staffing requirements. As nursing homes prepare to implement the CMS minimum staffing levels, seeing the entire picture of financial solvency is increasingly important to maintain standards and meet the difficult challenges of a constrained industry with ever-increasing regulatory pressures.
Lument’s analysis focuses on actionable items that achieve the goal of delivering care that benefits the resident and promotes their independence while capturing the appropriate reimbursement of all delivered services. Some common actionable suggestions are adjustments to direct care staffing levels across shifts and within buildings, renegotiation of Medicare Advantage contracts, reduction of administrative expenses, and a renewed focus on clinical case mix and ancillary services.
Further, the comprehensive staffing hours and turnover analysis completed by Lument’s SCA team provides borrowers with key data to address questions posed when pursuing financing via the U.S. Department of Housing and Urban Development (HUD)/Federal Housing Administration (FHA), an appealing permanent financing option.
Case in Point
In a recent example, Lument provided permanent FHA acquisition financing for Bellevue Health and Rehabilitation, a skilled nursing facility in Oklahoma, while the SCA team conducted a comprehensive financial analysis and five-star rating comparison to identify and optimize operational efficiencies.
First, they analyzed the facility’s five-star metrics and compared them with those of their competitors. Next, they carried out a comprehensive financial analysis to compare Bellevue with a best-in-class competitor in the region. This process helped the team identify areas where Bellevue could achieve efficiencies without compromising the quality of care or negatively impacting the five-star rating.
“From conducting a deep dive into our financials to pinpointing the improvements we needed to make to operate more efficiently and effectively, Lument was instrumental in getting us to the point where we could go to our lenders to successfully complete the purchase,” said Bellevue co-owner Matt Stuart.
As described above, the goal of Lument’s SCA team is to help borrowers provide the highest level of patient care and a manageable work environment for staff while simultaneously achieving financial benchmarks lenders and loan investors need to see for deal execution and sustained performance into the loan term. With the Lument SCA team’s expertise in lending, senior care operations and asset management, they can help borrowers of all types assess, improve, and succeed.
Contact the Lument SCA team for more information.
