Why Short-Term Rehab Alone Might Not Sustain Skilled Nursing

A consulting firm that offers services across the health care spectrum sees opportunity for growth in skilled nursing, though the leader of its SNF practice believes that the industry must expand beyond short-term rehab to survive.

The Wayne, Penn.-based McBee plans to look at both hires and potential acquisitions as it tries to bolster its work in the SNF arena.

Skilled Nursing News caught up with McBee president Mike Dordick and consulting director for skilled nursing Marc Myzal to talk about the opportunity the consulting firm sees in skilled nursing, as well as some of the challenges ahead for operators — including why they think the industry can’t thrive on short-term residents alone.

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What are McBee’s primary fields for consulting, and where does the skilled nursing division fit in?

Dordick: McBee overall is a health care financial management and clinical consulting firm, doing work in both consulting and outsourced services. The firm is probably today about 85% post-acute — which is home health, hospice, and skilled nursing — and about 15% acute care/hospital.

We’ve done work in all the spaces, including skilled nursing, for many many years; we’ve been around since 1973. But the work we’ve done in skilled nursing has been smaller than many other areas up until recently. So when you think about our primary areas of consulting, we’re doing operational and process consulting, but on the skilled nursing areas, we’re doing a heavy amount of revenue cycle outsourcing, [Minimum Data Set] reviews and coding, and then overall operational improvement within that space.

That skilled nursing group that we’re building out under Marc today is part of our post-acute consulting practice.

What are some of the services you provide for SNFs? Can you give a sense of the typical SNF client profile?

Myzal: There is no typical skilled client today. All clients — be it a one-facility lone operator or a national organization — their concerns and needs tend to wrap around the same set of issues. So we do have clients that are large regional players, we have hospital systems — health systems that have SNFs within their system — and we have individual facilities as well. Our largest is a 48 facility, multiunit client. There’s not a typical size, but the issues and the needs are consistent across all.

What are the issues and needs that are common to all facilities?

Myzal: The changes in reimbursement models is a common theme across all organizations. As we look at our services, our billing outsourcing and our cash acceleration is a large theme that we’re seeing with a lot of our providers. Especially on the cash acceleration side, the challenges of managed care and assisting them in decreasing their [days sales outstanding], and decreasing their outstanding receivables is an area where they’re all looking for assistance today.

Staying in the managed care arena, we’re doing a good amount of work with denials management. In the past, that was usually done within the facility in conjunction with their therapy provider. At this point, there are a good amount of clients that we have where we are doing their denials management. We are reviewing the therapy documentation, we’re reviewing the skilled nursing documentation, as well as the MDS and other [electronic medical record] documentation, and assisting them with putting together their appeals, and looking at denials.

Why is now a good time to expand McBee’s skilled nursing practice?

Dordick: When I think about where the skilled nursing industry is, you’re in a situation where large organizations are very challenged from a margin perspective, so they need to be much more efficient than they’ve been.

We feel it’s an opportune time to expand out into the space. Unlike when you compare the skilled nursing industry to the home health and hospice industry, there are a number of large national players like McBee that compete with us in the home health and hospice space. Those players don’t exist in the skilled nursing space. There’s a lot of good firms, regional players, that do this that may not have the size and the scale that McBee does to go through.

When we look at it, we believe it’s a very opportune time to go out and compete on a national level with our client base in health care, to be able to add the value that these organizations need.

Skilled nursing has a reputation as the beleaguered sector in post-acute care, and it’s certainly in the middle of a lot of changes. Do you see the sector as distressed? If so or if not, why?

Myzal: I start with the statement that skilled nursing providers are survivors, and there’s no question about that. As an industry, we’ve seen a great amount of change over the past 30 years and that change is going to continue. Over that period of time, the industry has taken a look at itself both from a national and regional market level and created new strategies and new definitions to survive and flourish. Certainly the margins are much more challenged today. The ACO markets and the managed care markets certainly thin out those margins.

However, [by] looking at and assessing markets and understanding the needs and staying diligent, operators will continue to be there. Will it look differently as we move forward than we’ve seen it in the past? Absolutely, every few years, the marketplace and the providers look differently and it will continue to evolve. But I believe that it will survive. It may not look the same tomorrow as it does today.

That element of change leads me to my next question on the Patient-Driven Payment Model. How much work is McBee seeing related to this change, and what have been some of the common questions and problems?

Myzal: Our PDPM market has begun to increase, as we understand more and more about the market and what PDPM is. Facilities are starting to know what questions to ask. Everybody’s been to many many seminars, and all of those seminars tell everybody to be prepared. Very few of those seminars are telling people the strategies that they need do.

So where are we seeing the areas of questions? The first one that is probably the largest one today is therapy contracts. … There are two questions: Should we go in-house, should we stay contracted, or vice versa? And if you’re staying contracted, what do those contracts look like? And that’s different for every provider … based on each provider’s model and their relationship with their therapy providers.

The next area is believing that facilities can live just on a short-term rehab model. That is not the reality of life, and we certainly need to look at: What does your market bear? Doing facility assessments and market assessments, what are the needs? [Can they] provide the services?

Which leads truly into the biggest piece, which is the training and education of the nursing clinical and therapy staff.

[We’re also] looking at assisting facilities with the reengineering of their staffing models and what that looks like — and again, that’s different for every provider. Looking at the overlay programs that these software companies are putting in place to assist with PDPM: How does that match up with what the facilities need to do going forward to line up and capture their documentation?

Given all the changes that have happened and are happening, how do you see skilled nursing changing over the next five to 10 years?

Myzal: Everybody started out as one small operator and kind of grew. Then we became these large national corporations, and then we saw those national corporations break down to regional players over the years.

We’re seeing many many more regional players, and less and less national players, and I believe that is what the trend is going to be going forward, based on PDPM and everything else that’s coming down the line with the reimbursement changes.

You have to create strategies that are strong and efficient around resident culture, with a focus on attracting and attaining and keeping quality health care workers. Training and education and incentives are not going to make it anymore. It’s: What are the SNF providers doing for their employees to help them with their lives, to help them with their professional growth and really understanding those employees?

As the baby boomers age, we already know their expectations far exceed any generation prior to them. Our industry requires that we continue to evaluate and customize services and care models to meet the needs as well as their expectation.

As I said earlier, a short-term rehab model alone is no longer going to be a sustaining factor in our world of ACOs and managed care and the like. You need to really look for those niche markets within each market, and look at facilities and perhaps limit the services, but enhance those services that they provide. You’re going to have 60-year-old and 70 year-old people in for some of those niche services, with the octogenarians, the 80- and 90 year-olds. That’s a real challenge for the skilled providers of today, but that’s the need as we go forward.

Dordick: You’re seeing many more organizations that are skilled providers that are getting out of just the traditional skilled nursing. They’re getting into assisted living, they’re getting into all these other areas. But most importantly, they’re starting to get into home health and hospice. The industry is going to start consolidate in those perspectives too, where those two industries have been sisters or brothers, or however you want to describe them, but they’re going to start becoming much more intertwined.

The post-acute bundle comes on top of it, if that takes place some time in the future. Yeah, we don’t know exactly when, [and] full continuum of health care is one thing. But if you look at what’s just in the post-acute continuum, that skilled nursing piece may look differently than it does today, but it’s going to be a big piece of where baby boomers look to have their care done. So I think the industry is going to look different, but it’s going to continue.

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