Katherine: Hello everyone. Thank you so much for joining us today on This Needs To Be Said. We are joined by our friend Paul Contris, and he’s going to get us up to speed on these changes that we are going to be experiencing in the very near future if you are considering using, or if you are using the Affordable Healthcare Act, as well as, we’re going to talk a little bit about the workforce.
Paul, welcome back. How are you?
Paul: Good. How are you Katherine?
Katherine: I’m doing good. I think for me the Affordable Healthcare Act has gotten really confusing, so I’m looking forward to what you have to share about that.
Paul: Well, unfortunately I’m not an expert on the Affordable Care Act, but I can comment on how it might impact our industry, the long-term care industry, senior care industry. Obviously I’m in favor of having more people insured, and that’s something that basically costs money. I mean, our health insurance costs have gone up as a result of the Affordable Care Act. But, whatever the numbers, I don’t know how exact they are, there are 23 million people that are on health insurance roles, and what they’re contemplating right now is, you need a crystal ball to know how it’s going to end up, but one of the provisions that’s included in with the healthcare ballot, is going to block grants for Medicaid by state.
That’s something that we’re very concerned about, because really what that would do is, it would reduce the funding for nursing home services, fairly dramatically, if they do that. Right now the federal government matches what the states pay on Medicaid for nursing home services. So that’s a big substantial portion of our patients; most are on Medicaid, over 50% of our patients are. So a substantial portion of our revenues come from Medicaid.
Typically Medicaid doesn’t cover the cost for those patients in general, and we’re kind of forced to make our margins by the private, the insurance, and the Medicare patients. Really, if you look at the industry, our average margins when all is said and done, are well under 5%. So it’s a pretty slim margin business. Actually, right now the industry in general is probably … Many companies are actually not making money, and we’ve got a lot of pressure on both sides of the equation; on the revenues and expenses.
The idea that they would block grants and further reduce Medicaid reimbursement is very concerning to us. We’re doing everything we can to let our legislators know that we need to have some help in that arena. There has been some talk of carving out the Medicaid reimbursement for seniors with this new legislation, or whatever, we may end up with the new republican legislation.
Obviously that’s something we’re very in-tuned to, and keeping an eye on, and we’re hopeful that it will not significantly reduce our revenues going forward, because things are pretty tight as they are. I think we’re going to talk a little bit today about what’s going on in the labor front. The good news, I guess, is for the labor pool in general in the country, the unemployment rate is low and wages are going up, and that’s good for the country, it’s good for the employees. But it does put pressure, you know, increases our expenses. So we’re having to kind of deal with that challenge. Obviously we have to increase our wages; is one way of dealing with it. But the other way is just by being better employers.
People in general I think, they’re definitely motivated by money to a certain extent, but they’re also motivated by having a job that they feel appreciated at, and that’s fulfilling for them. What we’re working hard on is working with our human resources department to … We do interviews and we’re having our employees critique how they feel they’re being treated, and we’re taking that information and acting on it, and trying to make our work environment a more positive and pleasant place for them.
Because we think that’s good … And obviously you’ve got to be competitive on wages, and if wages in general are going up, you’ve got to increase your wages. But we think it’s just as important if not more important to work with our leadership and our management department heads to get them to really create a positive work environment for our employees. And that, we’re finding, is really helping as far as the retention and recruitment. Because word of mouth is a big deal in a lot of our communities. If you’re known as a good place to work, it’s going to help you get those people, recruit those people, and then obviously help you retain them, which we have.
Katherine: Absolutely. I wanted to ask, what would it mean … Because you said, “We’re reaching out … ” I want to go back a little bit in the interview. You said, “We’re reaching out to our legislator and letting them know we need this funding.” What happens if you don’t get the funding? How does this affect the patients that are there? Or how does this affect the families?
Paul: Well, I mean, that’s a real good question. They’re already putting, like I said, they’re putting downward pressure on what they’re paying us, and they’re demanding, they want more care, they want more hours. You know, we’re taking care of more medically complex people. And it’s really a tough situation to be in, where people want more for less, and we’re trying to figure out how we can do that and still give high level quality of care to our patients. I mean, obviously if at some point they’re not going to reimburse you enough to cover your expenses, you’re going to go out of business. Then nursing homes are going to close, and then that’s not going to be good for the patients. Because then instead of being able to go to a facility, maybe in their home town, they’re going to have to drive two hours, or move to a different town or something, and then they won’t be able to be around their children, their loved ones. It can create all sorts of problems.
Katherine: Do you recommend that the families also … Like, who do they need to be writing? Do you recommend the families write the legislator? Would that be effective?
Paul: Oh yeah. I mean, for sure. You know, their congressman, their senators, and let them know that they want to protect the funding for the elderly, and that they are opposed to the idea of the blocked grants, because the blocked grants basically are just going to ratchet down the amount of money spent on care for the elderly. The people that are on Medicaid, they’re on Medicaid for a reason. It’s because they don’t have the funds to be able to pay for nursing care. And once again, this is not the nursing home of 40, 50 years ago where people are being warehoused in nursing … I mean, anybody who doesn’t need 24-hour RN coverage is now in assisted living, or independent living. So the people that are in nursing homes now, by and large, have some sort of medically complex or chronic health issue where they need 24-hour nursing care. So what are you going to do with those people? Are you going to put them on the streets? They can’t live with their family because they need 24-hour nursing care.
Now, you could make an argument in, maybe independent living, or maybe even assisted is becoming much more service intensive. But maybe independent living, those people maybe could live with their children. But people in skilled nursing settings, really by and large can’t. There’s no real option for them. Some of them maybe could live at home with very intense home health assistance. But that’s very costly too. Which, they don’t have the money for that.
It’s a big issue, a big challenge this country is going to have to come to grips with, because the age wave really is going to hit in a couple of years. I think 2020 is when the age wave really takes off. It’s a big challenge for the country.
Katherine: Not long from now at all. Our time is about up, but I wanted to get into what this also means for the workforce.
Paul: Right. Well for the workforce, I think it’s a positive thing. I mean, obviously the demand is now kind of outstripping the supply. So I think it’s a good thing for the workforce. There’s going to be plenty of opportunity in our industry, in the senior care industry, particularly when the age wave hits. There’s going to be a lot of openings, a lot of employment opportunities.
Katherine: Mm-hmm. Pros and cons here.
Katherine: Paul, thank you so much for joining us on This Needs To Be Said and sharing this with us. Tell people how they can get in touch with you and your organization outside of This Needs To Be Said.
Paul: Our website is www.Welcov.com, that’s W-E-L-C-O-V, Welcov.com.
Katherine: All right. Until next time, Paul. Have a wonderful day!
Paul: You too! Thanks, Katherine!