Virginia Senator Mark Warner asked panelists at the U.S. Senate Finance Committee on nursing home abuse and neglect a series of questions about the viability of rural operators, the Five-Star Rating system, and operating margins for nursing facilities that serve a high percentage of Medicaid residents.

Warner cited MedPAC data on nursing facility margins for their Medicare and Medicaid mix and noted that for some facilities, their margins may only be “half of one percent.” Warner then posed the question, “Is this a viable business model, particularly in some of the smaller communities if the margin is this thin?” Harvard Medical School Professor of Health Care Policy David Grabowski, PhD, responded that nursing facilites with a high-Medicaid population do lose money on every patient.

Warner also expressed deep concern about the closure of nursing facilities in rural areas across the country and that this trend could continue to increase as “people find this is not a viable business model.” David Gifford, MD, MPH, AHCA/NCAL Senior Vice President of Quality and Regulatory Affairs, responded that the association shares his concerns. Gifford added that of the over 3,000 counties in the U.S., 93 percent have at least one nursing facility, which is often the largest health care provider in the community.

Warner added, “We need to expect quality, but we also need to expect a business model that works.”

A recording of the hearing is available on the Finance Committee’s website. Sen. Warner’s remarks begin at the 1:54:52 mark and last approximately five minutes.

VHCA-VCAL is appreciative of Sen. Warner’s lines of questioning and understanding of the financial pressures facing Virginia’s nursing homes.