In the competitive world of short-term rehab, success depends on both who and what you know — and, by extension, how you tell your individual building’s story to the people whose opinions matter the most.
The Medicare-focused building has been hailed as the future of skilled nursing and questioned as a difficult-to-achieve pipe dream, but a group of leaders in the space insisted that there’s a clear blueprint to win in the short-term niche.
“For me, all my chips are on the table for pushing to medically complex,” Tim Fields, CEO of short-term provider Ignite Medical Resorts, said during a panel discussion at the Skilled Nursing News Summit in Chicago last week.
As the industry prepares for the Patient-Driven Payment Model (PDPM), which will bring financial incentives to caring for higher-acuity residents, adding certain specialty services has been floated as a way to thrive under the new system. But for the companies that are already there, offering the right mix of services means that referral partners reach out to the SNFs — and not the other way around.
Mark Fritz, president of Bridgemoor Transitional Care, said that just within the past week, multiple managed care companies had approached him about working within a new risk-based model based on their existing success in the short-term marketplace. While some operators might find the managed care firms’ demands — a 17-day length of stay with a hospital readmission rate of under 15% — to be daunting, those stats weren’t a problem for Bridgemoor, which posts a return-to-acute rate of under 6% and an average length of stay of 12.6 days.
“I didn’t feel like they set a very high bar to achieve,” Fritz said.
Though those rates may seem unsustainably low for operators that have a mix of short- and long-stay residents, Fritz said that Bridgemoor’s four-building footprint makes up for it with volume.
“We’re consuming a lot more patients because of our length of stay, with collaborating with these physician groups and hospitals and managed care companies,” Fritz said.
Admitting is the first step
Industry leaders and consultants have long preached the strategy of approaching referral partners with firm data about their outcomes, demonstrating how an individual operator could solve a hospital’s toughest pain points. That contrasts from earlier eras in the SNF-acute care relationship, when landing referrals could be as simple as offering a free breakfast to the right hospital employee.
Joseph Kiernan, chief strategy officer of the New Jersey-based Ocean Healthcare network, described the shift in succinct terms back in the spring of 2018: “It’s no longer about donuts — it’s about data.”
Fields expanded on the idea at the SNN Summit.
“This is not a marketing meeting where you’re going with fancy brochures and talking about how great you are,” Fields said. “It’s learning where their pain points are, and how you can be a resource to them.”
But operators should do their homework about the hospital networks themselves before even entering the room, Blake Gillman, vice president and director of post-acute care services at Life Care Services, said.
“The hospitals already know everything about us. We profess to know everything about them — we really don’t,” Gillman, whose company operates the continuing care retirement community (CCRC) model, said. “The closer we can get to that alignment, the better off we’re going to be.”
Once a provider has studied up on the needs of prospective hospital partners, they must ensure that they’re pitching their solutions to the right people. At the Texas-based Bridgemoor, for instance, Fritz focuses on a hospital’s chief financial officer and chief medical officer above all other C-suite executives.
“We can show real data: This is what our length of stay is. And not just our overall length of stay: This is our length of stay by diagnoses. This is our return to acute by diagnoses,” Fritz said. “That means something to your CFOs.”
Once both sides have made those connections and set up a good referral partnership, operators should be open to ways that hospitals, managed care organizations, and other groups can sweeten the deal. A local hospital system in Bridgemoor’s footprint hired a physician to work on the ground at one of its rehab centers, in order to bolster care coordination and potentially prevent unnecessary hospital readmissions.
And it isn’t just about knowing your specific company’s role as a hospital partner; providers need to be aware of the other solutions available in the marketplace, with Fields noting that he considers long-term acute care hospitals (LTACs) and other acute rehabilitation facilities as Ignite’s direct competitors.
“If you want to be the discharge destination for the hospital, you have to provide medically complex care that the hospitals and the physicians and the payers want,” Fields said.
Overcoming investor skepticism
With all that said, setting up these intricate post-acute care networks represents a considerably different path to success than the traditional Medicaid-heavy nursing home — and investors might not always be on board with taking a risk on a unique model.
“Every single time I’ve talked to a bank or a REIT or a private equity investor, they keep asking the same question: Why can you run a model that is brand-new development, short-term rehab, and all those facilities with Mainstreet failed?” Fields said.
The Carmel, Ind.-based Mainstreet, a developer of skilled nursing facilities, launched the Rapid Recovery Center post-acute model in 2017 with lofty goals, planning to open and operate 11 facilities in Arizona and Texas over the following 18 months. But the company pulled out of the Arizona market entirely in March 2018, and in February sold the operations of four Texas facilities to Fritz — a former Mainstreet executive who helped to develop the RRC model.
In turn, Fritz formed Bridgemoor, and touted the new company’s smaller footprint in an interview with SNN at the time.
“We really look at our size as our advantage,” Fritz said.
Bridgemoor has demonstrated early success in its smaller footprint, and Fritz has wholeheartedly embraced the trial-and-error nature of finding a model that works.
Soon after taking over the buildings, management noticed that Bridgemoor was still struggling to lower its rehospitalization rates. Fritz quickly diagnosed the problem: Outsourced laboratory reports took up to seven hours to complete, with many residents forced to return to the hospital in the meantime. Bridgemoor then decided to invest in in-house lab capabilities, and has also invited a consultant to observe its operations and help management identify certain “blind spots” — added steps that are increasingly vital to success, in Fritz’s view.
“We are moving into an area where skilled nursing hasn’t been operating in ever before,” he said.
Fields, meanwhile, said he found it instructive to perform deep financial dives into examples of facilities that had trouble succeeding in the space — properties with solid overall EBITDAR stats, he said, but lackluster performance on the “R” part of the equation.
The lesson, according to Fields, was simple: “Not to do a deal just to do a deal, but do a deal that makes financial sense, so that it’s sustainable.”