Orange County’s three publicly traded nursing home chains and rivals are likely to see gains from changes in Medicare payments in 2011, according to an industry analyst.
The industry could post strong earnings growth next year because of a “favorable Medicare reimbursement environment and stable operating costs,” said Robert Mains of Memphis-based Morgan Keegan & Co.
Orange County is home to Irvine-based Sun Healthcare Group Inc., Skilled Healthcare Group Inc. of Foothill Ranch, and the Ensign Group Inc., which is out of Mission Viejo.
Medicare launched a new reimbursement system in October in which it pays nursing homes per patient day, with rates based on how complex the services patients receive.
The changes allow nursing home companies to treat patients whose reimbursements were previously inadequate.
Larger, publicly traded chains will be able to take advantage of the changes because they have the economies of scale to do so, said Mains, who follows Sun and Skilled.
Mains also said that he expected Medicaid nursing home rates to stay relatively stable despite concerns about cuts due to state budget problems.
