Profitability Of Freestanding Vs. Hospital Based Skilled Nursing Facilities

Profitability Of Freestanding Vs. Hospital Based Skilled Nursing Facilities

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Profitability of Freestanding vs. Hospital-Based Skilled Nursing Facilities
There are various reasons why freestanding skilled nursing facilities (SNFs) are more profitable than hospital-based skilled nursing facilities (HBSNF). First, freestanding SNFs are more profitable than HBSNFs because they admit less Medicare patients and more private pay patients (Liberty University, 2015). Second, studies have shown that the fixed costs of HBSNFs are often disproportionate to patient acuity and tend to be higher than the fixed costs of freestanding SNFs (Pizer, White, & White, 2002). Higher costs, however, have been associated in part to HBSNFs being better prepared to care for higher acuity patients by offering specialized staff and equipment (Pizer, White, & White, 2002). While SNFs can also care of high acuity patients they are more likely to contract the help of higher skilled staff or equipment on a case-by-case basis and thus have better control over costs (Pizer, White, & White, 2002). Finally, under the current prospective payment system (PPS) reimbursement continues to be based on patient mix and not operational costs thus making SNFs much more profitable than HBSNFs (Pizer, White, & White, 2002).
Cost-to-charge Ratios
Cost-to-charge ratio (CCR) is a cost determination method used by many healthcare organizations and is it the method mandated by Medicare for annual cost reporting (Liberty University, 2015). CCR allows institutions to allocate costs for each individual patient. If a patient requires an x-ray and medications from the pharmacy, each of these units of service would carry distinct costs. If the medications cost the pharmacy’s $50 but the pharmacy charges the patient $100 dollars then CCR for the pharmacy is 0.5. ...


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...to ensure staff is delivering safe and effective care. Staying abreast of the latest advances in evidence-based practice is an instrumental part of delivering high quality care. Providing opportunities for continuing education and having staff develop and deliver unit in-services is another way that nurse leaders can maximize reimbursement. Substituting costly, ineffective, or unsafe treatments for newer techniques that are safer and more cost-effective is just one way to maximize reimbursement. Likewise, using new transfer techniques and transfer devices can help a unit not only prevent falls but also protect caregivers from back injury. Strategically using nonproductive or indirect care hours for staff engagement and training directly impacts the delivery of care and supports work center innovation which can result in maximized reimbursement and cost-containment.

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