Inflation hurting nursing homes.

AFTER IMPROVING FOR FIVE straight years, profitability among nursing homes in Arkansas took a step backward in 2007, reports filed with the Arkansas Department of Human Services indicate.

Of 204 nursing homes that filed full-year cost reports for the year that ended June 30, a third--69--reported net losses ranging from about $1,250 to more than $700,000.

In the previous year, only 27 percent were in the red, a high-water mark achieved after the state adopted a cost-based formula for reimbursing nursing homes for caring for Medicaid patients. That formula took effect in fiscal 2002.

Randy Wyatt, executive director of the Arkansas Health Care Association, said the same price inflation that has hurt other businesses has affected nursing home profitability.

"Just because we are on a cost-based reimbursement [system] does not mean we are guaranteed a profit," Wyatt said. "The only category in which costs are returned dollar-for-dollar is direct patient care."

And even those costs are reimbursed 12 to 18 months after they are spent. The reimbursement rate is set on Jan. 1 based on actual costs incurred in the fiscal year that ended the previous June 30.

About 75 percent of nursing home patients in Arkansas have their care paid by Medicaid, according to DHS spokeswoman Julie Munsell. The average reimbursement rate paid to Arkansas nursing homes last year, about $135 a day, included direct patient care costs of about $65.45, Wyatt said. During the same time, the actual average cost of providing that direct care was $67.53, he said.

"Now, they will turn around and get that back in this year's rate, but they spent it last year," he said.

The nursing home association says Arkansas nursing home patients receive an average of 3.36 hours per day of direct care from licensed practical nurses and certified nursing assistants, well above the state requirement of 2.8 hours.

Nursing homes, on average, lose money every day they care for Medicaid patients, Wyatt said. "We're not losing a lot, and that's on average, but we are losing dollars on Medicaid. Not dol lars--cents. It's less than a dollar."

The reimbursement rates being paid to 220 nursing homes in Arkansas right now average $141.67 per day, according to DHS data.

Average costs are also being pushed up by the construction of new and replacement nursing home facilities.

By Gwen Moritz

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Top 10 by Medicaid Reimbursement Rates *

 1   Davis East, Pine Bluff                              $173.18
 2   Salem Place Nursing & Rehab Center                  $172.89
 3   Golden Living Center-Golf links, Hot Springs        $171.64
 3   Heritage Living Center, Conway                      $171.64
 5   Manila Nursing Center                               $165.82
 6   Carroll County Nursing & Rehab Center, Berryville   $164.07
 7   Golden Living Center-Van Buren                      $163.77
 8   St. John's Place, Fordyce                           $163.08
 9   Southfork River Therapy & Living Center, Salem      $160.65
10   Innesfree Skilled Care Center, Rogers               $160.45

* Weighted daily reimbursement rate for January-June 2008

Top 10 by Revenue *

 1   Ashley Health & Rehabilitation Center, Rogers    $10,131,285
 2   Siloam Springs Nursing & Rehab Center             $9,446,201
 3   Southfork River Therapy & Living Center, Salem    $9,433,443
 4   Crestpark Retirement Inn-Helena                   $7,948,697
 5   Davis Life Care Center, Pine Bluff                $7,842,022
 6   Pine Lane Healthcare, Mountain Home               $7,823,891
 7   Kenwood Health & Rehabilitation, Benton           $7,560,538
 8   Davis East, Pine Bluff                            $7,241,628
 9   Concordia Care Center, Bella Vista                $7,099,211
10   Brookside Health & Rehabilitation Center,         $7,096,081
     Little Rock

* Fiscal year ended June 30, 2007

Source: Arkansas Department of Human Services