Genesis Exec: Skilled Nursing Industry Has No Choice But to Embrace New Models

It’s an existential problem that many providers face in the skilled nursing industry: New payment models demand substantial operational changes, but the current fee-for-service reality determines how they can pay and plan for those shifts.

This frustrating dichotomy was on full display during a panel discussion on Institutional Special Needs Plans (I-SNPs) and other new payment strategies at the eCap Healthcare Summit, held outside of Miami last week.

“Hospitals are our distribution channel, and our payers are the ones that want to get innovative agreements with us,” Jason Feuerman, senior vice president for strategic development and managed care at nationwide provider Genesis HealthCare (NYSE: GEN), said. “If we don’t change, if we don’t adapt, we will either find ourselves pushed to the wayside or not doing as well as we could. I just don’t think there’s a choice.”

Over the past few years, those innovative arrangements have included both government-led shifts toward value-based payment models, as well as accountable care organizations (ACOs) — groups of providers across the continuum that band together to find shared savings when treating patients.

But with the acute care providers generally in the driver’s seat, skilled nursing facilities have often not seen the benefits of these new models, instead struggling with a variety of stresses as hospitals demand shorter lengths of stay and lower readmission rates.

“The elephant in the room is that the SNF world is probably at the bottom of the totem pole,” Mark Berger, CEO of the Skokie, Ill.-based Villa Healthcare, said. “If you’re outside of New York or one or two other states, the challenge is: How do I keep the lights on, and how do I keep the doors open?”

For Berger, that takes the form of a more “old-school” approach that looks inward before it goes outward: Focus on clinical outcomes, resident satisfaction, and internal efficiencies before seeking new payment partners, then use that experience to find the right options.

“You have to have the right partners who understand what your challenges are and how you’re going to overcome them,” Berger said.

That said, Berger acknowledged the desperate need for providers to change how they navigate the world.

“Skilled nursing operators are absolutely innovative,” he said. “I think we’re forced to be innovative in the climate today.”

I-SNPs have been promoted as a way for providers to help mitigate some of the pressures in the skilled nursing industry by giving providers more control over reimbursements. These special Medicare Advantage plans exclusively target long-term residents in nursing homes, and essentially allow operators to take on double duty as the insurer for their patients.

The number of provider-backed I-SNPs doubled between 2016 and 2018, according to a December analysis from Anne Tumlinson Innovations, helping to drive overall growth in the specialty Medicare Advantage space, and the CEO of I-SNP management firm AllyAlign told SNN earlier this year that the plans will serve as a “permanent pillar” of how SNFs navigate reimbursement changes.

But starting an I-SNP isn’t easy or an instant path to success. An ideal provider candidate for an I-SNP would have a sizable long-term care population, significant scale, and geographic concentration, Heidi Wold, chief clinical officer of the Illinois-based Longevity Health Plan, said during the eCap event.

“Let’s say you have five or six buildings, but they’re spread over hundreds of miles,” she said. “That doesn’t work in an I-SNP model.”

Wold also emphasized the importance of strong clinical infrastructure and a focus on quality improvement when considering the I-SNP marketplace — a strategy that Berger observed could again hinge on building out a solid foundation before reaching out.

“Readmissions is not the goal — it’s a result,” he said. “Readmissions is a result. And the goal is clinical outcomes, patient satisfaction. That’s ultimately what it comes to. As sophisticated as you want to make it, that’s what it’s going to come down to.”