How Can Nursing Homes Control Their Operating Costs?
Managing costs is always a primary concern in any business. Nursing care facilities aren’t spared these problems, as they often deal with spiraling operational expenses, nursing home insurance, and various other factors that affect profit margins.
Unsurprisingly, controlling costs is one of the most formidable challenges faced by skilled nursing facility (SNF) owners and administrators. Add salary and benefits to the equation, and you can see why many firms struggle to remain afloat.
Factors that affect nursing costs
One of the main factors that affect nursing costs is the high demand for nurses across the globe. In some regions, nurses have virtually free reign to name their salaries, which tends to increase hiring costs considerably.
It’s no secret that nursing is incredibly difficult and demanding work. Most nurses work long hours, often under challenging conditions. These factors and the high demand for nurses result in quick turnover rates, which cause recruiting and training costs to increase exponentially.
Adding to the difficulty is the need to conform to staffing requirements. Although maintaining a modest staff might seem like a feasible way to reduce expenses, employers have to ensure that they have enough nurses to cover their needs. Maintaining a lean workforce and ensuring adequate staffing is often a difficult and costly balancing act.
Managing the cost of salary and benefits
Salary and benefits are among the biggest expenses that nursing facilities have to deal with. Unfortunately, little can be done about reducing salary costs, considering the high demand for nurses and the necessity of attracting and retaining quality workers. For most nursing care facilities, salary-related expenditures are a given.
Nursing homes can generally manage expenses more effectively by focusing on the benefits packages they offer. Periodic assessments and restructuring benefits programs can help plan administrators develop strategies for reducing costs.
Many firms have found that discussing plan coverages with their employees is an effective way to determine which benefits are most important to them. Medical benefits are always a high priority, but the cost of other equally important perks is often negligible.
Finding out which benefits matter the most to nursing personnel–and which don’t matter at all–can be helpful for developing cost-cutting measures. Based on employee feedback, plan administrators can decide to enhance certain benefits and discard others.
This strategy often pays off in more ways than one. On the one hand, employers can cut costs by eliminating unnecessary perks in their benefits packages. On the other, employees enjoy a plan that is much better suited to their needs and preferences. Ultimately, nursing homes are able to attract and retain higher quality workers, who in turn derive better benefits and more job satisfaction.
Other strategies for reducing benefits-related costs
Apart from restructuring benefits plans, nursing care facilities can reduce benefits-related costs in other ways. For instance, they could offer flexible hours, which many employees consider a desirable perk.
This strategy can be implemented in a few different ways. Employers may allow three- or four-day workweeks, for example, or longer hours combined with fewer days on duty. If you could offer these benefits without compromising the quality of nursing care, you may be able to reduce your operating costs considerably.
Health insurance premiums have traditionally been the biggest expenses employers have to deal with. You can cut costs in this area by vetting different HMOs to find those with the highest deductible plans.
Some nursing care facilities have also switched to minimum essential plans. These packages typically offer limited coverage while maintaining compliance with Affordable Care Act (ACA) requirements.
Other strategies for reducing benefits-related costs include:
- Implementing surcharges for spouses that have their own employee benefits plans
- Increasing employee contributions, which transfers healthcare costs to workers
- Providing incentives such as discounted gym rates or free wellness plans to improve overall employee health
- Increasing the cost of specialty medications and requiring generic alternatives instead
These are only some of the strategies that nursing care facilities can implement to reduce the costs related to benefits packages. Because benefits are often the biggest expenses that employers have to deal with, focusing most of your cost-cutting efforts in this area can significantly improve your company’s finances.
You could also consider consulting with financial professionals who specialize in reducing operating costs. A specialist with extensive experience assisting nursing care facilities manage expenses could help you outline other effective strategies that you wouldn’t have considered otherwise.
About Midwest Insurance Group
Midwest Insurance Group is a risk retention group developed by Caitlin Morgan Insurance Services in response to the unique needs of the healthcare industry, particularly that of senior living facilities. With rising premium costs and difficulties in obtaining coverage from the traditional professional and general liability insurance market, Midwest Insurance Group represents a viable, long-term insurance alternative for the senior living sector, giving members complete control over costs and claims management. Midwest Insurance Group is reinsured with Lloyd’s of London, and A rated by Demotech.