As we approach the mid-point of 2021, healthcare executives of skilled nursing facilities and other long-term care centers should be starting to think about their budget plans for 2022. There are numerous factors to consider in light of the coronavirus pandemic and the changing needs of patients, staff, and facilities. In order to establish a functional budget plan for long-term care centers, healthcare executives must take into account past expenses, current needs, and future possibilities. Here are some components to keep in mind.
Calculate a Clear Cost Analysis
If you want your 2022 budget to be as accurate and sufficient as possible, you must calculate a comprehensive cost analysis to identify how much it costs for your facility to operate. What goes into your cost analysis may vary, but for SNFS and long-term care centers, relevant factors may include the cost of resident supplies like bedding, the funding necessary for resident and staff activities, and the price-per-day of feeding residents.
In addition to the cost of essential resources, events, and more, your budget must also account for operating costs, staff salaries, and the costs of staff benefits programs. You may also consider how much you spend on marketing and advertising efforts if such practices are common for your facility. Considering how much your facility currently spends and what you want to spend in the future will be a crucial first step to establishing your budget for next year.
Account for Staffing Wages, Rates, and Capital Expenditures
For many long-term care facilities, wages and benefits are where a majority of funds are allocated, often amounting to more than 50 percent of a facility’s expenses. Because highly-skilled, dedicated staff are imperative for optimal functioning, budgets must first account for staff wages, benefits, training, and more.
It is also important to identify whether your rates should be updated in the coming year based on projected revenue and anticipated capacity. Additionally, you should consider your contractual allowance rate, which is the difference between gross revenue and what providers actually pay, as well as potential insurance changes involving public programs like Medicare.
Considering any potential renovations, expansions, or other projects, especially ones that might have been delayed in 2020, can also give you insight into how to plan your budget for next year. Accounting for these costs in your budget now will help you acquire the necessary funding to complete such initiatives.
Keep Potential Fluctuations in Mind and Stay Flexible
Like with any facet of business, no matter how prepared and detailed you are in your plans, circumstances could change at any moment. Keep in mind that you may need to periodically revisit and adjust your plan. Throughout the year, occupancy may vary, as will funding, so recognizing how important it is to re-evaluate and update your budget will be essential for optimal planning.
Fluctuations in the cost of living, healthcare inflation rates, funding opportunities, and more are likely to occur, and accounting for these changes can help you keep an accurate, flexible budget to account for your needs in the coming year. Calculating the operation, staffing, and equipment costs of the previous year can help you predict how much you need to include in your budget, but you should also be prepared to make adjustments as needed.
In light of the ongoing pandemic, healthcare executives should recognize that flexibility is critical, especially in this industry. A skilled nursing facility’s budget plan should be reflective, analytical, and adaptable in order to accommodate unexpected changes or shifting needs of the care center, its residents, or its staff. While next year may still feel like a ways away, getting started on a budget plan now can help you be more prepared for 2022.
