Since 2000, fifty-one nursing homes have closed, and many have changed auspices. With the State facing a projected $8.2 Billion deficit in fiscal 2010-20011, large cuts to Medicaid are proposed and the lobbying to mitigate them are actively occurring. This is on top of the $1.2 Billion cut over the last two years. The Governor's Budget calls for approximately $400 Million in cuts for the forthcoming fiscal year and projections for next year are dire when you consider the loss of Federal Funds enacted specifically to deal with the recession. The industry will ratchet up its lobbying effort as it has in previous budget battles. While these efforts are absolutely necessary it may be time for a facility specific health care reform.

Over the last twenty-five years, nursing homes have taken strategic steps to adapt to its environment. That environment has been shaped by government regulation and competition. Nursing homes expanded vertically to develop new revenue streams while dividing administrative costs over a larger program base. Nursing homes developed new products (i.e. sub acute) to entice new payers (managed care) as well as capture more Medicare reimbursement. Such strategic steps are essential. However as Michael Porter, Professor of Business Administration, Harvard Business School wrote in his classic article, What is Strategy?, (Harvard Business Review, November-December 1996,) Operational Effectiveness (quality, productivity, reducing the cost of a product or service) is necessary along with strategy. Together they lead to superior performance and value for our customer. As nursing homes continue to evaluate new program/services it is important that they consider new ways to operate effectively.

For the foreseeable future government reimbursement will be problematic at best. The challenge for nursing home executives is how to continue to lower their facilities operating costs in a manner that fosters productivity and quality. As presented in previous editions of The Budgetwire, the so-called easy work has been done. The ranks of management are smaller and other labor related expenses were reduced. Many facilities have outsourced support service and administrative functions like: payroll, Housekeeping Management and Food Service (both management and entire operations). There is another outsourcing option available to reduce expenses, improve productivity and quality. This option is part of the Caretech Advantage.

Heathcare reform is all about new ways and/or better ways of delivering service. Health care is also predicated on improving value for the consumer. Value is based upon the relationship of cost and quality. The industries challenge is to reduce the cost of service (driven by a reduction in Medicaid reimbursement) and to improve quality. Productivity is all about doing more for less. From automating and streamlining purchasing to completely outsourced solutions, Caretech is leading the way. We are an integral component of an organizations productivity engine.

Caretech is your supply expense expert and strategic partner. By outsourcing these cost centers to Caretech, a facility will reduce expenses, and improve quality. Here's how. Purchasing for more than 10,000 beds, (Caretech doubled in size in twelve months), Caretech is able to leverage it bargaining power in the facilities best interest. Price reductions are immediately evident. Price by itself isn't enough; managing inventory/supply usage is crucial and most facilities no longer have the management staff available to provide this oversight - Caretech becomes a facilities de facto manager. Caretech can also work with management staff to get the best quality supplies that will bring the best clinical results. As your strategic partner, Caretech can provide anonymous data (clinical and expense) that can be used for benchmarking purposes, which also improves value. Caretech provides timely information to support management decision-making.

While healthcare reform on the national level may be dead in its track, fiscal realities will force significant changes in the long term care sector. Nursing homes will need to reconsider how care is delivered. Caretech can help facilities continue their own individual health care reform and begin such a journey. If not now, when?