My predecessor, Dr. Richard Ice, likened operating a company like ABHOW to a large ship. Though difficult to build momentum, he said, once moving it develops an inertia that keeps it going forward. His words remind me that ABHOW and our residents have faced many storms over the years, and were it not for our momentum, we might easily have been blown off course.
On October 1, we’ll face one of our biggest storms yet when an unprecedented cut in Medicare reimbursement takes effect.
Buffeted the past few years by an ailing economy and falling home prices, the senior living industry was shaken by news of this 11.1 percent reduction in payments for skilled nursing care. While we anticipated some of these cuts as we prepared our corporate and community budgets for next year, the actual cuts were twice that projected by industry experts.
At The Villages, ABHOW’s skilled nursing centers, administrators and caregivers will be challenged to continue providing high quality care and services despite the cuts, and somehow, they will. This will have a significant impact for each health center and therefore for all 11 ABHOW CCRCs, and the residents who live there, as well.
In addition, the State of California has announced a temporary reduction in MediCal reimbursement, presumably to be repaid next fiscal year. Again, our standards for care and resident expectations for quality will remain the same, yet the financial resources to meet those standards will be substantially reduced. For as much as our residents have seen their finances impacted by these events, so, too, has ABHOW.
Before we conclude catastrophe and concede defeat, let’s remember Dr. Ice’s analogy. ABHOW has built up positive inertia that is not easily lost. Because only a portion of our revenue comes from Medicare and MediCal programs, the impact of the cuts is somewhat mitigated.
And, fortunately, we’ve established efficient systems for the delivery of care and services and built reserves such that we can react to these cuts without lowering our standards. Nevertheless, we will work closer than ever with residents and local boards to maintain quality, service and financial well-being at both the corporate and community level.
So, ABHOW and our residents will weather this storm, in part because of our size and strength, but also because of our history. I don’t want to gloss over the challenges ahead, or belittle the potential impact on quality of care and residential living fees. It’s likely we will all feel the sting of these cuts in one way or another. Hard choices lie ahead, but we’ll make them and be better for it. And together, we’ll keep moving forward.