Image credit: CLA

Recently, respected advisory firm CliftonLarsonAllen released their latest SNF Cost Comparison and Industry Trends Report.  CLA explores several prevailing themes in an industry besieged by challenges, including issues with decreased liquidity and occupancy, the rise of telehealth, and the continuing importance of PDPM to the bottom line.  But one of the findings we found most interesting was CLA’s continued focus on the relationship between Nursing Home Star Ratings and key financial performance metrics.  As we’ve written before, Star Ratings have a high degree of correlation with higher occupancy.

Facilities with an overall rating of three stars or greater

tend to have higher median operating margins and

occupancy percentages.

      – CliftonLarsonAllen’s 2020 SNF Cost Comparison and Industry Trends Report

As the above chart shows, the difference in occupancy between the high and low performers is clear, with only 4- and 5-star facilities beating the national median of 84.6%.  In an environment where occupancy has taken a nosedive and some operators worried that it may take 18 months to recover, the message is clear: Star Ratings Matter. 

The Bottom Line: Operating Margin

OperatingMargin2019

Image credit: CLA

 

Where there’s smoke, there’s fire, and where there’s low occupancy, there’s an impact on the bottom line.  With median margins remaining close to zero, predicting who’s in the red versus who’s in the black could be as simple as looking at their Star Ratings.

StarsOperatingMargin2019

Image credit: CLA

CLA’s findings again confirm:

SNFs that received an overall star rating of three stars or higher experienced an operating margin above that national median. SNFs that received an overall star rating of one or two stars experienced operating margins well below the national median.
      – CliftonLarsonAllen’s 2020 SNF Cost Comparison and Industry Trends Report
2020 has thrown the entire industry a curveball.  But in times of great change, it’s as important as ever to focus on the fundamentals of delivering quality care.  Smart operators – and smart investors – should be looking more closely than ever at the operational performance of facilities to ensure their long-term viability and success. Star Ratings offer a useful shorthand for assessing that performance, and our applications delivery trended ratings over time alongside occupancy, Covid-19 data, and so much more.  Click here to run a sample search today, and be sure to sign up for our newsletter for the latest updates.

Related Post

Leave a Comment