COVID-19 Financial Impacts on the Senior Care Community
We want to commend you for the incredible work your organization is doing to protect and save lives within the senior community. We are in unchartered territory right now with COVID-19 and need to plan for the short- and long-term impact on your organization and the community.
Organizations are incurring supplemental pandemic expenses that are out of their control and we anticipate that the Federal and State governments may reimburse providers for the increased expenses related to COVID-19. Therefore, we suggest tracking any expenses that your organization incurs specifically due to COVID-19. This information will also assist you in understanding the financial impact of COVID-19 on your current financial situation and will help you prepare for one-time and recurring expenses that may require greater scrutiny or resourcefulness. Our recommendation would be to track the expenses that will allow you to do the following:
- Report the expenses on the Medicaid and/or Medicare cost reports
- Identify the total expenses impacting your facility and ultimately the senior care industry for future years’ budgets. The State’s revenues are going to be severely impacted which will have a dramatic effect on the State’s budget. The senior care industry is likely going to have to fight for their share/piece of the State’s constrained resources.
- Provide one-time adjustments for covenant calculation purposes required in leases or loans
- Inform the community and the State of the additional expenses you are spending to keep the residents safe during these trying times.
You should consider all areas of your operations to track expenses including the following:
- Additional staffing expenses for direct care (e.g. increased floor staffing including overtime, bonuses, etc.)
- Additional nursing agency expenses due to staffing shortages or increase in resident’s acuity due to COVID-19
- Additional staffing for indirect care (e.g. dietary aides to deliver meals, monitoring the entrances, increased housekeeping to sanitize, deep clean, etc.)
- Increased sick pay and FMLA expenses due to changes in Federal or State law
- Increased other benefits and unemployment expenses
- Personal Protective Equipment (supplies and equipment such as gloves, masks, etc.)
- Ancillary services (cost of additional medical and pharmacy supplies, etc.)
- Planning for preventative measures and responses to the current environment involving COVID-19 (staff and external expenses)
You might have other expenses that are not on this list. For example, the cost of establishing the availability and use of telehealth and other remote-care technology in your facility. Also, you should probably track the expenses by department or other classification depending on the structure of your organization’s financial information. We suggest putting the procedures in place now to accurately capture the expenses as they are current and to prepare for the months ahead. It will be much easier to identify the expenses now than having to go back in time. This exercise will help you assess your cash flow needs for both the short-term and the long-term.
Working together, the severity of the COVID-19 situation will pass, and we will find ways to come out of this stronger and more prepared for the future. We thank you for all the hard work you and your team are doing to minimize the impact on your community and are deeply grateful to all the health professionals on the front lines of this pandemic. Please know we are here to help you, however possible.
Please give us a call if you have any questions.