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Most Nursing Homes Lost Money in 2000, Reports Show.

THE NURSING HOME INDUStry's legislative effort to improve the reimbursement rate for Medicaid patients is bolstered by FY2000 financial results released last week by the Arkansas Department of Human Services.

Cost reports filed by 222 nursing homes indicate that only 86, or 39 percent, of them operated in the black during the 12-month period that ended June 30, 2000. (The data report for one nursing home, Pine Bluff Nursing Home, was incomplete.)

In the previous year, 49 percent of the state's nursing homes were profitable.

The profitable nursing homes are generally less profitable than they were in 1999, when profits were significantly less than in the 1998 fiscal year. The most profitable home in 2000 was Three Rivers Nursing Center in Marked Tree, whose netincome of $593,3l0 was actually one-third higher than its 1999 income of $443,841. Revenue at Three Rivers increased 11 percent.

But last year's most profitable nursing home, Dardanelle Nursing Center, had net income of $842,222 -- 42 percent higher than this year's No. 1. And the combined net income of the 10 most profitable homes slipped about 11 percent, from $5.24 million in 1999 to $4.67 million last fiscal year.

Dardanelle Nursing Center remained profitable in 2000, but it dropped from No.1 to No.23. Its profits were slashed to $202,766--a 76 percent drop in one year -- on revenue that declined by 27 percent. The nursing home's.Medicaid utilization rate--the proportion of patients who are dependent on Medicaid -- grew from 67 percent to 70 percent.

Meanwhile, the unprofitable nursing homes, listed on Page 22, lost more money in 2000 than in 1999. The most unprofitable home, Saline Nursing Center in Benton, lost more, than $1.1 million -- significantly less than the nearly $1.6 million Little Rock Healthcare and Rehab Center lost to top the 1999 list of money-losing nursing homes.

But the 10 least profitable nursing homes lost a combined $9.86 million in 2000, up from a combined loss of $9.4 million by the bottom 10 the previous year.

Little Rock Healthcare and Rehab remains on this year's least-profitable list. Its loss--$642, 587--ranked it No. 14 this year. Revenue at the home at 5760 W. Markham St. was up almost 79 percent, to $4.7 million.

As more nursing homes slide into the red, the industry has volunteered to tax itself to increase available revenue.

The Arkansas Health Care Association has found legislative sponsors for a bill, as yet unfiled, that would impose a "quality assurance fee" on all nursing homes in Arkansas, executive director Randy Wyatt said.

Unlike an earlier proposal that would have imposed a per-bed tax, the bill would most likely call for nursing homes to pay the state about 5 percent of patient revenues. The exact percentage due for the fee would be determined each fiscal year.

Each dollar from the fee would be used to draw down $3 in federal matching money to increase the reimbursement nursing homes receive for housing the 76 percent of residents who are dependent on Medicaid.

The new method would provide an additional $80 million-$100 million a year, Wyatt said, and the bill should be filed this week.

Sen. Gunner DeLay, R-Fort Smith, is sponsoring a bill that would raise extra nursing home money by tapping part of the tobacco settlement. However, it would have to overcome complaints that it tears a part the carefully constructed "CHART" spending plan approved by the voters in November.

AHCA and DHS have also proposed a new, "cost-based" formula for Medicaid reimbursement to replace the state's traditional flat fee. The plan has been submitted to the federal Health Care Financing Administration for approval.

"Direct care" of the patient is the most significant difference in the new reimbursement plan. AHCA research director Lynn Rodgers said, and money from it would manage expenses such as nurses' and aides" wages, medical supplies and resident physical therapy.

"In the old system, buying paper for the copy machine is more important than hiring a nurse,"' Rodgers said. "Under the new system, hiring a nurse is the most important thing."

The state currently reimburses nursing home operators an average of just under $70 a day for care provided to Medicaid-eligible patients; Wyatt said, but the costs per day average $78 per patient. However, a combination of the provider fee and the new reimbursement formula means that the reimbursement for some homes could be as high as $84 a day.
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Title Annotation:Arkansas Department of Human Services releases financial results
Comment:Most Nursing Homes Lost Money in 2000, Reports Show.(Arkansas Department of Human Services releases financial results)
Publication:Arkansas Business
Article Type:Brief Article
Geographic Code:1USA
Date:Jan 22, 2001
Previous Article:New Privacy Rule Will Cost Health Providers Billions.

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