A Tale of Two Nursing Facilities

May 9, 2023
At SilverSage, we champion the model of placing a full-time doctor in each nursing home. There are many reasons for this, of course, paramount being the quality of care this affords each patient. 

It was the best of care, it was the not-so-best of care.

By Dr. Kenneth Scott Jr., D.O., CMD


At SilverSage, we champion the model of placing a full-time doctor in each nursing home. There are many reasons for this, of course, paramount being the quality of care this affords each patient. 

I choose the word “affords” purposely, because facility administrators tend to use it when explaining their perceived roadblocks to hiring a full-time doctor on staff. As in, “How can we afford to hire a full-time doctor when there are less-expensive personnel options available?”

Admittedly, a full-time doctor’s salary is an upfront investment. But the savings come in myriad ways that are easily overlooked by those focusing solely on the immediate bottom line.

To illustrate those long-term savings, I’d like to share an example of two seemingly similar nursing homes that experienced very dissimilar outcomes over a period of years.


Equal Starting Points 

Not too long ago, I was approached by two different buildings run by the same company. These two facilities had a lot of similarities, including the following:

  • They were both beautiful facilities that had been built within a year of each other.
  • They were both located in the suburbs but different sectors of the same city. One was situated in the northeast sector, and the other in the metropolitan city’s southeast suburb.
  • Due to their proximity to each other, they both drew patients from the same hospitals on the east side of the city.
  • Both buildings offered a full array of services, including physical therapy, occupational therapy, speech therapy, etc.
  • They both had beautiful rehab gyms, wonderful, protected courtyards, and many private and semiprivate rooms.

Because of how beautiful both buildings were, the only pull for patients to transfer to either building was the proximity of friends and family for support of the patient. For all intents and purposes, the two facilities started out on equal footing and were essentially mirror images of each other.


Subtle Changes Noted

For the first year, occupancy at the two buildings was nearly identical. There were natural ebbs and flows in the number of skilled and long-term care patients at any given time, but over a given year, their average daily census was almost equal.

As time progressed, however, two trends were noted. The southeast facility, which we’ll call Building 1, began to run a slightly higher census. After that trend had continued for another year, the administrator of the northeast facility (Building 2) reached out to me for some help.

I traveled to the building and met with the administrator in person. He expressed concern that despite having adequate census in his building, he couldn’t seem to get his budget under control.

He noted that he had met with his direct counterpart from Building 1 in an attempt to understand why that facility was always able to make or exceed budget, while his could not. Servicing of the debt between the facilities was nearly identical, and there wasn’t enough of a difference in census or staffing to account for the budget discrepancies. Additionally, there was no difference in the complexity of the patients each facility admitted.

Considering the two care facilities remained mostly identical, he was puzzled by the contrasting states of their budgets.

At this point in our conversation, this administrator proceeded to show me the financial difference between the two buildings that he had discovered while meeting with his colleague. It appeared that there were three things that contributed to his losses while making the other building profitable.

Difference 1

The first difference was that over time, the skilled census in Building 1 had crept ahead of Building 2 by between three to five average daily census. Over the course of a year, this difference added significantly to the profits of the first building.

Difference 2

The next difference involved ancillary services. The second building had almost double the overhead in radiology costs, lab costs, and pharmaceutical costs when compared to its sister facility.

Difference 3

The third difference, which I needed to educate this administrator about, was the fact that the first building had a full-time doctor in-house. That doctor was responsible for the care of over 90 percent of the patients in the building. The vast majority of ancillary services utilization was ordered by this doctor. Building 2, on the other hand, used various community physician groups in the area. There was either a doctor or a nurse practitioner in the building every day, just as in the first building—however, it was not usually the same clinician.

I recommended that if the second facility wanted to mirror the results of its counterpart, then naturally it should duplicate its model of having a full-time doctor on staff. This administrator, however, did not feel this was a workable solution, politically, for his building and instead asked that I speak with the community clinician groups to help educate them on clinical practices in post-acute and long-term care.


The Full-Time Doctor Difference 

Having a full-time doctor in the building each day clearly helped create the three to five average daily census increase in the first facility. But how, exactly?

The difference was achieved through a variety of methods. One big factor was the reduction in rehospitalization rates, allowing for patients to safely remain in the skilled facility and continue their rehab. With time, the census grew even more as hospitals in the area preferred to send patients to Building 1 because their own rehospitalization rates improved, which helped them avoid Medicare penalties. The reputation of Building 1 also improved because patients were getting better and returning home sooner. For those reasons, it became the preferred building in the community.

Since the first facility employed a full-time doctor on staff, he had the time to evaluate patients immediately when a slight change in condition occurred. This resulted in keeping patients stable in the nursing home. In many cases, because the doctor was able to go to the bedside and examine the patient, only minimal and specific tests needed to be ordered. This reduced lab X-ray and pharmaceutical costs to nearly 50 percent of what Building 2 was spending.

Medications were regularly reviewed by the doctor, and efforts were consistently made to reduce medications on a daily basis. Furthermore, with gradual dose reduction, the doctor was present daily to monitor for any adverse effects. And, due to close observation, antibiotics were ordered less frequently. 

Because the same doctor was present every day, education of nursing staff occurred routinely at the bedside. This improved the reporting by members of the nursing staff and strengthened their assessment skills. Instead of nurses placing a page to a doctor who was not present at the facility, then waiting for hours to receive a call back, the nurses were able to communicate their concerns in real time. This reduced Building 1’s overtime because doctors were there to write orders immediately and nurses were not left with a call that was returned at the end of their shift, requiring them to spend hours after their shift to write verbal orders and document conversations. In my experience, this type of thing happens frequently in facilities where primary physicians are not on staff but instead split time between their own practices and multiple nursing homes.


Good Care Costs Less

I did eventually meet with the community clinician groups that provided services to Building 2. I explained the difference in utilization costs, and the better outcomes obtained by the building with less resource utilization.  

Despite my efforts, however, it quickly became clear that the incentives of the community groups were not aligned with those of the facility. Although one would naturally assume that clinicians and facilities would work in concert to provide the best service possible, and certainly those aspirations were verbalized by both parties, the unintended consequences of providing care in disparate models resulted in higher costs—not only to the facility, but also to Medicare and, most importantly, the patient. Ultimately, it is the patients who bear the monetary and physiologic burden of less-than-the-best care. 

It is often said that good health care costs less. I believe this to be true—but in order to experience this difference, there’s often a realignment of budgets and shifting of dollars and politics that must first take place.

Kenneth L. Scott Jr., DO, CMD

Kenneth L. Scott Jr., DO, CMD

CEO of SilverSage Management Services

Dr. Kenneth L. Scott Jr., DO, CMD, is a proud father, husband, and experienced medical professional with over 30 years of experience. From serving in management as a certified medical director, to belonging to numerous medical societies, he leads with a vision to change medicine for the better.


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