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Controlling Costs in Skilled Nursing Facilities

Controlling Costs in Skilled Nursing Facilities


Our 2016 Maryland Skilled Nursing Facility Outlook Survey looks closely at several key areas that present challenges for nursing home owners, administrators and CFOs.

It is no surprise that controlling costs is a huge concern among skilled nursing facility (SNF) leaders. When we dug a little deeper into cost control concerns, owners, administrators and CFOs overwhelmingly named nursing costs as the top area where they struggle to control costs, followed by salary and benefits.

The following graph is based on data from our recent study and shows just how significant these two areas of concern are.


Let’s take a closer look at these two areas that pose such a problem for skilled nursing facilities.

Controlling Nursing Costs Is #1 Challenge

About two-thirds of SNF leaders identify nursing costs as the #1 area where they have the toughest time controlling costs. This really is no surprise.

The demand for good nurses is extremely high within the healthcare sector. To a large extent, especially depending on the region in which your SNF operates, nurses can name their price, which only drives salary ranges higher and higher.

We do not have to tell you that being a nurse is incredibly hard. And although the rewards of a nursing career can be huge, it is often a thankless job. This, coupled with the market’s high demand for nurses, means that nurses do not often stay at one facility for a very long time. Unfortunately, this creates more costs for your facility in terms of recruiting and training. In fact, our 2016 Maryland Skilled Nursing Facility Outlook Survey found that more than 40% of owners, administrators and CFOs said finding and retaining quality employees is one of their top concerns.

Staffing is a balancing act. While you want to be lean and mean in an effort to control costs, SNFs are required to have a certain number of employees based on the number of beds that are filled. This is a challenge that is likely to remain.

Salary and Benefits Costs Are a Big Concern

Nearly one-quarter of survey respondents said salary and benefits present the biggest challenge when it comes to controlling costs.

The most successful organizations routinely look for ways to maintain these costs. While it is tough to skimp on salaries when you want to attract and retain quality employees, you can periodically look at the benefits you offer in an effort to identify ways to reduce costs.

We talked with our HR director and picked her brain on some ideas for controlling the cost of benefits.

One of her recommendations is to talk with your employees to find out which benefits matter the most to them. While medical benefits will likely always be at the top of their list, you might be surprised to learn that some of the most desirable perks cost little or nothing at all.

Once you have a handle on the benefits that matter most to your employees – and those that do not matter at all – you can make decisions to enhance or drop certain benefits, potentially saving you money along the way. A nice byproduct of this process is that you put your SNF in a better position to attract and retain quality employees.

Allowing some employees to have flexible hours, for example, does not cost anything and is often a major perk for employees. You can also consider allowing three- and four-day work weeks. Some employees might prefer to work longer shifts with fewer days spent at the facility. If your facility can offer these kinds of perks while still maintaining a high level of care, they are worth looking into.

You can potentially manage the cost of health insurance premiums – which come with a very high price tag – by considering HMOs or high deductible health plans. You could also shift to minimum essential plans, which limit coverage but are compliant with ACA.

Some other ideas we see organizations pursuing include:

  • Imposing a surcharge for spouses who can obtain coverage through their own employer
  • Shifting healthcare costs to workers by increasing employee healthcare contributions
  • Offering free wellness plans or discounts to gyms to help improve health of staff and reduce cost of healthcare
  • Restricting prescription programs by requiring generic medications and increasing the cost for specialty drugs

These are just a few ideas, and if you really want to dig into controlling benefits costs in your facility, there are consultants who specialize in this area.

Obviously, skilled nursing facilities that have a good handle on controlling costs are in a much better position to stay ahead of the competition and remain profitable. How is your facility doing when it comes to controlling costs?

For Help

Contact us online or call 800.899.4623 to discuss your skilled nursing facility.

2022 Benchmark Report for Skilled Nursing Facilities

Published on October 04, 2016