Mission Health CFO: Skilled Nursing Providers are Balancing on a Financial Tightrope

Skilled nursing providers have walked a tightrope trying to rebuild census, balancing bringing on agency staffing with holding back at the risk of further disrupting an already wobbly workflow or compromising care quality.

Some have seen the practice as a necessary evil over the course of the pandemic, while others have vowed at all costs not to bring agency staff into their buildings.

Mission Health Communities had more than 75% of its facilities using agency staff by the end of 2021, according to CFO Michelle Delker.

The situation was “prohibitive” and unsustainable, resulting in the need for a two-pronged approach: the Florida-based operator has continued to grow its in-house certified nursing assistant (CNA) program, while also partnering with select agencies that share the company’s mission.

Mission Health told Skilled Nursing News back in April that it expected to have 400 CNA graduates within a month after its launch in the summer of 2021, and a 92% retention rate.

The operator has also seen a “stark decline” in agency usage from April to June — down about 72%, according to Delker.

“We are a very good partner and so we found some incredible partners that are willing to work with us as it relates to pricing — but it’s not a long-term solution,” Delker said on an episode of the Rethink podcast. “The long-term solution is rebuilding that bedrock and having our permanent full-time employees caring for our residents on a daily basis.”

Highlights of Delker’s podcast, edited for length and clarity, are below. Subscribe to Rethink via Apple Podcasts, Google Podcasts, or SoundCloud.

On what keeps a skilled nursing facility CFO up at night:

So a lot of things keep me up at night. I would say top of the list right now, of course, the workforce challenges, leveraging agency [staffing] with incredible premiums and basically fixed reimbursement.

I would say beyond the workforce crisis [is] state reimbursement, really, because that’s an issue that we’ve struggled with for a number of years, and at this point we really need to begin making some meaningful traction.

Beyond that, state reparations – so we were fortunate enough to receive a healthy amount of assistance through the Provider Relief Fund (PRF) through the Cares Act. But we do operate in a number of different states and obviously each state had the autonomy to make decisions on how they would like to provide assistance. So that, because we have some states that have really gone to Herculean measures to assist, and then others that we’re still working with to get some of the assistance that we’re in need of.

Then beyond that, what it’s always been, the regulatory requirements and the changing landscape of the level of stringency associated with enforcement of penalties. Of course we want to do everything perfectly, and the pandemic, I think, has really shined a light on opportunities for improvement, and then also areas where people have done an absolutely incredible job.

Fortunately we’re not sitting by idly. We’re doing things, we’re having active conversations and we’re explaining really the tone of the marketplace and the story of our particular sector, which surprisingly, is new information to some and then an old tale to others.

On the types of capital investments Mission Health has made into recruiting and retaining staff:

We sat down as a leadership group in October of 2020 and talked about what our next big initiative was going to be, and it had to be addressing the workforce crisis. We really didn’t begin to feel the depths of the crisis until May of 2021.

So our incredible team came up with a pretty phenomenal program and the crux of it is that we’re investing in you. The biggest component was setting up a paid CNA training program and hiring recruiters to go out into the local communities and discover this talent, share the story of our space and engage them to join our organization.

We’re talking in some cases about folks who have never before had an opportunity to receive an investment like a paid training program. We’re putting people through this course, sitting with them, assisting them while they’re studying and watching them pass and ultimately graduate. Then when they get to one of our facilities we’re buddying them up with a mentor to ensure that they’re receiving a good indoctrination.

We all know that it’s one thing to learn something in the classroom and then another thing to put it into practice in real life. We want to make sure that we’re giving plenty of runway and a soft start for our new folks to come out and be successful.

It’s been really enriching and rewarding and there’s also a financial benefit. If we were to graduate roughly 50 CNAs through this training program and hang on to them for a year, that saves us roughly $1.5 million in agency because the markups that we’re seeing today are roughly 100%. So it’s an incredibly meaningful program and something that, when we modeled out, we looked at it taking potentially five to seven years to rebuild the bedrock of what we’ve lost over the last year-and-a-half, two years at this point.

On how Mission Health has managed using agency staff:

If we were to go back five years and look historically at our agency usage, it was quite minimal in the past. Obviously we fell heavily into agency as many others did … the fever pitch really coming in May of 2021. It continued to build, and by the end of the year I would say we had more than 75% of our facilities in agency — which was prohibitive with the markups.

We always looked at our PPDs on a daily basis, but now we’re really scrutinizing the weighting of those PPDs, the composition of the CNA, the LPN, the RN. And we’re tracking it closely, also in conjunction with our CNA training program, because as we graduate folks and we deploy them to facilities, we anticipate that the agency component of the PPD is going to correspondingly decline.

What we found in some cases is that maybe we didn’t need agency in a particular building. Beyond that, we do have buildings that definitely require agency usage. So the stance that we’ve taken is, in general, we are wanting to do business with our preferred partners — those that are strategically aligned with us and share similar values.

So rather than engaging 15 different agencies, we’re paring it down to maybe three in a particular geographic location … fortunately we’ve built incredible relationships in the communities in which we operate. We are a very good partner and so we found some incredible partners that are willing to work with us as it relates to pricing — but it’s not a long-term solution. The long-term solution is rebuilding that bedrock and having our permanent full-time employees caring for our residents on a daily basis.

A couple of months ago we performed an in-depth analysis about our direct care labor, looking at our actual versus our budget, and then again the composition of the different disciplines that comprise the overall numbers.

We have seen a stark decline in our agency usage from April to May and then again from May to June. I would say as of this morning, almost two months in, we’re down about 72% — which is absolutely incredible.

We haven’t had to stop admissions at this point, but I will say that not having not having adequate staffing has prevented us from moving forward with certain initiatives. We have a couple of facilities in particular that have some specialized programming or units that they would like to roll out, but we simply do not have the staff in place to be able to support the vent unit or the trach unit or the hemo den.

So that’s unfortunate because it could help with increasing revenues and making the facilities a little bit stronger. But there’s simply not the available workforce in the workplace at a price that makes sense for us.

On what Delker’s two biggest financial goals are in the next two years for Mission Health:

I sound like a broken record but I would say definitely to garner Medicaid rate adjustments to where we’re covering the cost of care maybe with a little something extra, because then that would allow us to have the surplus necessary to do what we talked about — reinvesting in our facilities, in the plants, in the people and then also in additional ancillary businesses to be a bit more self sustaining within the continuum.

But I think that’s going to have to be the biggest conversation is the Medicaid reimbursement rates.