Leadership

New year, new challenges and opportunities: Strategies for success in 2024

Written by Brandon Tappan, Chief Revenue Officer, ShiftKey

December 19, 2023

As we embark on 2024, the healthcare facilities landscape is poised for significant evolution, shaped by demographic trends, labor dynamics, technological advancements, capital market pressures, managed care expansion and regulatory shifts. Drawing from my extensive experience in long-term care leadership, here are some insights that may aid facility operators in navigating the upcoming year.

Occupancy growth: Approaching pre-pandemic highs

The surge in occupancy rates is expected to continue in 2024, driven largely by an aging population, presenting a unique set of opportunities and challenges. On the one hand, higher occupancy means increased revenue potential and greater utilization of facility resources. This uptick offers a chance to expand services and invest in quality improvements, aligning with the growing demand. In the third quarter of 2023, occupancy in skilled nursing facilities reached 82.2% among standalone nursing homes, an 850 basis point increase from the pandemic’s low point (Skilled Nursing News).

However, higher occupancy levels could strain existing resources and exacerbate some workforce challenges. Facilities may want to innovate in their resourcing solutions and look to technology to help streamline operations. There's also the challenge of maintaining high standards of care amidst increased demand, requiring strategic planning and resource allocation. As competition intensifies in a crowded market, differentiating services and maintaining high resident care and satisfaction will be key to success.

Workforce challenges: A continuing saga

Workforce challenges, particularly in post-acute care, will persist as a critical concern in the new year. Despite isolated improvements, the broader sector is still far from pre-pandemic employment levels. This situation presents some opportunities to embrace innovative recruitment and retention strategies. Facilities can explore new avenues like partnering with educational institutions, offering competitive benefits and utilizing technology for efficient workforce management.

These challenges bring potential risks, including burnout among staff, difficulty in maintaining care quality and the financial strain from higher pay demands. In addressing these challenges, facilities might consider innovative workforce solutions that diverge from the traditional temporary staffing agency model. Embracing technology-driven platforms like ShiftKey that are not employment agencies can offer a more flexible and efficient approach to workforce program management. This method aligns with the evolving needs of healthcare facilities, fostering a sustainable work environment that supports optimal patient-to-healthcare professional levels and maintains high care quality without the pitfalls of conventional temporary staffing methods.

Technology: The rise of AI in patient care

The embrace of technology, especially AI-driven patient monitoring systems, is transforming healthcare delivery. McKinsey estimates a 10% compound annual growth rate (CAGR) between 2021 and 2026 in healthcare technology adoption, with the sector reaching $81 billion by 2026 (McKinsey & Company). These systems offer numerous benefits, such as real-time health data analysis, predictive insights for early intervention and streamlined operations, allowing facilities to do more with less and enhance patient outcomes.

There are considerations, such as risk of over-reliance on technology, potential privacy concerns and the need for ongoing internal staff training. Facilities must also evaluate the financial impact of investing in advanced technology, balancing short-term costs with long-term gains. Integrating these technologies requires careful planning to ensure they support, rather than replace, the human element of care.

Capital market pressures: Navigating financial challenges

Facilities in 2024 will face a complex financial landscape. As PwC reports, there's cautious optimism with stabilizing inflation and interest rates offering reasons for hope (PwC). Inflation, which has been persistent, appears to be receding with real GDP growth expected to slow down in 2024. However, facilities should prepare for a "higher-for-longer" rate environment and deficit concerns that could impact growth.

Addressing these issues requires innovative financial strategies. Vanguard's economic outlook suggests that higher interest rates will persist, impacting borrowing, savings behavior and capital allocation (Vanguard). Exploring alternative funding sources or grants, and leveraging financial technology for efficient capital management may be warranted in this environment. Facilities might also consider restructuring debts or renegotiating terms to alleviate financial strain.

The expectation of limited interest rate increases provides an improved market tone for deals, which could influence refinancing activities and leveraged finance issuance (PwC). While these pressures may challenge expansion plans, they also present opportunities for strategic investments in areas that yield significant ROI, such as technology solutions that can drive operational efficiencies and enhance patient care, and staff development, which is crucial for maintaining quality service. Prioritizing these types of expenditures will be critical in navigating a shifting financial landscape, as technology investments are not just cost factors but essential to ensure sustainable growth and improved care outcomes.

Managed care expansion: Adapting to Medicare Advantage

The expansion of Medicare Advantage will continue to impact post-acute revenue streams. Over 30.8 million people are enrolled in Medicare Advantage plans, accounting for more than half (51%) of the eligible Medicare population in 2023 (Kaiser Family Foundation). Facilities may need to focus on efficient care delivery that aligns with the requirements of managed care, perhaps investing in technology to track and report care outcomes more effectively or revising care procedures to ensure compliance with Medicare Advantage standards. Balancing these changes with the need to maintain high-quality care will be important for facilities navigating this evolving reimbursement landscape.

Regulations: Preparing for staffing mandates & election year

The Centers for Medicare & Medicaid Services (CMS) issued a federal nursing home staffing mandate proposal in September 2023, specifying minimum requirements for patient-to-healthcare provider ratios in Medicare- and Medicaid-certified nursing homes (Skilled Nursing News). The proposal requires a minimum of 0.55 hours of care from a registered nurse per resident per day and 2.45 hours of care from a nurse aide per resident per day. Non-rural nursing homes have three years, while rural nursing homes have five years, to meet standards. Additionally, RNs would need to be on-site at facilities around the clock and tightens care assessment requirements.

This proposal has sparked significant industry resistance. Critics argue that no mandated patient-to-healthcare provider ratios guarantee quality care and that a lack of available workers and insufficient funding make the mandate unfeasible. The mandate does not account for the current workforce shortage and financial challenges facing the long-term care sector. There is a call for more meaningful solutions to build the workforce pipeline and increased reimbursement rates to cover the cost of care and raise pay.

The election year of 2024 adds complexity, as political shifts could impact policies and their enforcement. Facilities need to stay informed and adaptable, preparing for implementation of potential mandates while maintaining operational efficiency and quality care in a sector already facing workforce shortages. Conversely, these mandates could offer an opportunity for facilities to reevaluate and enhance their workforce models, which could lead to improved care outcomes and a more stable workforce.

Conclusion

In 2024, care facilities face a dynamic and challenging environment. Embracing occupancy growth, addressing workforce challenges, leveraging technology, navigating financial pressures, adapting to managed care, and preparing for regulatory changes will be key focus areas. At ShiftKey, we're dedicated to supporting facilities through these transitions with innovative workforce technology solutions and insights.

Together, we can shape a future where quality care and operational excellence coexist.