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LTC Bullet: Senior Entitlement
Changes Plague LTC Giant
Tuesday June 23, 1998
Seattle--
*The content of this Bullet comes courtesy
of LTC News andComment*
Vencor, the LTC giant, has announced layoffs and delays in new
construction due to projected lower earnings for the remainder
of this year and next year. Company officials blame constant changes
in Medicare and Medicaid for the company's poor financial outlook.
Recent changes to the way Medicare reimburses nursing-home care,
enacted by the Balanced Budget Act of 1997, are singled out as
especially damaging by Vencor's CEO. In October of 1997, the company's
stock dropped 28% due to new rules in Medicare. New Medicare rates
for SNF will average $320 per day, down from the current payment
of $360 per day. Vencor bought Hillhaven in 1995, thus acquiring
300 nursing homes. It also owns 60 hospitals that specialize in
long-term acute care.
In April of this year, Vencor evicted Medicaid patients from its
nursing homes to make way for higher paying private patients.
This policy was reversed soon due to investigations by governmental
regulators. [Source: Wall Street Journal 6/19/98.]
COMMENT: Vencor is a relatively new company, acquiring its first
hospital in 1985, and since growing to employ 80,000 people. The
company came on the LTC scene when Medicare and Medicaid reimbursements
were comparatively rich. The demographics of aging and of the
future work force, however, have forced Congress and state legislatures
to cut back on LTC
entitlements now, and to study ways of making more substantial
changes to save a semblance of the programs for the future. The
lesson learned the hard way by Vencor has already been understood
by at least one LTC industry, assisted living: Do not build your
LTC business on the foundation of governmental entitlements, but
on the private dollar. Look for the home health care and nursing-home
industries to follow the lead of the assisted living industry,
and clone providers who specialize in private pay patients and
emphasize quality.
For more LTC news and views, visit LTC News andComment on the
web at www.larsonltc.com
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