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Three paths to organizational
self-care
for state public health agency survival

11.11.20

The American Public Health Association annual conference’s thematic focus on preventing violence provided an illustration of the extent of the overwhelming demands on state public health agencies right now. Not only do you need to face the daily challenges of responding to the COVID-19 pandemic, you also need to address ongoing, complex issues like violence prevention.

The sheer breadth of sessions available at APHA shows the broad scope of public health’s reach and the need for multi-level, multi-sector interventions, all with a shrinking public health workforce. The conference’s sessions painted clear pictures of the critical public health issues our country currently faces, but did not showcase many solutions, perhaps leaving state health agency leaders wondering how to tackle these taxing demands coming from every direction with no end in sight.

BerryDunn has a suggestion: practice organizational self-care! It might seem antithetical to focus maxed-out resources on strengthening systems and infrastructure right now, but state public health agencies have little choice. You have to be healthy yourself in order to effectively protect the public’s health. Organizational health is driven by high-functioning systems, from disease surveillance and case investigation to performance management, and quality improvement to data-informed decision-making.  

State health agencies can use COVID-19 funding to support organizational self-care, prioritizing three areas: workforce, technology, and processes. Leveraging this funding to build organizational capacity can increase human resources, replace legacy data systems, and purchase equipment and supplies. 

  1. Funding new positions with COVID sources can create upward paths for existing staff as well as expanding the workforce
  2. Assessing the current functioning of public health data systems identifies and clarifies gaps that can be addressed by adopting new technology platforms, which can also be done with COVID funding.
  3. Examining the processes used for major functions like surveillance or case investigation can eliminate unproductive steps and introduce efficiencies. 

So what now? Where to start? BerryDunn brings expertise in process analysis and redesign, an accreditation readiness tool, and an approach to data systems planning and procurement―all of which are paths forward toward organizational self-care. 

  1. Process analysis and redesign can be applied to data systems or other areas of focus to prioritize incremental changes. Conduct process redesign on a broad or narrow scale to improve efficiency and effectiveness of your projects. 

  2. Accreditation readiness provides a lens to examine state health agency operations against best practices to focus development in areas with the most significant gaps. Evaluate gaps in your agency’s readiness for Public Health Accreditation Board (PHAB) review and track every piece of documentation needed to meet PHAB standards.
  3. Data system planning and procurement assistance incorporates process analysis to assess your current system functioning, define your desired future state, and address the gaps, and then find, source, and implement faster, more effective systems. 

Pursuing any of these three paths allows state health agency leaders to engage in organizational self-care in a realistic, productive manner so that the agency can meet the seemingly unceasing demands for public health action now and into the future.

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Truly effective preventive health interventions require starting early, as evidenced by the large body of research and the growing federal focus on the role of Medicaid in addressing Social Determinants of Health (SDoH) and Adverse Childhood Experiences (ACEs).

Focusing on early identification of SDoH and ACEs, CMS recently announced its Integrated Care for Kids (InCK) model and will release the related Notice of Funding Opportunity this fall.

CMS describes InCK as a child-centered approach that uses community-based service delivery and alternative payment models (APMs) to improve and expand early identification, prevention, and treatment of priority health concerns, including behavioral health issues. The model’s goals are to improve child health, reduce avoidable inpatient stays and out-of-home placement, and create sustainable APMs. Such APMs would align payment with care quality and support provider/payer accountability for improved child health outcomes by using care coordination, case management, and mobile crisis response and stabilization services.

State Medicaid agencies have many things to consider when evaluating this funding opportunity. Building on current efforts and innovations, building or leveraging strong partnerships with community organizations, incentivizing evidence-based interventions, and creating risk stratification of the target population are critical parts of the InCK model. Here are three additional areas to consider:

1. Data. States will need information for early identification of children in the target population. State agencies?like housing, justice, child welfare, education, and public health have this information?and external organizations—such as childcare, faith-based, and recreation groups—are also good sources of early identification. It is immensely complicated to access data from these disparate sources. State Medicaid agencies will be required to support local implementation by providing population-level data for the targeted geographic service area.

  • Data collection challenges include a lack of standardized measures for SDoH and ACEs, common data field definitions, or consistent approaches to data classification; security and privacy of protected health information; and IT development costs.
  • Data-sharing agreements with internal and external sources will be critical for state Medicaid agencies to develop, while remaining mindful of protected health information regulations.
  • Once data-sharing agreements are in place, these disparate data sources, with differing file structures and nomenclature, will require integration. The integrated data must then be able to identify and risk-stratify the target population.

For any evaluative approach or any APM to be effective, clear quality and outcome measures must be developed and adopted across all relevant partner organizations.

2. Eligibility. Reliable, integrated eligibility and enrollment systems are crucial points of identification and make it easier to connect to needed services.

  • Applicants for one-benefit programs should be screened for eligibility for all programs they may need to achieve positive health outcomes.
  • Any agency at which potential beneficiaries appear should also have enrollment capability, so it is easier to access services.

3. Payment models. State Medicaid agencies may cover case management services and/or targeted case management as well as health homes; leverage Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) services; and modify managed care organization contract language to encourage, incent, and in some cases, require services related to the InCK model and SDoH. Value-based payment models, already under exploration in numerous states, include four basic approaches:

  • Pay for performance—provider payments are tied directly to specific quality or efficiency indicators, including health outcomes under the provider organization’s control. 
  • Shared savings/risk—some portion of the organization’s compensation depends on the managed care entity achieving cost savings for the targeted patient population, while realizing specific health outcomes or quality improvement.
  • Pay for success—payment is dependent upon achieving desired outcomes rather than underlying services.
  • Capitated or bundled payments—managed care entities pay an upfront per member per month lump sum payment to an organization for community care coordination activities and link that with fee-for-service reimbursement for delivering value-added services.

By focusing on upstream prevention, comprehensive service delivery, and alternative payment models, the InCK model is a promising vehicle to positively impact children’s health. Though its components require significant thought, strategy, coordination, and commitment from state Medicaid agencies and partners, there are early innovators providing helpful examples and entities with vast Section 1115 waiver development and Medicaid innovation experience available to assist.

As state Medicaid agencies develop and implement primary and secondary prevention, cost savings can be achieved while meaningful improvements are made in children’s lives.

Article
Three factors state medicaid agencies should consider when applying for InCK funding

Is your state Medicaid agency considering a Centers for Medicare and Medicaid Services (CMS) Section 1115 Waiver to fight the opioid epidemic in your state? States want the waiver because it provides flexibility to test different approaches to finance and deliver Medicaid services. The skyrocketing prevalence of substance use disorders nationwide calls for such flexibility and innovation to expand existing services for treatment and recovery. Although applying for an 1115 waiver can be daunting, here are some guidelines to help you succeed with implementation.

Be pragmatic
Be honest and pragmatic in planning discussions for the essential resources you need to have in place for a successful implementation. Ask yourselves who and how many people you need to involve to develop and execute each stage. Plan enough time to develop policies and agency protocols, make sure you have the right providers for your members, set provider rates, and then train the providers.

Ask hard questions
Once you identify key requirements to address first in your waiver, ask yourself what elements need to be in place to meet these requirements. Here are elements to consider and questions to answer:

  • Fee-for-service and managed care organization (MCO) rates — new services, such as adult residential treatment services aligned with care standards (e.g., American Society of Addiction Medicine (ASAM®) levels), may require changes to reimbursement rates. What needs to happen to develop new rates? What obstacles do you anticipate and how will you overcome them?
  • Care standards (e.g., ASAM® levels of care) and training your providers — consider what the levels mean given the range of providers in your state and the services your members receive. What is required to move to these standards? How you will work with providers to ensure adherence, including certification and training? What will this cost?
  • Policy changes — your state’s Medicaid agency will need to revamp and create policies to cover the service expansion and other changes. How will you complete all necessary policy and protocol changes early enough to inform MCO and provider actions?
  • MCO provider network adequacy — it’s worth investing the time in your application development to assess whether the MCOs serving Medicaid recipients in your state have the right mix of providers to ensure that you can fully implement the new service structure. How long should you give the MCOs for network expansion or recruitment?
  • MCO care coordination guidelines — each MCO will have its own approach. How are you going to ensure adherence to your waiver’s vision of care coordination?
  • Indicators — how will you evaluate the success of your program? How will you collect and analyze data? The earlier you determine how you will evaluate your program, the easier it will be to report on, and make improvements.

Get started
Applying for and implementing an SUD 1115 waiver is a complex and time-consuming process — but by dedicating the time up front to address the many details of time and resources, you’ll find implementation to be far smoother, and effective treatment and recovery services provided sooner for those who need it most. Our Medicaid team is here to help.

Article
Building a Strong Substance Use Disorder (SUD) 1115 waiver demonstration

Read this if you work for a healthcare organization that serves uninsured or self-pay patients.

The No Surprises Act was passed in 2020 as part of a COVID relief package, with the goal of reducing surprise bills for patients who received medical or surgical services. One part of the act requires healthcare facilities and providers to give Good Faith Estimates (GFEs) to uninsured and self-pay patients starting on January 1, 2022. Read on for frequently asked questions about this topic, an update for 2023, and resources where you can find more information.

Frequently asked questions about good faith estimates for healthcare

What is a good faith estimate?

A Good Faith Estimate (GFE) is a document provided to a patient that details the expected charges for healthcare services provided. It is not a bill.

Who needs to provide GFEs, and to whom?

At this time, GFEs need to be provided to uninsured and self-pay patients. 

The following healthcare facilities must comply:

  • Federally Qualified Health Centers (FQHCs)
  • FQHC Look-Alikes
  • Tribal/Urban Indian Health Centers
  • Rural Health Clinics (RHCs)
  • Hospitals
  • Hospital outpatient departments
  • Critical access hospitals
  • Title X Family Planning Clinics
  • Health care providers who serve uninsured and self-pay patients

How should information about the GFE process be communicated to uninsured and self-pay individuals?

Information about the availability of GFEs for uninsured or self-pay individuals must be:

  • Written in a clear and understandable manner and prominently displayed:
  • On the facility’s website and easily searchable from a public search engine
  • In the office (such as in the patient waiting room), and
  • Onsite where scheduling or questions about the cost of items or services occur, such as at the registration or check-out areas
  • Explained verbally when scheduling an item or service or when questions about the cost of items or services occur
  • Made available in accessible formats, and in the languages spoken by individuals considering or scheduling items or services

How does the US Department of Health and Human Services (HHS) define uninsured and self-pay individuals?

HHS has a two-fold definition:

  • Individuals who have no health insurance coverage
  • Individuals who do have health insurance coverage, but do not want to have a claim submitted to their insurer

Both of these groups of individuals must receive a GFE.

What content is required in a GFE?

A GFE must include the following:

Patient information

  • The patient’s name and date of birth

Services estimated

  • A description of the primary item or service in clear and understandable language and, if applicable, the date the primary item or service is scheduled
  • A list of items or services reasonably expected to be furnished for the primary item or service

Information about services, providers, and estimated charges

  • Applicable diagnosis codes, expected service codes, and expected charges associated with each listed item or service
  • The name, National Provider Identifier, and Tax Identification Number of each provider or facility represented in the GFE, and the State and office of the facility’s location where the items are services are expected to be provided
  • Lists of items or services that the provider or facility anticipates will require separate scheduling and that are expected to occur before or following the expected period of care for the primary item or service. (A disclaimer should state that separate GFEs will be issued upon scheduling or upon request of the listed items or services.)

Disclaimers

  • A disclaimer that there may be additional items or services that the provider or facility recommends as part of the course of care that must be scheduled or requested separately and are not included in the GFE
  • A disclaimer that the information provided in the GFE is only an estimate and that actual items, services, or charges may differ from the GFE
  • A disclaimer that the individual has a right to initiate the patient-provider dispute resolution process if the actual billed charges are substantially in excess of the expected charges included in the GFE.
  • “Substantially in excess” is defined as at least $400 more than the total amount of expected charges.
  • This disclaimer must include instructions about where an uninsured or self-pay individual can find information about how to initiate the patient-provider dispute resolution process and state that the initiation of the patient-provider dispute resolution process will not adversely affect the quality of health care services that are furnished.
  • HHS strongly encourages providers and facilities to include an email address and telephone number for someone within the provider’s or facility’s office that has the authority to represent the provider or facility in a billing dispute.
  • A disclaimer that a GFE is not a contract and does not require the uninsured or self-pay individual to obtain the items or services identified in the GFE.

HHS encourages sliding fee discount providers and facilities to include information about the provider’s or facility’s sliding fee schedule and any other financial protections that it offers. Sliding fee discount providers and facilities have flexibility to determine how best to demonstrate the expected charges associated with each listed item or service, and to determine what additional information to include, if any.

What are the required methods for providing a GFE?

A GFE must be provided in written form either on paper or electronically, based on the individual’s requested method of delivery and within the required time frames. GFEs that are provided electronically must be provided in a manner that the individual can both save and print. A GFE must be written using clear and understandable language that can be understood by the average uninsured or self-pay individual.

If the individual requests a GFE in a method other than on paper or electronically (such as by telephone or verbally in person), the provider or facility may verbally inform the individual of the information contained in the GFE. However, the provider or facility must also issue the GFE in written form.

What is the timeline for providing a GFE?

When providing a GFE to an uninsured or self-pay patient, the following time frames must be followed.

When the service is scheduled: When the GFE must be provided:
If scheduled at least 3 business days prior to the date that the item or service will be furnished Not later than 1 business day after the date of scheduling
If scheduled at least 10 business days prior to the date that the item or service will be furnished Not later than 3 business days after the date of scheduling

Please note, when a GFE is requested by an uninsured or self-pay patient, a GFE must be provided not later than 3 business days after the date of the request.

How long should a provider or facility retain a copy of GFEs?

A GFE is considered part of the patient’s medical record and must be maintained in the same manner. At the request of an uninsured or self-pay individual, the provider or facility must provide a copy of any previously issued GFE within the last six years.

Update for 2023

  • As of the start of 2023, all of the preceding requirements remain in place.
  • As of January 1, 2023, HHS has paused enforcement on the next phase of GFE implementation

The next phase of GFE implementation, which began on January 1, 2023, requires that GFEs for uninsured and self-pay patients include expected charges from co-providers or co-facilities that are part of an episode of care for a patient coordinated by a provider or facility. However, on December 2, 2022, HHS paused its enforcement of this requirement based on comments it received during the rulemaking process indicating that compliance with this provision was likely not possible by January 1, 2023.

HHS is extending enforcement discretion, pending future rulemaking, for situations where GFEs for uninsured or self-pay individuals do not include expected charges from co-providers or co-facilities. We will provide an update when HHS issues any communication about changes to GFE-related enforcement.

Helpful resources for FQHC, RHCs, and other healthcare facilities

If you have questions about the information provided in this article or are interested in an external review of your healthcare facility’s compliance with current GFE requirements, please contact Robyn Hoffmann or Mary Dowes.

Article
Healthcare Good Faith Estimates (GFEs): Updates for 2023

Read this if you are in the senior living industry.

Happy New Year! While it may be a new calendar year, the uncertainties facing senior living facilities are still the same, and the question remains: When will the Public Health Emergency end, and how will it impact operations? Federal and state relief programs ended in 2022, and facilities are trying to find ways to fund operations as they face low occupancy levels. Inflation was at 7.1% in November and staffing remains a significant challenge. So, what can the industry expect for 2023?

Occupancy

Through the pandemic, occupancy losses were greater in nursing facilities than in assisted living (AL) and independent living (IL) facilities. This trend of care shifting away from nursing facilities had started before the onset of the pandemic. From 2018-2020, nursing facility volume decreased by over 5% while AL facilities occupancy increased by 1.1%.

Nursing facility occupancy nationwide was 80.2% in January of 2020 and declined to as low as 67.5% in January 2021. In 2022, nursing facility occupancy began to recover. As of December 18, 2022, nationwide occupancy had rebounded to 75.8%.

The assisted living and independent living markets were certainly impacted by the pandemic but not to the extent of the nursing facilities. AL and IL occupancy was reported at 80.9% in March 2021, a record low occupancy for the industry. Through the third quarter of 2022, NIC reported IL occupancy at 84.7%, which was up from 83.8% in the second quarter of 2022. AL occupancy was at 79.7%. in the third quarter of 2022. 

Providers are starting to see some positive signs with occupancy, but are reporting the recovery has been slowed by staffing shortages.

Cost of capital

The lending market is tightening for senior living providers and occupancy issues are negatively impacting facilities bottom lines. In addition, there has been significant consolidation in the banking industry. As a result, interest and related financing costs have risen. For those facilities that aren’t able to sustain their bottom lines and are failing financial covenants, lenders are being less lenient on waivers and in some cases, lenders are imposing default lending rates. 

Ziegler reports in their Winter 2022 report the lending market for senior housing is beginning to pick up. The majority of the lenders surveyed were regional banks, and reported they are offering both fixed and floating rate loans. Lenders are also reporting an increased scrutiny on labor costs coupled with looking at a facility’s ability to increase occupancy. 

Despite these challenges, analysts are still optimistic for 2023 as inflation seems to be tapering, which will hopefully lead to a stabilization of interest rates.

Staffing

Changes to five-star rating
In July 2022, the Centers for Medicare and Medicaid Services (CMS) modified the five-star rating to include Registered Nurse (RN) and administrator turnover. The new staffing rating adds new measures, including total nurse staffing hours per resident day on the weekends, the percentage of turnover for total nursing staff and RNs, and the number of administrators who have left the nursing home over a 12-month period.

Short-term this could have a negative impact on facilities ratings as they are still struggling to recruit and retain nursing staff. The American Healthcare Association has performed an analysis, and on a nationwide basis these changes resulted in the number of one-star staffed facilities rising from 17.71% to 30.89%, and the percentage of one-star overall facilities increasing from 17.70% to 22.08%.

Staffing shortages 
Much like the occupancy trend, nursing facilities faced staffing issues even before the pandemic. From 2018 to 2020, the average number of full-time employees dropped at a higher rate, 37.1%, than admissions, 15.7%. Data from the Bureau of Labor and Statistics and CMS Payroll Based Journal reporting shows nursing facilities lost 14.5% of their employees from 2019-2021 and assisted living facilities lost 7.7% over the same time period. This unprecedented loss of employment across the industry is leading to burnout and will contribute to future turnover.

This loss of full-time employees has created a ripple effect across the healthcare sector. Nursing facilities are unable to fully staff beds and have had to decline new admissions. This is causing strain on hospital systems as they are unable to place patients in post-acute facilities, creating a back log in hospitals and driving up the cost of care.

While the industry continues to experience challenges recruiting and retaining employees, the labor market is starting to swing in the favor of providers. Some healthcare sectors have recovered to pre-pandemic staffing levels. Providers are also starting to report lower utilization of contract labor.

While the industry continues to experience challenges recruiting and retaining employees, the labor market is starting to swing in the favor of providers. 

Minimum staffing requirement
CMS is expected to propose a new minimum staffing rule by early spring 2023. Federal law currently requires Medicare and Medicaid certified nursing homes provide 24-hour licensed nursing services, which are “sufficient to meet nursing needs of their residents”. CMS issued a request for information (RFI) as part of the Fiscal Year 2023 Skilled Nursing Facility Prospective Payment System Proposed Rule. CMS received over 3,000 comments with differing points of view but prevailing themes from patient advocacy groups regarded care of residents, factors impacting facilities' ability to recruit and retain staff, differing Medicaid reimbursement models, and the cost of implementing a minimum staffing requirement. In addition to the RFI, CMS launched a study that includes analysis of historical data and site visits to 75 nursing homes. 

In a study conducted by the American Healthcare Association, it is estimated an additional 58,000 to 191,000 FTEs will be needed (at a cost of approximately $11.3 billion) to meet the previously recommended 4.1 hours per patient day minimum staffing requirements.

One potential consequence of the minimum staffing requirement is higher utilization of agency staffing. Nursing facilities saw a 14.5% decrease in staffing through the pandemic and are still struggling to recruit and retain full-time staff. To meet the minimum staffing requirements, providers may need to fill open positions with temporary staffing. 

Provider Relief Funds (PRF) 

Don’t forget if you received PRF funds in excess of $10,000 between July 1 and December 31, 2021, Phase 4 reporting period opened January 1, 2023, and will close March 31, 2023.
Many of the changes to the industry brought on by the pandemic are likely to remain. Facilities who are putting a focus on their staff and working to create a positive work environment are likely to keep employees for longer.

While there are many challenges in the current environment, they were made to be met, and we are here to help. If you have any questions or would like to talk about your specific needs, please contact our senior living team. Wishing you a successful 2023.
 

Article
Status of the senior living industry: The good, the bad, and the uncertain

Read this if you are a part of the gaming industry.

The gaming industry has bounced back during 2021 and 2022 following pandemic-related declines, but a potential economic downturn will likely impact consumer behavior and have effects for gaming businesses. Though recessionary concerns may prompt some consumers to rein in spending, several factors point to resilience in the gaming industry, including customer retention initiatives, the growth of digital gaming and sports betting, and the continued allure of experiences offered by casino resorts.

Instead of merely weathering a potential recession, gaming companies can position for sustained success by reviewing strategic plans and focusing on key business objectives. Financial discipline will be another priority, particularly if changes in consumer spending affect revenue growth during 2023.

Retention has a big payoff in a recessionary environment

Despite the rate of inflation in the US reaching levels not seen in more than 40 years during 2022, consumer spending has remained relatively strong. According to data from the Bureau of Economic Analysis (BEA), disposable personal income and personal consumption expenditures both increased slightly more than expected during September. Interest rates have continued to rise, however, and there are indications that some consumers are delaying the purchase of big-ticket items, which suggests a slowdown in some areas of spending.

To help mitigate the effects of a potential recession, gaming companies may consider shifting more attention to customer retention in addition to customer acquisition. That strategy could be especially important for sports betting, a subsector that has invested heavily in customer acquisition in recent years—and may not be as recession-proof as some had predicted. According to a TransUnion study, 54% of US sports bettors earn at least $100,000 per year, but even high-income earners show signs of cutting back on discretionary spending like gambling. Nevertheless, many sportsbooks have seen relatively low rates of customer churn this year despite inflation, which could be due partly to the growth in popularity of unique multi-leg wagers such as same-game parlays.

High costs for customer acquisition due to digital competition can pose challenges for companies trying to grow their consumer base, and recessionary pressures make it even more important to keep existing customers engaged. Fragmentation and evolving competition also complicate predictions for the lifetime value of a new customer. The longer a customer stays, however, the bigger the return on initial acquisition costs.

Retention strategies

Strategies that focus on retention can help reduce churn amid growing recessionary pressures. These strategies vary for different types of companies, such as online gambling (iGaming), land-based casinos, or a hybrid of online and on-premises gaming. Taking steps to improve customer experience and leverage data analytics can both help increase engagement. Such initiatives can include customized loyalty and reward programs based on a customer’s unique habits, as well as data insights about the most popular types of games and bets that enable cross-promotion. Reload bonuses, referral bonuses, free bets, and percentage back on losses are examples of other strategies to help keep existing players engaged. Critically, even small improvements in retention can have a significant impact on margins and profitability.

Growth potential remains, but a downturn would impact industry subsectors differently

If recessionary pressures prove to be a drag on consumer spending in the months ahead, it may affect some gaming sectors differently than others. Even if consumers reduce discretionary spending, casino resorts could still fare well because of their diversified offerings, but they also have much higher operating costs than dedicated iGaming companies. Land-based casinos in particular should practice financial discipline and manage labor costs. They can achieve this by maintaining balanced staffing levels, expanding electronic casino games, and adopting cashless gaming and digital payments.

Overall, casino resorts can provide a relatively affordable range of unique leisure experiences. People remain eager to travel after dealing with pandemic-related restrictions, and recent TSA checkpoint data indicates airport activity has been near or above 2019 levels. BEA data also indicates that consumer spending on services, such as travel and dining, has outpaced spending on goods in recent months.

Although research has shown flat levels of growth for casino gambling during previous recessions, the industry has seen several notable changes in recent years. Digital gaming remains a convenient option for consumers and has experienced a spike in adoption in recent years, which aids both digital-only operators and land-based casinos that offer a digital component. Casino resorts can also use data-backed insights to help convert their online customers into on-premises customers through targeted offers and other marketing initiatives.

Sports betting has also grown rapidly during the past five years, which provides an accessible platform for a much larger population of customers than previously. Before the US Supreme Court’s 2018 decision in Murphy v. National Collegiate Athletic Association, only a few states could claim partial exemption to the 1992 federal ban on sports betting. As of November 2022, more than 30 states and the District of Columbia allow sports betting, and additional states are considering similar legislation.

Recession-related shifts in discretionary spending may not impact gaming as much as other consumer sectors. A May 2022 YouGov poll of 16 countries shows that while monthly gamblers may cut back on betting, they are more likely to reduce spending in other areas to maintain their monthly budget. A recession would still likely impact growth, so it is critical for gaming companies to protect revenue during a downturn.

Other developments also hold promise for the gaming industry. Casino stocks recently surged following China’s announcement of eased travel restrictions that would allow tour groups into Macau, the world's largest gambling jurisdiction. Overall, publicly traded gaming companies have enjoyed relatively strong earnings during 2022 despite market volatility, and many analysts have maintained “buy” ratings. A downturn could also give well-capitalized companies an opportunity to gain market share through acquisitions and partnerships.

Looking ahead: A sure thing

To help guard against the impact of recessionary pressures, managing costs and finding efficiencies will continue to be priorities. However, cutting back spending across the board can constrain growth and exacerbate customer churn. By combining financial discipline with a business strategy tailored to the effects of a potential downturn, gaming companies can continue the pandemic recovery and even thrive during volatility.

Article
Beyond weathering the storm: How the gaming industry can succeed during economically challenging times 

Read this if you are a community bank.

The Federal Deposit Insurance Corporation (FDIC) recently issued its third quarter 2022 Quarterly Banking Profile. The report provides financial information based on Call Reports filed by 4,746 FDIC-insured commercial banks and savings institutions. The report also contains a section specific to community bank performance. In third quarter 2022, this section included the financial information of 4,308 FDIC-insured community banks. BerryDunn’s key takeaways from the report are as follows:

Community banks see $1.0 billion increase in third quarter 2022 to $8.5 billion in quarterly net income. 

Community banks’ quarterly net income increased 13.5% in third quarter 2022 from second quarter 2022. Net interest income increased $2.0 billion and more than offset the increases in noninterest expense and provisions for credit losses and a decrease in noninterest income. Unrealized losses on securities totaled $76.1 billion in the third quarter, up from $55.3 billion in the second quarter, primarily due to increases in market interest rates.

Community bank net interest margin (NIM) increased to 3.63% due to strong net interest income growth.

Community bank NIM increased 32 basis points from the year-ago quarter and 30 basis points from second quarter 2022. Net interest income growth exceeded the pace of average earning asset growth. The average yield on earning assets rose 48 basis points while the average cost of funds rose 18 basis points from the previous quarter. 


Loan and lease balances continue to grow in third quarter 2022, with 83.3% of community banks reporting quarterly loan growth.

Loan and lease balances had widespread growth, with 81.9% of community banks reporting annual growth. Community banks saw annual loan growth in all portfolios except commercial and industrial (C&I). Despite C&I showing a decrease in annual loan balances, with the exclusion of Paycheck Protection Program (PPP) loan repayment and forgiveness, C&I loans would have shown annual growth of 21.6%. Total annual loan growth, with the exclusion of PPP loan repayment and forgiveness, was 15.7%.


Community banks reach record low for noncurrent loan rate since Quarterly Banking Profile (QBP) data collection began in first quarter 1984. 

Loans and leases 90 days or more past due or in nonaccrual status (noncurrent loan balances) hit a record low in third quarter 2022 at 0.47%. Over half of community banks reported quarter-over-quarter declines in the balance of noncurrent loans. The reserve coverage ratio (allowance for credit losses (ACL) to noncurrent loans) hit a QBP record high of 263.4%, as noncurrent loan balances hit an all-time low and the ACL continues to remain above pre-pandemic averages. Similarly, the ratio of reserve coverage to annualized quarterly net charge-offs continues to remain elevated due to an elevated ACL and low net charge-offs. The net charge-off rate was .06% for third quarter 2022, unchanged from third quarter 2021.

Institutions continue to move ahead with cautious optimism. The Federal Open Market Committee (FOMC) already increased the target federal funds rate by 375 basis points in 2022, with an additional increase expected in December 2022. Although rising rates have been the largest contributor to strengthening net interest margins, the impact these rate increases will have on the long-term economy is still yet to be seen. Inflation also continues to be elevated, although October statistics seemed to indicate some waning of inflation. As a result, the FOMC has indicated they expect smaller rate increases going forward, with a 50-basis point increase anticipated during their December 14th meeting. With increasing rates, many institutions are wondering if now is a good time to lock in duration on their balance sheet. And, if so, what is the best way to fund this duration, especially with deposit growth being outpaced by loan growth and unrealized losses on securities at unprecedented levels? Also, as we’ve recently seen, the economic situation can change significantly very quickly, which has many wondering to what extent the federal funds rate will remain relatively elevated. Many still believe we are destined for an economic downturn in 2023. Depending on the extent of this downturn, we could see federal funds rate decreases, something that hasn’t been fathomed for a couple years. 

The new interest rate environment also poses some unique opportunities on the liability side of the balance sheet. Customers that may not have been rate shopping due to low rates may now be looking to see what other products from other institutions are available. And these customers may not be looking solely for higher rates; they may also be looking for institutions that offer a better overall suite of services and products. Thus, not only do institutions need to be defensive and protect those customers already on their balance sheet, but they should also identify unique opportunities to attract new customers. Higher deposit rates may get a prospective customer in the door, but it is likely the other products and services an institution can offer that will win the customer. As always, please don’t hesitate to reach out to BerryDunn’s Financial Services team if you have any questions.

Article
FDIC Issues its Third Quarter 2022 Quarterly Banking Profile

Read this if you are a Maine business or pay taxes in Maine.

Maine Revenue Services has created the new Maine Tax Portal, which makes paying, filing, and managing your state taxes faster, more efficient, convenient, and accessible. The portal replaces a number of outdated services and can be used for a number of tax filings, including:

  • Corporate income tax
  • Estate tax
  • Healthcare provider tax
  • Insurance premium tax
  • Withholding
  • Sales and use tax
  • Service provider tax
  • Pass-through entity withholding
  • BETR

The Maine Tax Portal is being rolled out in four phases, with two of the four phases already completed. Most tax filings for both businesses and individuals are now available. A complete listing can be found on maine.gov. Instructional videos and FAQs can also be found on this site.

In an effort to educate businesses and individuals on the use of the new portal, Maine Revenue Services has been hosting various training sessions. The upcoming schedule can be found on maine.gov

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New Maine Tax Portal: What you need to know

On November 8, 2022, Massachusetts voters approved a constitutional amendment to alter the state’s flat 5% income tax to add a 4% surtax on annual income exceeding $1 million. The so-called “millionaires tax,” also referred to as the “Fair Share Amendment,” is effective for tax years beginning on or after Jan. 1, 2023. The annual income level subject to the surtax would be adjusted yearly to reflect increases in the cost of living.

This measure is expected to bring in revenue of between $1.2 and $2 billion annually. The proceeds from the increased tax collections will support state budgets in the areas of education, roads, bridges, and public transportation. The measure passed with 52% voter support and is the sixth attempt to change the state’s flat income tax rate since 1962. This amendment is expected to affect about 0.6% of the state’s population, or about 20,000 taxpayers.

If you expect your income to exceed $1 million in 2023 and have questions regarding the recent legislation, please contact a member of our state and local tax team.

Article
Massachusetts voters pass "Millionaires tax"