Providers estimate lost revenues in response to FY2012 SNF payment cut

Several skilled nursing and senior living chains released Monday preliminary estimates of lost revenue in light of last Friday’s final rule (PDF) from the Centers for Medicare & Medicaid Services (CMS), which announced a $3.87 billion payment reduction to SNFs for fiscal year 2012.

Brookdale Senior Living anticipates the payment reduction “will reduce full year Cash From Facility Operations in the range of $20 million to $25 million,” it said in a statement. “The company’s current annual run rate for skilled nursing revenue that is paid for by Medicare or by managed care entities that reimburse using the [Prospective Payment System] is in the range of $180 million to $185 million.”

Sunrise Senior Living, of which skilled nursing units comprise three percent of the company’s units, said that assuming this cut had been in place for 1Q2011, “the company estimates that reported first quarter 2011 consolidated net income and adjusted EBITDA would have each been reduced by approximately $1 million,” according to a statement.

Boyd Hendrickson, chairman and CEO of Skilled Healthcare Group, said in a statement that the company was “extremely disappointed” with CMS’ announcement on Friday. “We are currently in the process of fully assessing the effect of the final rule on our operations and will update our 2011 full year guidance when our assessment is complete,” the statement read.

Shares of Skilled Healthcare Group dropped by 44 percent down to $4.91 per share on Monday. “Hardest hit was Sun Healthcare, which lost [more] than half of its value in afternoon market action, falling more than 55 [percent] to $3.10 a share,” Barron’s reported.

At 1 p.m. Monday, shares of Kindred Healthcare slipped 30 percent to $13.13 per share.

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