Skilled Nursing Poised to Become ‘Biggest, Cheapest Game in Town’

In an industry where a coming wave of customers seems to be permanently just out of reach, skilled nursing facilities have to be braced for some short-term pain. But if they take charge of their strategies and relationships, it’s possible for them not just to survive, but to thrive.

That was the message from a panel on skilled nursing at the National Investment Center for Seniors Housing & Care’s (NIC) annual fall conference in Chicago last week — a panel that had admittedly committed to being optimistic, according to NIC health care analyst and moderator Liz Liberman.

“We are kind of in the trough of the ideal skilled nursing customer,” Liberman said, pointing to NIC data showing ongoing occupancy declines that began in 2015 and have continued downward. “And it will be a little bit of time before that generational trend kicks upward.”

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But in the spirit of optimism, even though the proverbial silver tsunami is at least a few years away, the panelists agreed that SNFs can benefit as paradigms of care shift and as the new Patient-Driven Payment Model comes into effect.

“Skilled nursing is going to come out as the biggest, cheapest game in town,” Steven Littlehale, executive vice president and chief clinical officer at PointRight Inc., predicted.

Specifically, he pointed to a “phenomenal opportunity” for SNFs: patients being diverted from long-term acute care hospitals (LTACs). SNFs can take care of those patients well and for much less money, Littlehale argued.

Julianne Williams, co-founder and president of Dycora Transitional Health and Living, based in Clovis, Calif., sounded a note of caution, however, on the patients who will be coming in the future.

“I think there are a lot of patients in LTACs that do belong in a SNF,” she said. “I do think we’ll see some diversion. But I do think we’re also going to be skipped by other people for home, outpatient, whatever. It’s a really fluid environment right now, and we have to be clear about what we can do clinically to serve the patients that are in our markets.”

Dycora operates 27 facilities in California and Wisconsin, according to its website, and with its regional concentration, Williams stressed the importance of relationships with local hospitals. Acute care is paying close attention to readmissions, she stressed.

“Our hospitals in our market are very, very focused on the quality measures, and they don’t necessarily look at Five-Star [ratings],” Williams explained. “They look within Five-Star, and they choose the measures that they find helpful for them. They really do understand exactly where they are getting their penalties, and who is driving that.”

Local markets also drive what makes the most sense in terms of capital investment, according to Lee Delaveris, vice president of health care mortgage banking at KeyBank Real Estate Capital. But by making such additions as a short-term rehab wing or a Medicare wing, a facility could reposition itself in the market, he said.

“There’s a lot of dated skilled nursing facilities in the country in need of capital investment or otherwise poorly located for post-acute care,” he observed.

Market-to-market variations also have an impact on downstream relationships, Delaveris noted later in the panel, which are becoming increasingly important to SNFs. One of the key metrics for hospitals is the rate of patients who come back to hospitals after being discharged from a SNF to the community, which tends to not get measured, according to Littlehale. Many providers are paying a penalty in value-based payments in this regard, he added.

“It has to be a priority for skilled nursing to either own it or rent it … there’s got to be something there so they know the handoff is going to be successful,” he said.

Williams, who deals with many downstream alternatives in California, has a notable solution: narrow networks, much as hospitals have been doing to SNFs. She evaluates partners by checking accounts receivable, how long the downstream providers keep patients, and other factors.

But ultimately the quality of care in SNFs is going to factor into their ability to survive — and maybe even thrive.

“I honestly think it comes back to the clinical product and programming,” Williams said. “Because if you cannot take care of the patient that’s in your market that needs to get care, you cannot admit the patient. And if you can’t admit the patient, you don’t have any business.”

Written by Maggie Flynn

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