When Hospitals Build Skilled Nursing Networks, How Narrow is Too Narrow?

Skilled nursing providers have faced pressure to break into area hospitals’ top-tier referral groups — the increasingly select few deemed fit to manage acute care operators’ patient populations across the continuum. But when SNFs size up their competitors in their marketplaces, are they facing off for a slot in a hospital’s top five, or top 100?

The size of hospitals’ preferred skilled nursing networks varies wildly depending on location and patient volume, several experts told Skilled Nursing News, but all are shrinking — and the savviest operators are the ones with a pulse on their particular market landscape.

“The short answer is: There’s no right number that applies to all hospitals,” Brian Fuller, an independent health care consultant, said. “Instead, there’s some common factors that determine what the right size is. I’ve seen networks as small as six or seven, and as big as 30, and everything in between.”

A few dozen also isn’t even necessarily the high boundary: A recent study of hospital networks found that some discharged patients into more than 350 individual SNFs over an 18-month span earlier in the decade. While he couldn’t speak to that particular study directly, Fuller posited that network figures could be artificially inflated by individual rural patients who travel significant distances for acute care, but then want to return to a skilled facility closer to home.

“Where you get noise in the network is people go back to their homes, and that could be 90 miles away, and so you get a lot of what I would characterize as onesies-twosies that make it seem like they have a quote-unquote large network,” Fuller, who has previously worked at care transitions provider naviHealth and health care consultancy Avalere, said.

Not set in stone

In general, Fuller said it’s best not to look at a SNF network as an unchanging roster of providers from which hospitals can never deviate. Rather, sending 70% to 80% of patients to a trusted group of high-quality SNFs is more the norm, with the remainder going to other providers for a variety of reasons, including geographic location and consumer preference.

Hospital administrators and care coordinators can then focus on beefing up the relationships with those key providers in the true inner circle.

“You’re going to work with that subset of SNFs in a much more meaningful way. You’re going to clinically integrate and collaborate. You’re going to share data and information; you might give them access to your medical records and vice versa,” he said.

There’s another reason hospitals shouldn’t view their SNF partnerships as static: specialization. As skilled nursing operators look to set themselves apart from the competition in new payment models, some providers have turned to ventilators, cardiac recovery programs, and other specialty services that not all SNFs provide.

Anne Tumlinson, founder of research and advisory firm Anne Tumlinson Innovations, told SNN that hospitals should always have “backup” relationships with providers that can offer certain services that buildings in its core preferred network can’t.

“Without question, if a hospital really wants a strong post-acute care program, it needs to consider its specific needs in the context of the SNFs in its market,” she said. “What doesn’t work is to log onto Nursing Home Compare and select the five SNFs with the highest stars and lowest readmission rates and call it a day.”

Population size matters

Acute care hospitals in urban areas naturally require a larger footprint to handle the increased patient volume. But even in a rapidly growing metropolitan area of more than 7 million people, Dallas-Fort Worth Hospital Council president and CEO Steve Love had a fairly narrow definition of preferred networks.

“I can’t say a specific number, but you certainly don’t want to be referring to a lot. It would be nice if you had a network where, I would say, 10 or less, depending on the demographics,” Love said, adding that the number could be a little higher in a market like the Dallas metroplex, which added 146,000 residents in 2017 to lead the nation in population growth.

Dallas sits in fourth place nationwide among metropolitan areas by population, succeeded only by the New York City, Los Angeles, and Chicago regions.

Still, Love emphasized that building a SNF network — at least from the hospital side — has less to do with a specific cutoff number and more to do with demonstrated quality. In a payment system where hospitals are increasingly asked to share risk with skilled nursing providers and other downstream care settings, acute care providers will aim to build a stable of SNFs that can prevent readmissions and provide solid clinical outcomes, then back into a firm number from there.

“Sometimes, and it may not be that easy, but if the medical and clinical professionals can round together at least once in a while to know the clinical effectiveness of what they have, it may mean that you might not need as [high] a number,” Love said. “It’s hard to put a number on it, but I’d say around 10 to 12 — as log as the clinical criteria is being met appropriately.”

No matter what their eventual size, Fuller stressed that many hospital networks have gotten more serious about developing a stable of trusted partners over the last few years. Half a decade ago, the networks tended to be preferred in name only, with maybe some data-sharing but no major shifts in volume to the chosen ones. But as acute care providers are forced to take on more and more risk — especially as their reimbursements depend on how well SNFs can keep residents out of the hospital — they’re increasingly starting to walk the walk when it comes to true network collaboration.

“When a hospital says they have a network, for example, you are seeing now clinical collaboration in ways you didn’t see five years ago,” he said. “You are seeing the hospital discharge planning process and materials and decision points change such that it does result in real volume starting to shift to those network members.”

Written by Alex Spanko