DeKalb County Rehab & Nursing’s budget woes started before 2020

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DeKalb County Board voted recently to continue to help cover expenses for DeKalb County Rehab & Nursing Center (DCRNC) in the face of a worsening revenue picture. The board had approved a loan of $2 million last spring to improve cash flow issues resulting from a $2.8 million revenue shortfall in 2020, and, according to a recent article in the Daily Chronicle, its operating board has had to prevail upon the county board for more cash flow assistance since then.

How DCRNC makes money

DCRNC does not levy local property taxes. It’s expected to support itself. Revenues primarily come from a mix of reimbursements from Medicare, Medicaid, and private insurance for services provided. Here are DCRNC’s reimbursement assumptions for the 2021 budget based on an occupancy rate of 92.1% of capacity (i.e., averaging daily occupancy of 175 of a possible 190):

— 12.0% (21 beds) Medicare at $527.00 per day
— 54.3% (95 beds) Public Aid at $198.03 per day
— 33.7% (59 beds) Private Pay average at $236.52 per day

Reimbursements actually vary from person to person depending on diagnoses. Still, it’s clear that while all revenues are vital to the support of the facility, Medicare is king; and when you read about DCRNC’s expansion you see that building rooms dedicated to transitional patients, many/most of whom have Medicare as their insurance provider, is a large piece of the project and a good business decision generally.

Why DCRNC is flailing

But Medicare as the relative “big bucks” also means fierce competition for these patients, and DCRNC is not winning. Pretty much nobody is winning right now. Medicare in this context usually refers to short-term patients with Medicare A insurance who have just been released from the hospital and require rehab and/or nursing services next. This patient often has just had an elective surgery (e.g., hip, knee) but such surgeries were delayed in 2020, and demand for them has not yet returned to normal. Minutes of DCRNC’s operating board meetings includes reports of June census of 122 with 13 of them Medicare placements, and a July count of 125 with 16 Medicare placements — either month a far cry from budgeted targets of 175 average daily census with 21 of them Medicare.

And these numbers apparently continue to fall. Recent total average head count as cited in the Chronicle article is 117 for 2021 so far, less than 67% of budget projections and only 62% of facility capacity. That the underperformance has continued to worsen so far into this year means the crisis can hardly be understated at this point.

The slide, however, did not begin in 2020 with the pandemic as one might expect. Again referencing the Chronicle article, the county administrator did note this, citing an average daily census of 181 in 2018 that dropped to 168 in 2019. Additionally, examination of meeting minutes of the DCRNC operating board show the census issue began snowballing in mid-2019, and flakes were apparent earlier than that. DCRNC was already reeling by the time the pandemic hit.

Next: DeKalb County Rehab & Nursing: How staff retention issues helped lead to its financial problems