Healthcare reform creates a sense of urgency among operators to track hospital readmission rates and patient outcomes.
By Jane Adler
At a recent seniors housing conference hosted by financial services firm Stifel Nicolaus & Co., attendees were asked about their biggest challenge. While the expected answer might have been worries about rent growth or capital expenditures, building managers and owners were instead most concerned about how to integrate operations with healthcare services.
“Healthcare reform presents a real opportunity,” says Daniel Bernstein, a Stifel research analyst based in Baltimore who attended the conference. “Operators have the chance to increase market share.”
The outlines of how that will happen are just starting to take shape as stakeholders navigate the way forward amid a confusion of new regulations under the Affordable Care Act of 2010. Skilled nursing operators are already positioning their facilities to become the preferred providers of post-acute care.
Assisted living operators are less certain how their buildings will fit into the healthcare continuum, especially considering that most buildings are private pay and not subject to the reimbursement rules of Medicare and Medicaid. Still, savvy assisted living operators see a role for their properties as yet another low-cost way to help seniors after an illness or hospitalization.
While it’s too early to know the full impact of healthcare reform, it’s already clear that successful seniors housing operators will track data on resident outcomes and provide measures on the quality of care.
This information is crucial to referral sources, including the growing number of accountable care organizations (ACOs) — local networks of providers such as physicians and hospitals.
In addition, new proposed legislation would require post-acute care providers that accept Medicare to collect standardized data on the quality and quantity of the care.
“It’s going to be messy for building operators,” says Dr. Cheryl Phillips, senior vice president of public policy and advocacy with Leading Age, a Washington, D.C.-based association of nonprofit aging service providers.
Healthcare reform is an effort to integrate systems of care and payments while enhancing transparency, adds Phillips. The bottom line, she explains, is that Medicare and other sources that pay for care want to know what they’re buying.
New payment model emerges
Skilled nursing facilities have traditionally had referral relationships with hospitals that were not driven by patient outcomes. Healthcare providers were simply paid for services rendered.
But Medicare is now penalizing hospitals for readmissions within 30 days of discharge. So nursing homes must be able to demonstrate that they provide the kind of care that keeps seniors out of the hospital.
Eventually, skilled nursing facilities will likely be penalized for hospital readmissions too. The U.S. Department of Health and Human Services (HHS) 2014 budget proposal recommends reducing payments by as much as three percent to skilled care facilities with high rates of preventable hospital readmissions. The proposed penalties would take effect in 2017.
“Skilled nursing facilities are scrambling to measure quality of care,” says Phillips at Leading Age.
Kindred Healthcare, a Louisville-based provider of post-acute services, has changed its strategy to provide a model of coordinated care. In a February 2014 conference call with industry analysts, Kindred CEO Paul Diaz noted that significant steps have been taken to “aggressively reposition the company in the context of healthcare reform.”
The privately held company operated more than 300 nursing homes in 2002, but now has just over 100 facilities.
Kindred has expanded its home health and rehabilitation offerings. In 2013, the company created a new Care Management Division to improve care transitions and patient outcomes.
Results are shared with payers and managed care groups. For example, Kindred has established a partnership with the Cleveland Clinic to coordinate and track patients through different care settings.
Other providers are modifying their approach. Continuing Life owns and operates four continuing care retirement communities (CCRCs) and tracks resident care. The Carlsbad, Calif.-based company has a new project, Laguna Glen, underway in San Juan Capistrano.
Continuing Life also recently announced the expansion of the GlenBrook Health Center at its La Costa Glen project in Carlsbad. The expansion will add 24 skilled nursing beds for those who need short-term rehab after surgery or an illness.
GlenBrook currently has 70 skilled nursing beds. Construction of the expanded health facility is expected to be complete this fall.
Residents at GlenBrook are tracked by length of stay, diagnosis and placement after discharge. For example, the progress of a senior in rehab following joint surgery is measured before, during and after discharge. “We send a report card to the surgeon and the primary care doctor,” explains Darolyn Jorgensen-Kares, director of operations at Continuing Life. Hospital readmissions are also monitored.
Prior to healthcare reform, nursing home managers often had trouble getting appointments with hospital staffers to discuss care plans and services. “Now hospital administrators are approaching us,” says Jorgensen-Kares. Hospitals want to coordinate care with nursing homes to avoid rehospitalizations. “We’re all being evaluated on how well we deliver care,” she adds.
Show me your stats
Outcomes are an integral part of the quality monitoring systems at Brookdale Senior Living based in Brentwood, Tenn. The publicly traded company operates 640 communities and expects to add another 500 communities to its portfolio after the merger with Emeritus Senior Living is complete in the third quarter.
In an email, Bomi Parakh, senior director of managed care at Brookdale, notes that multiple systems track measures relevant to the resident, the payer/referral source, and to Brookdale’s operations. For example, the company monitors rehospitalization rates and length of stay, as well as outcomes. The results are also used to develop strategies to help reduce falls and medication errors.
In another initiative, the company is collaborating with the University of North Texas Health Sciences Center on a program to decrease avoidable hospitalizations for seniors.
The program received a $7 million grant from the Centers for Medicare and Medicaid Services (CMS) to expand and test Brookdale’s Care Transitions Program. The goal is to prevent the progress of disease, thereby reducing complications, improving care and reducing the rate of avoidable hospital admissions.
Brookdale’s Care Transitions Program is based on INTERACT (Interventions to Reduce Acute Care Transfers), an evidence-based quality improvement program developed by geriatrician Joseph Ouslander, M.D., and colleagues at Florida Atlantic University to reduce avoidable readmissions for nursing home residents.
The quality improvement program will be modified and applied in assisted living and dementia-specific facilities as well as home care settings.
“Brookdale is focused on innovating to meet the market’s needs and has been preparing for health reform for some time now,” wrote Parakh in his email.
Meanwhile, quality measures are being introduced at assisted living buildings, which could play a bigger role in the healthcare continuum as new systems evolve.
Silverado Senior Living operates 33 memory communities, owning 26 of them, and tracks resident outcomes as well as quality of life. Consumers and referral sources are asking for more transparency from assisted living providers, according to Anne Ellett, senior clinical specialist at Irvine, Calif.-based Silverado. “Quality providers will be proactive and step forward to show we can be partners with the whole continuum of healthcare.”
The assisted living care team often acts as the case manager. Silverado, for example, tracks and coordinates medication use. New residents often arrive after a recent hospitalization with multiple medications, both from the hospital and the resident’s personal physician.
The Silverado team initiates communication with the healthcare providers to reduce overmedication or redundancy. “We want to demonstrate to acute care providers and the accountable care organizations that we are paying attention,” says Ellett.
Because Silverado specializes in memory care, hospitals familiar with the company’s work are more likely to send a patient back to Silverado for rehab after a hospitalization, says Ellett. “People with dementia do better in a homelike environment.”
Silverado brings rehab specialists to its facilities. The company also operates rehab units at its properties in Colorado and Utah.
Technology issues abound
Choosing the right technology to track outcomes can be a difficult decision. Software must seamlessly interact with hospital systems. At the same time, technology and electronic medical record systems can be expensive, putting small chains and single-location operators at a disadvantage.
The cost of a basic electronic medical records system ranges from about $30,000 to $50,000 for a 100-bed nursing home, according to one report. Annual maintenance costs range from about $25,000 to $40,000.
Silverado estimates that the cost to set up a basic system at about $50,000 to $150,000 and then about $5,000 to $10,000 per location. The company’s two locations with skilled nursing units have already implemented electronic medical record systems, and other locations will eventually do the same.
Another concern for operators is that ACOs and hospitals are expected to narrow their networks to only include those providers that can produce reliable quality measures.
“There are some real pitfalls,” says Stifel’s Bernstein. The big operators have the advantage now since they have the scale and resources to invest, as well as ancillary services such as home healthcare, he adds. But he expects more off-the-shelf technology to be developed for smaller operations. “Regional operators will have this technology and be competitive,” emphasizes Bernstein.
Ultimately, the healthcare system is moving toward bundled payments, experts say. In other words, healthcare providers will receive a certain amount of money to manage services for an individual. “Bundled payments are the endgame,” says Lisa Legeer, senior manager at DHG Healthcare, the healthcare consulting practice of DHG, a large accounting firm.
Legeer, who is based in Jacksonville, Fla., says nursing homes have to be “risk capable.” In other words, they must be able to manage an allocation of dollars for a patient and deliver a quality outcome. Medicare has a model program starting in 2015 for bundled payments.
Skilled nursing facilities can sign up with CMS to participate in a bundled payment initiative to manage a condition, such as rehabilitation after a knee replacement. The operators of participating facilities get access to Medicare data to determine the strengths of their program in an effort to prepare for the introduction of bundled payments, says Legeer. “It’s a rich opportunity for providers to dig deeper.”