Washingtons Impact on SNF Financing September 2018 TABLE OF - - PowerPoint PPT Presentation

▶
washington s impact on snf financing
SMART_READER_LITE
LIVE PREVIEW

Washingtons Impact on SNF Financing September 2018 TABLE OF - - PowerPoint PPT Presentation

Dec 10, 2023 130 likes •346 views

Washingtons Impact on SNF Financing September 2018 TABLE OF CONTENTS Washington Update & Impact Financial Review & Outlook Financing Options Observations & Predictions REPEAL & REPLACEMENT DIES WASHINGTONS

slide-1
SLIDE 1

Washington’s Impact

  • n SNF Financing

September 2018

slide-2
SLIDE 2

TABLE OF CONTENTS

  • Washington Update & Impact
  • Financial Review & Outlook
  • Financing Options
  • Observations & Predictions
slide-3
SLIDE 3

REPEAL & REPLACEMENT DIES

slide-4
SLIDE 4

WASHINGTON’S IMPACT

320 330 340 350 360 370 380 390 400

Total Return Index Value

Graham-Cassidy Released Presidential Election AHCA Released BCRA Released Source: Bank of America, U.S. Healthcare Facilities Index, Total Index Return

slide-5
SLIDE 5

REFORM STILL LOOMS

Congress

President’s 2018 Budget

[$650bn Medicaid cuts]

Bipartisan Budget Act of 2018

[reduced 2019 Medicare rate]

CMS

Medicaid Waivers

[work requirements, reduce benefits, increase beneficiary costs]

Regulatory Relief

[Voluntary Bundled Payment Program]

Other

Unified, Post-Acute Medicare Payments UPL Payment Scrutiny

Reduced Regulation & Reimbursement

slide-6
SLIDE 6

DYNAMIC PAST

Source: National Investment Center

63% 48%

  • 12%

12% 11%

  • 5%

5% 7% 10%

16% 26% 14%

PATIENT MIX REVENUE MIX MARGIN

2012 PAYER CONTRIBUTION

Medicaid Private Managed Medicaid Medicare 1.8% average

slide-7
SLIDE 7

DYNAMIC PAST

Source: National Investment Center

66% 49%

  • 11%

9% 9%

  • 6%

6% 10% 8%

13% 24% 11%

PATIENT MIX REVENUE MIX MARGIN

2017 PAYER CONTRIBUTION

Medicaid Private Managed Medicaid Medicare 0.7% average

slide-8
SLIDE 8

MANAGED MEDICARE IMPACT

Source: National Investment Center

$522 $522 $519 $519 $518 $521 $521 $489 $483 $475 $462 $448 $441 $433 $400 $420 $440 $460 $480 $500 $520 $540 2012 2013 2014 2015 2016 2017 2018

FFS vs. Managed Medicare Rates

Medicare Managed Medicacre

slide-9
SLIDE 9

ACA IMPACT

1893 1875 1849 1824 1706 1600 1650 1700 1750 1800 1850 1900 1950 2012 2013 2014 2015 2016

Medicare Patient Days

(per 1,000 beneficiaries) 27.4 27.2 27.0 26.5 25.7 24.5 25.0 25.5 26.0 26.5 27.0 27.5 28.0 2012 2013 2014 2015 2016

Length of Stay

(in patient days) 86.8% 86.2% 86.9% 85.9% 84.4% 83.0% 80.0% 81.0% 82.0% 83.0% 84.0% 85.0% 86.0% 87.0% 88.0% 2012 2013 2014 2015 2016 2017

Occupancy

69.0 68.8 68.6 68.9 66.4

64.0 65.0 66.0 67.0 68.0 69.0 70.0 2012 2013 2014 2015 2016

Medicare Admissions

(per 1,000 beneficiaries)

Source: National Investment Center, MedPAC

slide-10
SLIDE 10

BRINGING IT ALL TOGETHER

14.1% 13.2% 12.8% 12.8% 11.4% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 2012 2013 2014 2015 2016

Medicare Margins

  • 2.0%
  • 1.9%
  • 1.5%
  • 2.1%
  • 2.3%
  • 2.5%
  • 2.0%
  • 1.5%
  • 1.0%
  • 0.5%

0.0% 2012 2013 2014 2015 2016

Non-Medicare Margins

1.8% 1.9% 1.9% 1.6% 0.7% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 2012 2013 2014 2015 2016

Total Margins

Source: MedPAC

slide-11
SLIDE 11

VARIATIONS AMONG THE MEAN

Source: MedPAC

  • Medicare

= 0.7%

  • Non-Medicare = (10.2)%
  • Total

= (4.9%)

  • Medicare Mix

= 14%

  • Duel-Eligibles = 27%
  • H-End Therapy= 79%
  • Daily Census

= 66

  • Length of Stay = 36
  • Medicare

= 11.4%

  • Non-Medicare = (2.3)%
  • Total

= 0.7%

  • Medicare Mix

= 19%

  • Duel-Eligibles = 32%
  • H-End Therapy= 83
  • Daily Census

= 77

  • Length of Stay = 39
  • Medicare

= 20.2%

  • Non-Medicare = 4.6%
  • Total

= 5.9%

  • Medicare Mix

= 24%

  • Dual-Eligibles = 39%
  • H-End Therapy= 87%
  • Daily Census

= 88

  • Length of Stay = 42
slide-12
SLIDE 12

FUTURE CONSIDERATIONS

Pricing

Patient-Driven Payment Model Medicaid funding reform Managed care growth

Volume

Home health / ALF competition Length of stay pressure Telehealth / remote monitoring

Costs

Rising minimum wages Rising liability costs Refurbishment requirements

Value-Based Healthcare Remains

slide-13
SLIDE 13

PATIENT-DRIVEN PAYMENT MODEL

Source: CMS

Characteristic $ Impact

All SNFs 0% By Ownership For-Profit

  • 1%

Not-for-Profit +2% Government +4% By Location Urban

  • 1%

Rural +4% By Affiliation Freestanding 0% Hospital-Based +17% # Days Billed as RU 0-10% +28% 10-25% +16% 25-50% +7% 50-75% 0% 75-90%

  • 6%

90-100%

  • 10%

Removes therapy minutes as basis for payment Instead, uses clinical characteristics Establishes separate payment category for “non-therapy ancillary services” Divides therapy into three separate payment categories (PT, OT, SLP) Creates sliding payment scale that changes with “resource use”

  • ver a stay
slide-14
SLIDE 14

ROBUST INVESTMENT TRENDS

11.2% 11.5% 10.5% 10.1% 9.6% 10.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 2012 2013 2014 2015 2016 2017

Cap Rate

$5,694 $3,264 $3,777 $7,083 $7,205 $5,830 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 2012 2013 2014 2015 2016 2017

Sales Volume

(in millions)

$69,123 $68,293 $71,320 $75,324 $90,181 $85,284

$0 $20,000 $40,000 $60,000 $80,000 $100,000 2012 2013 2014 2015 2016 2017

Price-Per-Unit

Source: National Investment Center

slide-15
SLIDE 15

IMPORTANCE OF CREDIT STRENGTH

Credit Strength

Banks Government (HUD/FHA) Non-Banks Cash from Operations

slide-16
SLIDE 16

SNF FINANCING OPTIONS

Banks HUD/FHA

Slow No Recourse Long-Term Rigid Speedy Recourse Short-Term Flexible

Rate?

slide-17
SLIDE 17

BANK LOAN YIELDS

3.4 3.5 3.9 3.8 3.8 3.6 3.6 3.5 3.4 3.9 4.2 0.4 0.4 0.6 0.9 0.9 1.2 1.2 1.2 1.2 1.4 1.9

0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 3.0 3.2 3.4 3.6 3.8 4.0 4.2 4.4 Bank Yield (%) Fed Funds (%)

+15%

Source: Bank of America, U.S. Healthcare Facilities Index, Effective Yield; U.S. Government, Federal Funds Rate

slide-18
SLIDE 18

BANK DEBT VS. HUD/FHA RATES

3.4 3.5 3.9 3.8 3.8 3.6 3.6 3.5 3.4 3.9 4.2 3.0 3.3 3.3 3.5 3.5 3.7 3.7 3.3 3.3 3.6 4.7

0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 3.0 3.2 3.4 3.6 3.8 4.0 4.2 4.4 4.6 4.8 Bank Yield (%) HUD Rate (%) Fed Funds (%)

+15%

Source: Bank of America, U.S. Healthcare Facilities Index, Effective Yield; HUD/FHA, Interest Rate on Final Endorsements, U.S. Government, Federal Funds Rate

slide-19
SLIDE 19

OBSERVATIONS & PREDICTIONS

Legislative & Regulatory

Fool’s game trying to predict major healthcare reform measurers Minor reform measurers will continue via Congress & CMS Value-based healthcare is here to stay

Financial Outlook

SNF financials will remain under pressure over near-term SNF pricing/volume/expense pressure will continue Credit metrics will tighten, especially with legislative uncertainty

Financing Options

Credit strength will remain important & dictate financing options HUD will remain active, but with stringent terms & conditions Bank loans will continue to offer high flexibility & attractive rates

slide-20
SLIDE 20

APPENDIX

Jason Almiro, CFA, CPA

  • Director, Healthcare Research
  • 214.525.7673
  • jalmiro@bokf.com

BOK Financial N.A.

  • Top 30 U.S.-based bank holding

company

  • Leading healthcare & energy

lender nationwide

  • Healthcare Banking

– $2.3 billion total commitments – $950 million SNF commitments – National SNF/senior housing expertise

FALSE FALSE FALSE ≤ 15,000 30,000 50,000 100,000 ≥ 115,000

BOK Financial

Healthcare Banking

Geographic Dispersion of Commitments ($000)

$108,506 $4,420 $71,384 $2,900 $71,113 $20,870 $28,100 $4,000 $67,580 $321,908 $8,778 $5,478 35 TOTAL STATES $12,284 $112,534 $56,814 $100,386 $5,862 $14,997 $13,737 $83,888 $5,115 $29,136 $514 $21,739 $2,271 $132,903 $9,200 $12,788 $279,413 $25,544 $76,048 $127,532 $12,600 $8,792 $662

SNFs 41% ALFs 16% Hospitals 23% Services 20%

BOK Financial

Healthcare Banking

Sector Distribution of Commitments