The 4 Top Pain Points for U.S. Nursing Home Providers in 2024

The COVID-19 pandemic threw healthcare services across the globe into a state of turmoil.

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Fortunately, while the struggle with rising staffing costs and workforce shortages continues, hospitals and community care providers in the U.S. are seeing a trend of positive growth and a return to profitability. However, the same can not be said about nursing home providers. Despite a brief return to profitability in 2020 and 2021 - largely driven by Emergency Provider Relief Funds - the national net margin for skilled nursing care providers fell by nearly 3% in 2022, to -2.86%. A 2023 American Health Care Association report indicates the problem continues to worsen, citing an average operating margin of -17% across the sector. 

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With no easy solution to the issues plaguing the industry, a massive 579 nursing homes have closed their doors since the pandemic. And with President Biden’s announcements of planned staffing mandates and other regulatory changes, industry leaders are voicing concerns that this trend will continue to intensify.

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But the U.S. nursing home crisis isn’t just a financial issue. America’s elderly population, family caregivers, and hospitals all require a strong skilled nursing facility industry to maintain personal well-being and a properly functioning healthcare system.

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However, considering proposed government regulation is likely to make the financial challenges faced by nursing homes worse rather than better, it is clear solutions must be sought elsewhere.

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In this article, we’ll explain how business process outsourcing services (BPO), like those offered by Pharmbills, can help skilled nursing facilities of all types improve profitability and quality of care.

What Are BPO Services?

With the increased role technology is playing in healthcare, many forward-thinking providers are finding that outsourcing back office tasks can help them focus on doing what they do best - delivering high-quality care.

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There are three main benefits of BPO services:

1. By choosing a provider like Pharmbills that utilizes offshore labor, staffing costs for non-clinical roles are significantly reduced
2. Because the administrative burden on clinicians and direct care workers is reduced, efficiency, productivity, and profitability can increase
3. Money that would previously have been spent on staffing costs and overheads can be diverted to addressing challenges or strategic growth

Common BPO Roles

Some of the most common roles and tasks selected for outsourcing include:

• Payroll and HR
• Data systems and IT
• Medical billing and coding
• Risk management and compliance
• Records management and data entry
• Supply chain and procurement
• Revenue cycle management
• Customer support processes
• Billing and payment processing
• Account management

Nursing Home Pain Points and BPO Solutions

While the exact challenges faced by each nursing home provider will vary, several common difficulties impact the vast majority of skilled nursing facilities.

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Now, let's take a look at what these common pain points are, and how business process outsourcing solutions can help.

1: High Staff Turnover

When it comes to staffing and workforce issues, one of the biggest challenges facing nursing homes at the moment is high staff turnover.

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In 2021, staff turnover in U.S. nursing homes was 53%, which is double that experienced by hospitals. Since the pandemic, nursing homes have lost more than 200,000 workers. The workforce is currently at levels not seen since 1994, with a recovery expected to take until 2027.

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Businesses invest a lot of money into attracting and training high-quality staff. But for long-term care facilities, when a good staff member leaves it’s not just a financial setback - resident care suffers as well.

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Research shows that in skilled nursing facilities, as nursing staff turnover increases, so do:

• Instances of resident abuse
• Staff dissatisfaction levels
• Substandard health inspection ratings
• Numbers of substantiated complaints

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Some of these issues can land long-term care providers with substantial fines and increased compliance costs. In a sector already experiencing financial stress, high staff turnover represents a significant risk to the viability of many nursing homes that are already on the brink of closure.

Pharmbills Solutions    

The causes of high staff turnover in nursing homes include poor wages and benefits (compared to other areas of healthcare), lack of training, management issues, limited career advancement, and excessive workloads.

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While Pharmbills can’t address issues around wages or training, our BPO services for long-term care facilities can assist with some of the other pain points around staffing turnover.

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For example, our payroll, accounts management, HR, and data analysis and entry solutions can remove a significant workload from managers of long-term care facilities, enabling them to spend more time and resources on addressing staff turnover issues.

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For clinicians and direct-care staff, our BPO services can significantly reduce administrative burden, which is identified as one of the main contributing factors to health worker burnout.

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In short, BPO services give nursing home providers an affordable option to remove many back-office responsibilities from direct-care workers and managers. This results in a less overwhelmed, more engaged, more efficient workforce, who are less likely to leave to work for a competitor or change industries altogether.

2: Ongoing Staff Shortages

The staffing shortage currently being faced by nursing homes in America has been referred to as a “catastrophic crisis”.

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Providers and long-term care staff are stuck in a vicious cycle of workforce shortages that negatively impacts everyone.

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For staff, the biggest challenge is increased workload. Being expected to work extra shifts and manage extra residents has become commonplace, as facilities are often forced to run at less than ideal staffing quotas.

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For providers, the dwindling number of direct-care workers and health professionals willing to work in long-term care settings has caused staffing costs to skyrocket. Using agency staff to keep doors open has also become a regular occurrence, further adding to operating costs.

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As of June 2023, 21% of long-term care facilities report downsizing the number of beds/units as a result of labor shortages, which has contributed to the 45,217 fewer nursing home beds in America since the pandemic.

Pharmbills Solutions

One way innovative nursing home providers are navigating staffing shortages is through a staff augmentation strategy. 

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This approach acknowledges that clinical and direct-care staff are absolutely required to deliver high-quality care in a skilled nursing facility. However, rather than solely focusing on trying to recruit more of these difficult to find (and expensive) staff members, additional support and administrative staff are added to the team to increase capacity and productivity.

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Examples of some of the outsourced roles available through Pharmbills include:

• Data analysts
• Medical billers and coders
• Administrative and data entry staff
• IT and tech professionals
• Customer service professionals
• Account management

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Utilizing outsourced talent for these roles saves money because offshore staff can be hired for a fraction of the cost of local employees. It also can increase the efficiency of existing staff, who no longer need to be occupied with as many administrative tasks.

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Some providers find that the increased efficiency among existing direct-care and clinical staff from staff augmentation is sufficient. For others, the savings from using BPO services can be directed to initiatives and incentives to attract new staff to fill vacancies.

3: Increasing Financial Pressures

Developments since COVID have resulted in a perfect storm of financial pressures for long-term care providers that are negatively impacting financial viability.

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The main financial challenges for nursing homes in 2024 and beyond are:

• Losing financial aid from pandemic funding
• Low occupancy rates (below 80% in Dec 2023)
• Increasing reporting and regulatory costs
• Inadequate reimbursement from Medicare and Medicaid 

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When combined with increased staffing costs, these financial pressures have resulted in a situation where more than half of nursing homes are operating at a loss. What’s more, 45% say they can’t sustain operating at the current pace of loss for more than one year.

Pharmbills Solutions

It’s clear that skilled nursing facilities are struggling financially at the moment. And with no relief on the imminent horizon, providers who wish to stay in business need to take proactive steps to improve their financial resilience.

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At Pharmbills, we can help long-term care providers strengthen their financial position through the use of low-cost outsourced revenue cycle management (RCM) solutions.

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Comprehensive RCM assistance can help skilled nursing facilities optimize billing and reimbursement, improve cash flow, and increase overall profitability.

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Just some of the RCM services we offer include:

• Bookkeeping and accounting
• Insurance prior authorizations
• Financial reporting and analysis
• Medical billing and coding
• Accounts management and invoicing

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Because we operate offshore, we can deliver comprehensive RCM solutions at a much lower cost than U.S.-based companies.

4: Shift to Community-Based Care

While the U.S. has lagged behind some other developed countries, the past decade has seen a trend of healthcare of all types increasingly being delivered at home.

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Often referred to as “care at home” or “home health care”, patients now have the choice of receiving a range of clinical and health support services at home, such as:

• Doctor and nurse visits
• Blood tests and pathology
• Allied health therapy 
• Support with personal care
• Help to prepare meals
• Pharmacy reviews 
• Transport to appointments

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This means that would-be nursing home residents are increasingly choosing Medicare and Medicaid covered community care programs like PACE (Program of All-Inclusive Care for the Elderly), further negatively impacting long-term care facility occupancy levels.

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In our opinion, the increased uptake in community-based elder care options is more representative of changing consumer demands around healthcare, as opposed to a permanent decline in the need for facility-based nursing care.

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With America’s aging population, demand is only going to increase for skilled nursing facilities. However, healthcare consumers are now primarily choosing providers based on patient experience, rather than traditional drivers like consistency, familiarity, and price.

Pharmbills Solutions

We can look to hospitals and the wider healthcare system to get an idea of what factors might influence consumer behavior for skilled nursing facilities.

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According to consulting firm McKinsey and Co., healthcare consumers today now value personalization and access more than anything else.

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The good news is that these components of patient experience can largely be fulfilled by non-clinical staff and technology solutions, avoiding the workforce shortages we have discussed throughout this article.

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Some examples of BPO services available through Pharmbills that can improve resident experience include:

• Electronic systems to personalize resident care, such as remembering favorite meals, special occasions, and general care preferences
• Easy-to-use online booking systems, so care-seekers and family members can easily find a vacancy and make a booking
• Billing and payment systems that are simple to understand, with responsive customer service for any queries

The best part is, when these solutions are outsourced, resident experience can be significantly enhanced with minimal additional staffing overheads. 

Toward New Ways of Delivering Long-Term Care

Looking at the long list of challenges faced by skilled nursing providers in the foreseeable future, it’s understandable that some operators may feel demoralized about finding a viable way forward.

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It’s true. There are several challenges - big challenges - that providers will need to navigate in the coming years to deliver high-quality care while remaining profitable. However, for the savvy operators willing to explore new models of care and ways of working, the current state of affairs represents a significant opportunity.

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With nursing homes closing at an unprecedented rate, and demand set to skyrocket due to an aging population, innovative providers who “crack the code” to delivering high-quality care in a financially sustainable way can be almost assured of becoming industry leaders over the coming decade. 

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Considering inflation and workforce shortages are not expected to improve anytime soon, the logical choice for aged care providers wishing to get ahead, is to delegate and outsource all tasks that don’t involve direct care. This enables staff to focus on the high-value, high-impact work that drives positive outcomes.

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The easiest way to make this shift in your organization is to partner with a trusted provider of business process outsourcing (BPO) services, like Pharmbills.

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To find out more about how we can help skilled nursing facilities and long-term care providers deliver better, more profitable care, please contact our team today.