How to Survive Your First Nursing Home Operations Review Call

Typically, a new administrator will be basically thrown into their position without a ton of training.  Then, you get the pleasure of being grilled on every aspect of your facility’s performance by your regional, district, or corporate team usually on a monthly basis on an operations review conference call.  What we’d like to accomplish here is to give you some pointers on how to be prepared for your monthly ops review call so you don’t look and feel like you don’t know what you’re doing.

We’ll highlight several areas in your facility that may or may not be included in your monthly debriefing.  This is definitely not all-inclusive but should give you a great start and have you asking many of the the right questions.  These conference calls generally review the previous month’s financial outcomes and current/future census projections.

Depending on your company’s set-up, you may desire to have several of your department heads attend the call as well.  You want to have them in the same room as yourself on the same phoneline.  You should have prepared them several days prior to this call so they can modify their schedules to make sure they are present and prepared.  I generally let the responsible department head answer questions about their own department.  The Marketing or Admissions Director answers census questions, the DON answers clinical, and so on.

For any negative variances to budget, you’ll need to put together an action plan that details an explanation of the problem, what you’re doing to fix it or get it in-line year-to-date,  who’ll be responsible for what actions, how it’s going to be reviewed, and when it will be fixed.

1.  Census

You’ve absolutely got to know your census everyday throughout the day.  You should know the total census as well as census mix by payer type compared to budget for the prior month and current month-to-date.

How many admissions have you had this month?  How many clinical denials?  Did these denials go through the proper channels?  Same for financial denials.

Were there any prior period days adjustments and, if so, what for?

How many Private Pay do you have?  Who hasn’t payed for the current month?

What is you hospital discharge %?

What is your projected ending census for this week? If below budget, what actions are you taking?  What new marketing opportunities exist?

2.  Revenue Rates

Private Pay fluctuations from last month?  Why? 

Does your Hospice rate match your Medicaid rate?

Insurance/Managed Care/HMO – what does the contract say for each of these residents?  Is it negotiated rate, per diem, or RUGs-based?  How much rehab does the contract allow?

Average Part A rate?

What is your Medicare length-of-stay?

Did you have any default days and why?

Medicaid – questions would depend on if your state is casemix or not.

Part B volume?  What % of Part B eligibles are on therapy caseload?

3.  Ancillary / Rehab

Any changes in your ancillary rates from last month?

Any ancillaries you’re paying for that should be covered under Hospice, Insurance, Medicaid, etc?

Is Therapy in-house?  If so, what was their productivity?

If contract, did they meet the terms of their contract?  Any wasted minutes? Or did they miss any RUG levels?  Did you review the invoice?

4. EBITDARM, EBITDA, or Net Profit

Your company may focus on different lines on the financials here.  EBITDARM means earnings before interest, taxes, depreciation, amortization, rent and management fees.  Net profit (or net earnings) is your total expenses subtracted from your gross revenue.  Typically, what you need to know is did you make budget based on the bottom line your company is looking at.  You have controllable and uncontrollable expenses, but keep in mind, even if an expense is uncontrollable, you are expected to compensate in other areas to ensure a favorable net profit outcome.

You’ll also need to know where you are year-to-date and what you’re doing to “catch up” if YTD you’re behind budget.

5.  Labor

What were your labor PPD’s and payroll expenses for the review period? Total and per department?  Are you at budget?  Will you be at budget on the next labor report?

What was your overtime % for the period?  Was the OT approved or pre-authorized?  Why?

What are your open positions? (Note:  It will be very hard to explain why you are running OT if you have no open positions – that’s why you should watch your labor daily).

Turnover%?  Who was terminated in the last review period and what happened? Terms in 1st 90 days?

Any premium pay or bonuses?  What for?

Any agency staff used?  Why and what measures are you taking to eliminate? (Agency is very expensive to run.)

6.  Controllable expenses

You will go line-by-line and review any controllables out of budget.  Some companies go strictly by PPDs; some go by anything $100 over budget or $500 over budget.  You should review your financials several days prior to the call and have researched the GL accounts thoroughly in order to be able to answer the questions you’ll get.

How often are you reviewing department spend-downs?

How are your controllables YTD?

A sample of general controllable expenses may include:

  • Nursing supplies
  • Incontinence supplies
  • Activity supplies
  • Raw food expense
  • Dietary supplies
  • Food supplements
  • Laundry supplies
  • Linen
  • Housekeeping supplies
  • Maintenance & Repair expenses
  • Minor equipment expense
  • Office supplies
  • Postage
  • Marketing expenses
  • Bad debt (discussed below)

7.  Bad debt

What is the status of your delinquent accounts?

Howmany Medicaid-pending do you have?  How long have they been pending?

Any no-payers?  Have you sent any discharge letters?

What is your current DSO?

Any barriers for collections?

Review any over $10 k accounts.

8. Ancillary expenses

Typical ancillary expenses may include:

  • Rehab supplies
  • Central supplies
  • Equipment rentals
  • Complex Medical
  • Pharmacy
  • Medical Supplies / oxygen supplies
  • Lab, X-ray
  • Physical, Occupational, Speech Therapy expense
  • IV and Nutritional therapy
  • Medical Services, Transportation
  • Misc.

Pre-authorizing any Medicaid rehab?  (Medicaid does not pay for rehab in most states).

Are you verifying rehab isn’t exceeding insurance authorizations?

What equipment are you renting? How long have you been renting it and is it still needed?  Do we need to purchase?

Any large variances in pharmacy costs month-to-month?

Did you review the pharmacy bill for accuracy as well as to identify high-cost drugs?

How many tubefeeders?  Payer source?

Fluctuations in lab, x-ray, transportation costs?

9.  Workers comp

Any open workers comp claims?  Status?

Anyone on modified duty?

10. Other expenses

Are expenses being accrued appropriately?

Any consultant expenses?  What for?

Any building contracts, grounds , maintenance?

Education & training?

Orientation

Utilities

G&A expenses

11.  Clinical

Depending on your company, this could be a whole other call and, many times, it will be weekly.  Typically, you’ll review this at the minimum:

# Flags on QI/QM

MDS Transmission, late assessments

Falls, falls w/ injury

Wounds – pressure and non-pressure, facility-acquired or no-facility-acquired

Restraints

Weightloss

Unplanned hospital discharges

Any action plans for Nurse Consultant visits or survey POC

12. Survey activity or Plan of Correction progress

Complaints, any self-reports, annual survey

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