“The outcome was ... a positive audit. There was nothing unexpected that we found. Everything seemed to be in order,” said Bill Matheney. “... We basically make sure the nursing home, from an accounting standpoint, is operating like it should.”
Matheney and his associates determined BHRC’s records are being handled correctly. Negative reports stemmed from financial numbers being in the red. This lack of adherence to the general budget is due to several factors, including a $443,000 penalty received last October.
According to reports, the facility was notified it was not “in compliance with requirements for participation as a provider of nursing services in the Health Insurance for the Aged and Disabled Program of Medicare.” Corrections were quickly made at BHRC. The facility’s Plan of Correction received clearance and Medicare lifted the facility’s suspension before the end of November.
According to Matheney, three factors affected the facility’s yearly financial report: the $443,000 penalty; the state program, Choices, pulling patients out which reduced BHRC’s census; and receiving an 8 percent cut on rates by TennCare.
Dennis Burtnett, BHRC administrator, said the facility is still a strong institution. Being in the red is attributed to a yearly budget planned before these unforseen costs. Matheney said the Bradley Healthcare board knew about the penalty and the likely effect on the audit financial report.
“It is not really positive they had a loss, but if they had been highly leveraged then it would have been difficult to survive that penalty,” Matheney said. “One thing this facility has been historically good at is budgeting and making sure they have budgeted their expenses to know where they will fall.”
The facility has no debt, despite being in the red for this year’s budget. According to Matheney, the BHRC is not dependent on borrowed money. He said another institution with bonds in Bradley’s position would not have fared so well.
“They [BHRC] have managed their cash and they have built up reserves. When this penalty was assessed, they were able to pay it,” Matheney said. “Some facilities would not have those cash reserves at all.... The situation would have been different, if they had not prudently managed the facility and built up those reserves. Those reserves were built up over time so they were able to weather this storm.”
About 90 percent of Bradley’s revenue stems from reimbursement provided by Medicare and TennCare, or Medicaid. Matheney said TennCare has historically made up a majority of the facility’s patient bit at about 70 percent. The institution’s dependence on reimbursement has affected the way they budget and save money over time.
“Years ago, when we started working with this facility they were in dire straits,” Matheney said. “They were struggling. They were on what I was calling a roller coaster. Their TennCare would go up, so the next year they would cut expenses to make a profit and their TennCare rate would then go back down the next year.”
“Finally, somebody came in and said let’s manage this. Let’s stay $3 below what we think the rate is going to be. They want to manage to stay within a certain range.”
Five risk factors for continued growth and stability were presented to the board by Matheney. He said the following would be enough to keep Burtnett up at night:
- The impact of TennCare’s program, Choices, on the health facility. According to tn.gov, “... CHOICES provides the elderly (65 years of age and older) and adults with physical disabilities (21 years of age and older) who are eligible for TennCare with needed long term services and supports in the home/community setting or nursing home.”
- Reimbursement reductions by Medicare and TennCare.
- The shortage of nurses and Certified Nursing Assistants.
- A shortage of certain drugs consumed by elderly patients in large quantities.
- The changing demographic of nursing home patients. These include the admittance of numerous Baby Boomers and sicker patients.