Nursing Home Consolidations
Monday, December 17th, 2007Author
Thomas Wiest
CEO, Aspirience Home Care
The consolidation of nursing homes has been on the rise for the past several years now and will continue into the future. People want to grow old in their own home rather than in an institution. I don’t blame them. Knowing what we went through with my mom and what we see with others.
Recently, RiverView Health has announced that negotiations are underway for the sale of RiverView’s 55 bed skilled nursing facility, Hillcrest Nursing Home, in Red Lake Falls, MN. RiverView also owns a nursing home in Crookston, MN, a critical access hospital, a homecare agency, a chemical dependency treatment center and seven other medical clinics.
If this type of consolidation is happening in small rural areas like Red Lake Falls and Crookston, you can only imagine what’s going on in the big cities like Minneapolis and St. Paul.
This decision did not come easily or quickly for RiverView I’m sure. RiverView Health, like other nursing home owners in Minnesota, has experienced operating losses in its skilled facilities for several years now. Hillcrest Nursing Home lost $2 million over the past five years and preliminary financials show another $525,000 loss this last fiscal year.
When they acknowledged that they needed to explore other solutions, they looked for a potential buyer that would be committed to retaining quality care. The highest quality they could find was in the form of another Minnesota company to help out. The potential buyer is a senior residential service provider in Minnesota who owns and operates about 30 other senior housing facilities around the state.
Negotiations between the two parties started this month, with February 1 as the target date for completion of the sale. This still has to be approved by their board but, they know they cannot go on year after year losing money.
Major changes in 2005 to reduce expenses and increase revenues where possible were made but, those changes were negated by stagnant payment rates, rising costs of wages, benefits, utilities and supplies.
Reimbursement for long-term care facilities in Minnesota has declined over the last several years and profit margins for skilled nursing facilities have dropped dramatically. Today, the majority of the state’s skilled nursing homes are losing money and 26 percent are at risk for closure, according to the Minnesota Health and Housing Alliance.
With the growth of alternatives such as home care, healthier seniors have avoided nursing home stays. Hillcrest’s daily occupancy is at an average of 42, compared to 60 just 10 years ago
It’s important to know, Aspirience Home Care can help you with your home care needs.