South Florida Business Journal: Nursing homes expect to get less from Florida’s Medicaid system

March 11th, 2011 By Jackie Larena-Lacayo

Nursing homes expect to get less from Florida’s Medicaid system

by Susan R. Miller


The nursing home industry in Florida is like a balloon that is being squeezed on both sides. Eventually, something has to give.

That’s how Alan Rosenbloom, CEO of the Washington, D.C-based Alliance for Quality Nursing Home Care, describes the latest discussions surrounding cuts to the state’s Medicaid program.

On one end is Gov. Rick Scott’s plan to cut Medicaid by 5 percent for hospitals and nursing homes. On the other end are requirements and costs brought on by health care reform.

As a result, “facilities are going to have to make tough choices,” Rosenbloom warns.

At Miami Jewish Health Systems, 55 percent of patients are on Medicaid.

CEO Jeffrey Freimark said that, even before the planned cuts, it is losing $60 to $80 a day on Medicaid patients – $7 million to $8 million a year.

He said MJHS has been streamlining to become more efficient and looking for opportunities in other areas to generate additional cash flow to offset the losses.

The governor has said that 30 percent, or about $22 billion, of Florida’s budget goes toward Medicaid costs. The cuts he is recommending would come to about $140 million.

Funding cuts of $150 million would result in a little more than one-third of Florida’s facilities experiencing negative margins, and nearly 50 percent of all facilities facing margins of less than 2.5 percent, according to a survey of 585 Medicaid-certified nursing facilities produced for the Florida Health Care Association by Eljay LLC.

The study notes that every $75 million in Medicaid rate reductions cuts the margin percentage of high volume Medicaid providers by 1.7 percent.

While Freimark does not see budget cuts impacting quality of care, he said nursing homes may be forced to become more selective about the patients they take in, based on the level of care required.

The irony, Rosenbloom said, is that, in some cases, patients who otherwise might be cared for in a nursing home will end up in a more expensive hospital setting, “so the government ends up paying more,” he said.


Nursing homes help the most frail

Kristen Knapp, spokeswoman for the Florida Health Care Association, said nursing homes are already doing a good job of ensuring that people who are in facilities are there because they need to be.

“They are frail and have complex medical needs,” she said.

With 70 percent of a nursing homes’ operating expenses paying for the people who work in those facilities, “you can only go so far, in terms of reducing other costs,” Freimark said.

While nursing homes cannot cut direct care staff because those levels are mandated by the state, they can cut from other areas, such as maintenance. Given that the average age of nursing home facilities in the U.S. is 30 years, any delays in maintenance could directly impact patients, industry representatives argue.

And, although Scott ran his campaign on the promise of adding jobs, cutting the Medicaid budget could do just the opposite, Rosenbloom said.

Medicaid cuts, combined with potential federal Medicare funding reductions, would risk not only seniors’ care, but also job stability and the fragile economic recovery now taking shape, according to the Alliance for Quality Nursing Home Care.

“It could result in reductions in benefits and limited salary increases, higher co-pays and, ultimately, job loss,” Rosenbloom said.

Font Resize