What's Happening in Healthcare: Q2 2025

In this edition of VistaRx's quarterly newsletter, we dive into the financial and operational pressures facing skilled nursing facilities (SNFs) as they navigate rising costs, shifting payer mixes, and the ongoing uncertainty around Medicaid funding. We also spotlight the growing role of artificial intelligence and predictive analytics in long-term care and share strategies to heal you get ahead of escalating drug costs with purpose-built pharmacy data solutions.

Quick Stats

• Long-term care room costs rose 7% — 9% between 2023 and 2024, with the price for a semi-private nursing home room climbing to over $111,000 annually Skilled Nursing News.

• Over three-quarters of states increased their Medicare SNF rates in fiscal years 2024 and 2025, reflecting efforts to shore up reimbursements amid budget pressures MedPAC.

• 29% of healthcare leaders are currently investing in generative AI technologies, and 56% plan to do so within the next three years, underscoring AI's rapid rise in clinical and operational applications. Vention

• Average SNF occupancy in the US for 2024 has reached 77%, showing consistent growth since its 2021 low of 67%. Pre-COVID, occupancy sat at around 80% on average. Kaiser Family Foundation

Medicaid Funding Cuts Passed, but Long-Term Impact Uncertain… Still

Congress's recent budget reconciliation package, passed May 14th, 2025, includes several provisions that could reduce federal Medicaid spending by up to $880 billion over the next decade, including caps on the Federal Medical Assistance Percentage (FMAP) and elimination of certain provider tax mechanisms (KFF).

While the federal government traditionally covers an average of 69 percent of Medicaid costs nationwide, that match rate typically ranges from 50 to 77 percent, depending on the state's FMAP designation (Peterson Foundation).

The Hill reports that the recently passed provisions would result in millions losing Medicaid coverage, according to a partial analysis by the Congressional Budget Office (CBO). For safety net hospitals and post-acute care providers, it is unclear how these provisions will impact long-term operations. However, it is likely to take many forms depending on how individual states react to these changes.

Operating Costs, Payer Mixes, and Reimbursement Projections in Post-Acute Care

Since the occupancy rebound of skilled nursing and long-term care facilities, attention remains on improving the efficiency of facility operations in pursuit of increasing quality. Growing Medicare Advantage (MA) adoption, now accounting for approximately 50% of enrollment, alongside steady PDPM rates, has allowed some more breathing room for operators to assess operations and make plans.

A growing consideration for strategic leaders is their patient mix, with some post-acute care providers keeping a close eye on their balance of Medicare, Medicaid-supplemented, and MA residents. As reimbursement shifts between payment models, this will become an increasingly important leadership initiative that goes beyond increasing referrals.

Length of Stay and Medicare Rates

Regulators have been avoiding increasing Medicare rates, citing the desire to deny some incentives for SNFs to select patients based on payer sources. While seemingly rare, some dual-eligibles, for example, inadvertently increase their length of stay by experiencing a rehospitalization, which can increase reimbursement to the provider.

Routine Costs Up, Margins Healthy

Routine costs-per-day have been increasing, in part due to increased labor costs, ie., a combination of higher wages, contract staff, and a decline in the nurse aids to skilled nurses mix. Despite this, the majority of SNFs have seen fee-for-service profit margins remain strong at around 40% for non-hospital-based inpatient rehab facilities. The projected FFS Medicare margin for 2025 was forecast to be approximately 16%, although it is difficult to estimate how much new Medicaid funding provisions could impact this projection.

Integration of Artificial Intelligence (AI) and Predictive Analytics in Long-Term Care

While the promise of AI to transform care delivery is widely pitched across the industry, adoption in long-term care and skilled nursing has seen a relatively linear path. Predictive models relying on remote patient monitoring hardware have become the most common application.

These supplemental care systems depend on monitoring vitals and modeling based on patient data to "predict" changes in a resident's health. These tools and systems offer staff a certain amount of relief, enabling remote oversite of residents, but also create their own workload, requiring staff to review a secondary set of patient charts and dashboards.

No less, the arrival of AI-powered care is here, and consumers appear ready to embrace it.

Artificial intelligence (AI) is making is way into healthcare.

1 in 5 consumers is ready to use GenAI as a doctor's assistant.

80% of 18 — 34 year olds are willing to use GenAI for routine healthcare activities.

60% of consumers 55+ are willing to use GenAI for routine healthcare activities.

Source: https://www.pwc.com/us/en/industries/health-industries/library/healthcare-trends.html

Controlling Drug Costs

At VistaRx, we understand that drug spend often represents one of the largest and most volatile line items on your budget. That's why our integrated suite of pharmacy data solutions gives you real-time visibility and control over every claim, rebate, and price adjustment:

• Focus by Vista converts raw pharmacy data into actionable insights, so you can immediately identify high-cost therapies and implement targeted cost-containment measures.

• Clean Bill ensures accurate billing at the point of dispense, preventing unintended Part A billing gaps and eliminating costly coverage lapses that drive up net spend.

• Our Advocacy and Expertise team works alongside your clinical and finance leaders to optimize formulary design, oversee therapeutic interchanges, and negotiate rebate opportunities delivered with transparent, analytics-driven reporting.

With VistaRx, you're partnering with experts in the pharmacy value chain committed to driving 8% average reductions in net drug costs, enhancing adherence, and maximizing rebate recovery.

Control your drug spend, optimize your operations, and refocus your resources on resident care.

Contact us today