Adult Day Centers Provide Middle Path in Shift to Home — and More Competition for Skilled Nursing

Amid the macro-level shift of care from institutions to the home, adult day providers are positioning themselves as an in-between option for caregivers and their families — as well as direct competitors to skilled nursing facilities.

In the last six years alone, the number of adult day providers in the United States has doubled, according to Centennial Adultcare Center CEO William Zagorski, with operators in the space only poised to grow further.

“I think in the next five to seven years, you’ll see that adult day services are an absolutely essential and integral part of the long-term care continuum — between the value-based design and the reimbursement models,” Zagorski said during a Tuesday presentation on adult day services at the Healthcare Innovation and Investment Conference (HI2) in Chicago.


Both private payers and the federal government have increasingly incentivized the transition of services once provided in institutions — including both hospitals and skilled nursing facilities — to the home setting. Receiving care in one’s home is both preferable for the patient, the logic goes, and ultimately cheaper for the health care system at large.

Whether or not people who today reside in skilled nursing facilities, either for short-term rehab or long-term custodial care, can safely return to the home remains a matter of debate; hospital executives and big-picture health care thinkers tend to think it’s either viable now or will be in the near future, while leaders in the SNF industry often insist that their setting provides the best quality care at the lowest cost for people who require around-the-clock nursing attention.

Enter the adult day center, a kind of third way that provides elements of both worlds. In this setting, older people typically receive transportation to a communal care facility for a set number of days per week, receiving health services and meals while also interacting with other adults before returning home at night. Advocates for the model say that it promotes positive social spaces for seniors — who are often affected by the loneliness and isolation of living at home — while also allowing them to maintain their independence and receive needed care.


“They have have fun, and they have friends, and so they’re happier,” Merle Griff, CEO of adult day services provider SarahCare, said during the presentation.

The model also appeals to the adult children of elderly people, who see the daily services as a key respite from the often stressful task of caring for people with diminished physical and mental capabilities.

“The consumer, in this case, is the caregiver — people sometimes think about the client being the primary customer, but it is the working caregiver,” Christopher Vito, president and CEO of Nevada Adult Healthcare Centers, said.

While the phrase “adult day care” might conjure images of board games and craft projects, Vito and his fellow panelists described a setting that can offer many of the same services as a skilled nursing facility. For instance, the Tennessee-based Centennial Adultcare provides tracheostomy care and tube feeds, and Nevada Adult Healthcare Centers staffs its buildings with nurses, physicians, therapists, and pharmacy employees.

“I anticipate, in the next few years, the acuity going even higher, because we’re moving away from inpatient services more to community-based services,” Zagorski said.

Reimbursement structures haven’t quite kept up with the growth in both acuity level and demand for adult day services. Medicaid and private-pay insurance remain the top payers in the space, with limited Medicare participation through the Programs for All-Inclusive Care for the Elderly (PACE) program — though the exact coverage requirements vary by state.

In addition, Zagorski noted that the Centers for Medicare & Medicaid Services (CMS) in 2014 made it more difficult for SNFs to dabble in adult day services. In a final rule on home- and community-based services (HCBS), CMS took steps to ensure that Medicaid-funded HCBS is actually happening in the community, and not at a nursing facility or other institutional site of care.

“There are a number of states that allow adult day programs in these settings,” national provider group LeadingAge wrote in a 2018 explainer on the rule. “These states will be subjected to additional scrutiny by CMS to ensure that the setting is home and community-based and does not have the qualities of an institution.”

The picture for adult day providers could soon change, however, as Medicare Advantage plans can now cover their services, and industry is increasingly lobbying lawmakers and officials to make the option a part of the standard Medicare benefit.

“We’re here now in 2019. Care is moving away from inpatient care to more community-based services,” Zagorski said. “So our pitch to Medicare is to modernize Medicare to more outpatient services.”

To achieve that goal of wider acceptance, operators are turning to what should be a familiar playbook to nursing home operators: tracking key outcomes metrics, such as readmissions and falls, and bringing the results to government officials and managed care organizations (MCOs). In addition, Vito said he’s looking to partnerships with other providers along the continuum as a growth area.

“I think the future of adult day care is incorporating wraparound services — meaning that synergy between adult day care, home care, home health, hospice — that would be attractive to an MCO,” Vito said. “The key, really, is the health care services that are being offered and that level of care, because there’s a clear indication of premature discharges from the higher levels of care.”

There’s also another — and perhaps ultimately more compelling — reason that payers will listen.

“Adult day still remains the lowest-cost long-term care option. It’s about 50% less or more,” Zagorski said. “The value has been there. It’s been demonstrated.”

Robert Holly contributed reporting to this story.

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