Hospitals Picking Home Health Over Skilled Nursing Amid Payment Shifts

Hospitals that participated in Medicare’s bundled-payment initiatives were particularly focused on getting patients home first and foremost, rather than sending them to skilled nursing facilities, according to a new study published in Health Affairs.

That came as a surprise to the researchers, Jane Zhu of the Perelman School of Medicine at the University of Pennsylvania told Skilled Nursing News. She described hospitals’ focus on sending patients home as “a dominant strategy in response to bundled payment participation.”

The research focused on 22 hospitals that participated in lower joint replacement episodes within the Bundled Payments for Care Improvement (BPCI) program and the Comprehensive Care for Joint Replacement model, initiatives designed to improve quality and reduce Medicare costs by reimbursing providers for a single “episode” of care. Forced to share a finite amount of money for the episode, providers across the spectrum are expected to work together to bolster care and prevent cost overruns, such as avoidable rehospitalizations.


While the study did note the shift toward home-based care, the researchers also found that hospitals actively tried to improve coordination for patients who were discharged to SNFs.  Their primary strategy was setting preferred networks, defined by Zhu as organized efforts to coordinate care and discharge patients to a select number of SNFs. Fifteen of the hospitals and health systems in the study had formed networks of preferred SNFs.

This could be done formally, with contracts, or with more informal referral-based arrangements, Zhu said.

“One of the more common arrangements that we found in our sample of hospitals was that they were forming these informal networks whereby hospitals would refer a lot of their patients to certain facilities in exchange for influence over things like quality metrics, communication, patient management, and those types of coordination strategies,” she explained. “So it would really be referral volume in exchange for influence, and that was something that really defined what a lot of these preferred networks looked like.”


That influence could take several different forms, with some common strategies including hospitals sharing access to electronic medical records, holding regular meetings and performance reviews with SNF leaders, hiring or reassigning staff members for dedicated care coordination positions for SNFs, and collecting data on SNF performance.

“Hospitals would then say: ‘Here is a list of our quality metrics that we care about,'” Zhu said. “They would help these SNFs develop ways to collect that information and report that information, establish care algorithms, and engage in quality improvement initiatives around those metrics.”

Even hospitals that didn’t officially have preferred networks used similar strategies with the SNFs they either owned or used as discharge partners, she added.

All 22 hospitals in the study reported coordinating with SNFs, but the fact that even some were focusing on reducing SNF use in response to bundled payments is notable. It comes after mixed reviews on just how well BPCI achieves its goals of lower costs and better care, at least as measured by a survey of acute and long-term care providers last year and a research letter published in the Journal of the American Medical Association in June of this year.

The study does have limitations; in addition to a small sample size, the fact that it focused on lower joint replacements means that the patients involved in the bundled payment programs are more likely to be healthy. That difference will likely leave SNFs with more complex patients over time, Zhu noted.

But the shift to send patients home rather than to a SNF is significant in other ways, particularly as inpatient hospital volume declines and the pool of patients grows smaller.

“Hospitals are really pushing as many of their patients as possible to go home, and that represents a cultural shift, in that the home environment is now being seen by hospitals as a legitimate setting for post-acute care,” Zhu said.

Written by Maggie Flynn

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