A new report by the Urban Institute for the Medicare Payment Advisory Commission examines the reasons that more than a third of hospital-based skilled nursing facility units have closed since the Medicare SNF prospective payment system was implemented in 1998. Financial losses played a large role in the hospitals that shut down SNF units. Costs exceeded Medicare payments, the nursing shortage required some hospitals to staff their units with agency nurses, and physicians who had easy access to hospital-based SNF patients tended to visit them more frequently and order more tests. The hospitals also said the units detracted from their mission of providing acute medical care and that they needed the space occupied by the unit for expanded acute care. Burdensome SNF surveys and certification requirements were also barriers to keeping the units open.
In contrast, hospitals who maintained their SNF units said that even though they suffered financial losses, the units were serving a broader goal of providing continuity of care, maintaining good relations with physicians, and providing training for healthcare professionals. “Financial pressures resulting from the PPS meant that hospitals had to carefully consider the relative importance of different goals,” states the report. “Whatever choices were made, however, do reflect their primary acute care mission.”
