Industry News Roundup: Policy Changes & Market Moves
Sellers Living in Fantasy Land
Lots of owners are grumbling lately. There seems to be a sentiment going around where sellers are asking for the price of what they think their facility will be worth after someone else spends years and millions adding value. Not to mention sweat equity and energy invested.
"This 120-bed facility has tremendous upside potential. With $3M in renovations, improved census management, and better payor mix, this could easily be worth $25M."
THE SKEPTICAL BUYER: You're asking me to pay Ferrari prices for a Honda because it could be a Ferrari if I spend another $100K upgrading it and oh by the way that will take two years in the garage to accomplish while I'm still paying through the nose to upgrade it all along the way.
THE SELLER'S DEFENSE: "Look, I've owned this place for 15 years. I know every inch of this building, every referral source, every staff member. I've built relationships that took decades to develop. You're not just buying bricks and mortar - you're buying decades of my work and all the goodwill that comes with it. Plus, I'm handing you a roadmap of exactly what needs to be done. That has value. I simply don't have the drive to do it on this home because I'm dealing with 14 others?"
WHAT SELLERS DON'T GET: The buyer has to carry all the risk, spend all the money, do all the work, and deal with survey headaches during construction. You want to get paid for their future effort and investment.
BOTTOM LINE: Price your facility for what it is today, not what it could be someday. The upside potential is exactly why buyers are willing to take the risk - but they're not paying you for it upfront.
The Big Beautiful Bill: What It Means For Your Bottom Line
That budget bill Congress passed on July 4th is bringing several changes that will hit nursing homes where it hurts - the payroll and the cash flow.
Your Payroll Just Got More Expensive
New Medicaid work requirements mean some of your lowest-paid workers (housekeeping, dietary) are about to lose government health coverage.
The Problem: When your housekeeper loses Medicaid, either they go without insurance (more sick days) or they want YOU to pick up more of their health insurance costs because they certainly can't.
The Reality Check: Probably not as apocalyptic as the industry publications make it sound. Most CNAs already got wage bumps post-COVID. We're talking about support staff, not core nursing workforce.
Bottom Line: Will it cost more? Sure. Will it kill your business? Only if your margins were already hanging by a thread.
Medicaid Pay Window Shrinks
Here's a fun little surprise buried in the Big Beautiful Bill: Medicaid's retroactive pay window just got cut from 90 days to 60 days starting January 2027.
Translation: If someone's Medicaid application takes longer to process, you're eating more unpaid days. Some providers may refuse Medicaid-pending patients rather than risk the bad debt. Because apparently nursing homes weren't stressed enough about cash flow already.
PACS Still Sinking
PACS Group tried to move their fraud lawsuits from New York to Utah and got denied by a federal judge. Stock's down 76% from its high, they haven't filed earnings since Q2 2024, and they're facing multiple investor lawsuits claiming they lied during their IPO about using COVID waivers to boost revenues.
When one of the largest SNF operators can't even file financial statements, it's not exactly building industry confidence. But hey, at least they're keeping the lawyers busy.
