COVID-19 PANDEMIC

6 Months Ended

Jun. 30, 2020

Unusual or Infrequent Items, or Both [Abstract]

COVID-19 PANDEMIC

COVID-19 PANDEMIC

As of June 30, 2020, the Company has received $31,180 of Medicare stimulus funds, and recognized $5,148 as income, which is reflected in "other operating income" in the Company's results of operations for the three and six month periods ended June 30, 2020. For the six months ended June 30, 2020, the Company utilized $712 of stimulus dollars to fund capital improvements to prevent the spread of COVID-19. The remaining stimulus funds of $25,320 as of June 30, 2020 are classified as "deferred income" on the interim consolidated balance sheet. Additionally, the Families First Coronavirus Response Act provided states with a temporary increase in the regular federal matching rate, or federal medical assistance percentage, used to determine the federal government's share of the cost of covered services in state Medicaid programs, provided the states agreed to certain conditions such as not imposing cost-sharing requirements for COVID-19-related testing and treatment. The Company received $4,203 and $5,064 for the three and six month periods ended June 30, 2020, respectively, of Medicaid and Hospice dollars related to this temporary increase in the federal matching rate, which related to patient services rendered between March and June 2020 and is reflected in "patient revenues, net" in the Company's results of operations for the three and six month periods ended June 30, 2020. The Company expects that it will fully utilize the stimulus funds received through June 30, 2020 in accordance with the terms and conditions of the stimulus programs.

Also, the Company has elected to participate in the payment deferral of the employer's portion of Social Security taxes that are otherwise due from March 27, 2020 through December 31, 2020, with 50% of the deferred amount due December 31, 2021 and the remaining 50% due December 31, 2022. To date, the Company has deferred $3,185 of Social Security taxes which is presented as "payroll and employee benefits, less current portion" on the Company's balance sheet as of June 30, 2020.

The CARES Act also includes other provisions offering financial relief, for example lifting the Medicare sequestration from May 1, 2020 through December 31, 2020, which would have otherwise reduced payments to Medicare providers by 2%. For the three and six month periods ended June 30, 2020, the suspension of the Medicare sequestration positively impacted net patient revenues by $307.

The Company incurred an additional $2,200 of salaries expense, $1,100 of supplies expense and $100 of travel expense related to the COVID-19 pandemic for the three month period ended June 30, 2020. The Company incurred an additional $2,600 of salaries expense, $1,200 of supplies expense and $100 of travel expense related to the COVID-19 pandemic for the six month period ended June 30, 2020. These expenses are reflected in "operating expense" in the Company's results of operations for the three and six month periods ended June 30, 2020.

The Company is closely monitoring and evaluating the impact of the COVID-19 pandemic on all aspects of its business. We have identified team members and patients who have tested positive for COVID-19 at a number of our centers, and we have incurred an increase in the costs of caring for the team members, patients, and residents in those centers. The Company has also experienced reduced occupancy at its centers and has incurred additional expenditures preparing its centers for potential outbreaks and maintaining the healthcare delivery capacity of its centers. While we have experienced reduced occupancy and increased expenses, we received additional stimulus funds through the CARES Act, PPPHCE Act, and the Families First Coronavirus Response Act during the second quarter of 2020, which have been used and are expected to continue to be used to mitigate the impact of the lost revenues associated with the reduced occupancy as well as the increased expenses, and any cash flow or liquidity impacts therefrom. The Company has an interdisciplinary team monitoring and staying up to date on the latest information about the virus and its prevalence. The Company has implemented precautionary measures and response protocols to minimize the spread of the virus, following guidance from CMS and the CDC, but the Company nevertheless expects additional cases of the virus will occur at these and other facilities. The Company is continuing to evaluate and consider the potential impact that the virus may have on its liquidity, financial condition and results of operations due to numerous uncertainties. However, given the uncertainty as to the duration of the COVID-19 pandemic and the timing and availability of effective medical treatment and vaccines, it could have a material adverse effect on the Company's future results of operations, financial condition and liquidity.