CMS' Comprehensive Care for Joint Replacement Model and the agency's mandatory cardiac bundle have put pressure on skilled nursing facilities' margins, and SNF providers' revenue streams will likely remain under pressure in the near term, according to a Fitch Ratings report.
The financial strain is attributable, in part, to health systems trying to lower the overall cost of episodes of care. "Anecdotal evidence from initial joint bundled payment episodes shows health systems are skipping discharge to skilled nursing facilities to the benefit of lower cost settings (i.e. home healthcare services)," according to Fitch.
Skipping discharge to SNFs is sometimes appropriate for joint-related bundled payments. However, Fitch expects more patients covered by the cardiac bundles to be discharged to SNFs due to the expectation that these patients will have more comorbidities and be at greater risk of readmission.
Although bundled payment initiatives are still in their early stages, healthcare real estate investment trusts are already taking action in response to these payment arrangements. Some REITs have amended lease terms and others are looking to be net sellers of SNFs, according to Fitch.
Fitch expects REITs will continue to sell SNF real estate. However, it is unclear who the incremental buyers of this real estate will be.
More articles on healthcare finance:
Tenet's Conifer contracted for RCM at 11 WellStar hospitals
How calculating the cost of a minute of hospital care saves money, improves outcomes
S&P revises University of Pittsburgh Medical Center's outlook to stable