Parkinson: Releasing ‘Secret’ List Positive for Industry, But Nursing Homes Must Evolve — or Become a Commodity

The release of a so-called “secret” list of nursing homes considered for inclusion in a program for the nation’s worst properties sent shockwaves through the industry early last month — but the man in charge of the for-profit space’s primary trade group says the sunshine is ultimately a good thing for operators.

As the skilled nursing world endures another round of negative press, American Health Care Association president and CEO Mark Parkinson told SNN that he welcomes the latest round of transparency from the Centers for Medicare & Medicaid Services (CMS), which agreed to begin releasing that candidates’ list on a monthly basis in the wake of the leak by two U.S. senators.

Speaking on the latest episode of SNN’s podcast — “Rethink: The Future of Skilled Nursing” — Parkinson laid out his organization’s desire for operators to take a more aggressive approach when telling their stories to the public, while also working harder to prevent the kinds of isolated horror stories that drive the national conversation around long-term health care.

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During the course of our conversation, Parkinson also predicted that operators that don’t embrace the current changes sweeping the space will find themselves left behind as a mere “commodity.”

We’ve edited and condensed some excerpts from the conversation below; for the full episode, visit SNN’s pages on SoundCloud, Apple Podcasts, and Google Play. And if you like what you hear, make sure you subscribe so you don’t miss any of our twice-monthly editions.

What’s your take on the recent interest in the nursing home space? When I first started covering the industry in 2017, most people seemed optimistic that a Republican administration would mean less red tape.

I think you’re exactly right. We have a Republican administration, and half the Congress being controlled by Republicans, you don’t think you’re going to get all this regulatory stuff and all of the chatter about care. But we certainly have, and I think it’s happened for a variety of reasons. One is just the fact that Chuck Grassley’s the chair of the Senate Finance Committee. As a Republican, [he’s] led the way in the whole nursing home world for about 30 or so years. And so I think that’s been a part of it.

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Another big part of it is the one-off really bad things that occur in nursing homes are tragic and very newsworthy. The run-of-the-mill things that we do in our buildings every single day, that 99.9% of the time work out, result in really good care, are really not that newsworthy. We’ve had some really bad stories that have occurred because of some incredibly bad care, and that highlights that very small percentage of cases.

What we’ve been telling the members for the whole eight-plus years that I’ve been here is that the best way to combat it is to as a sector, get better on quality, and we’ve done that. You look at the quality measures that CMS has on Nursing Home Compare, which we really focus on — and on almost all of them, as as sector, we’ve gotten better. But again, that huge data story just isn’t as interesting as the individual horrendous cases that end up making the headlines.

We probably need to do more than just get better collectively. We probably need to also get better at telling our stories of really great care and personalizing it to individual situations. But you’re absolutely correct. We thought that coming into the year, there’d be a lot of discussion about nursing homes and regulations and all that. There’s actually been more than we even anticipated.

What’s your opinion on the release of the so-called “secret” list of Special Focus Facilities? Should it be available to the public, and if so, how?

A number of these investigations and activities that have taken place can actually lead to positive things. I think the Senate Finance Committee hearing that was held by Grassley is an example of that. There was some really positive discussion that came out of that hearing, talking about the need to adequately fund nursing homes in order to get the kind of care that we all want.

I think the same is true of this effort by Sens. Toomey and Casey to divulge this list, which we’re all for. We believe in transparency, and I don’t think that CMS was intentionally hiding anything — it’s just that no one really ever asked for this list to be published. I think most of the listeners know that there’s just a very small number of buildings every year that are put on a special focus list — which is about 88 — then there are about 400 that receive notices: “Hey, you really need to get your act together, because you’re getting pretty darn close to being put on the special focus list.”

The actions of Sens. Toomey and Casey have led to that group of 400 now being disclosed, and we’re fine with that. What I would say to consumers and residents and residents’ family members, though, is that there’s already much more meaningful information available than just that somebody might end up on the special focus list. That’s the information that’s on Nursing Home Compare, where you can look at every single of the 15,000 nursing homes in the country and see exactly how they perform on the 24 quality measures, which I think are way, way more important than that somebody might end up on the special focus list.

You principally end up on the special focus list because of really bad surveys. Surveys can be quite subjective. The quality measures that are on Nursing Home Compare are objective measures of quality, and so I think that residents and their family members should really be focusing on Nursing Home Compare.

And then I also think what they should be doing is they should run out and visit facilities, because when you tour facilities and you walk around facilities, that’s really the best way to understand if the care that should be given is being given or not. We don’t really think it’s that monumental of a thing that this list of 400 buildings is now public, but we’re all for transparency.

One other thing that I would add is that we’ve been lobbying CMS now for several years to add customer satisfaction to the quality measures. We think the results of customer satisfaction surveys is probably the one item that would be most helpful to people in figuring out if the buildings they’re looking at going into — or that they’re already in — are any good or not. So far, we haven’t succeeded with CMS and that, but we think that with all of this chatter around nursing homes, that we may have a chance to get them to do that this year.

Speaking of transparency, what about the issue of fuller disclosure of nursing home ownership information — it’s been another topic of conversation, especially given the issues surrounding Skyline Healthcare.

First of all, all of these topics fall into the category of: The overall sector being tainted by a minority of bad providers, whether you’re talking about the special focus list or these horrendous examples of bad care that occur, or you’re talking about a Skyline situation where some people got involved in managing way, way too many buildings when they really didn’t know, apparently, what they were doing — the whole sector gets tainted.

One of the things I think has been a real wake-up call for us this year is that we really need to get better about figuring out what we’re going to do as a sector about [under]performing buildings. I think you’ll be hearing some things for us over the next weeks and months, where we really try to tackle that situation.

Again, the Skyline example that you talked about is a really good example of that, and we’re going to continue to get tainted with those types of things until we take a more aggressive position and become more of a part of the solution.

The ownership thing is complicated. The complicated ownership situations are primarily because of tort law, and you’ve got a little more than a handful of states where you’ve got a very aggressive plaintiffs’ bar, and tort laws that allow one bad incident in a building to literally shut the building down. The result of that is the lawyers have gotten really creative at developing structures to insulate owners from various litigation situations, and as a result, it’s pretty hard to figure out who actually owns the buildings.

That’s not done for any villainous reason other than to improve the situation as it stands from a liability situation. But it creates the perception that people are trying to hide from normal consumers who the actual owners and operators are, and that’s really not the intent. The intent is really driven by liability situations. I don’t know if there’s a way to clarify ownership and yet still keep these separate legal structures out there, but if there’s a way to do that and provide that information, I think the sector would be all for it.

We joke about it around the office here — we’re trained journalists and we find it difficult to figure out who owns these companies. Is there a way for states to get that information to ease the vetting process?

The states absolutely have the power to do it. Unfortunately, they haven’t. What we learned from the Skyline situation is that there’s an enormous variance in what states require to approve a change of ownership. Some states have a very thorough vetting process, where they make sure that you’ve got experience in running nursing homes, you have a capital structure so that if things go wrong, you can keep the doors open and continue to provide quality care. And it takes time, and there’s a real vetting that’s done.

And then on the either hand, you have states — and it appears that Pennsylvania is one of those states — where it just doesn’t take very much at all to be approved to run a nursing home, which is not good policy. Nursing homes are basically, at this point, little hospitals, and the state needs to make sure that people that are running them know what they’re doing.

When states get burned, they’re going to naturally respond — and an example is Kansas. Kansas is another state that had a number of Skyline buildings in it. In response to the receivership that was created, the state just passed legislation that was supported and advocated for by the sector, that created a real due diligence process for change of ownership.

One of the things that we’re looking at, as part of our package of starting to take responsibility for some of these poor performers, is whether we should be going to the states that don’t have a thorough vetting process and encourage them to get one in the same way that Kansas has done.

What’s a bigger issue right now: PDPM or Medicaid?

If I could only fix one of the two, I would fix Medicaid. The crisis we have in the sector right now, from a financial point of view, is not a Medicare crisis. It’s a Medicaid crisis, and it’s the chronic underfunding of Medicaid in many states in the country. The reason it’s probably a hard question for some of the folks that you talk to to answer is that it’s a have- and have-not situation with Medicaid.

There are some states where the Medicaid reimbursement is okay. Members come pretty close to what the actual costs are. And then there are a majority of states where the Medicaid reimbursement is just awful. Part of the known reality of running a nursing facility in those states is that you’re going to lose a whole bunch of money on Medicaid.

If I could just fix one, I guess it would be the Medicaid underfunding. But we don’t feel like we can fix just one. We feel like we have a shot at creating both a fair Medicaid system and a good Medicare system, and PDPM is right in front of us, so it is incredibly important. We’re spending most of our time right now helping the members get ready for PDPM, and then working with CMS to make sure that it gets rolled out in the right way, and when the inevitable glitches occur, we’ll be in a position to get them fixed.

You guys make the news, and so you know that most of the sector’s pretty excited about PDPM, and our membership reflects that as well. I think that there’s just a general dissatisfaction with the current system, and its incredible dependence upon therapy, and a real excitement about being able to look at our residents and patients in a new way, and providing new and additional treatments beyond just providing therapy. I think the sector’s pretty excited, and we are, too.

It’s still funny to me that in such a heavily regulated industry, everyone seems to be on board with PDPM as a positive development — from operators to investors to the government.

If there’s anything that worries me, it’s that everybody’s so certain that this is going to be a great thing. I’m old enough to have seen multiple situations where, when the whole crowd agrees, you often get surprised negatively. But hopefully that won’t occur here, and this will turn out really well.

We’re still all systems go for implementation on October 1?

We talk with CMS almost every day, and some days more than once, and they’re 100% go on October 1. At no point, in the last year, have they ever said: “Hey, we have a contingency plan in case we don’t go live October 1. “

I think there were some skeptics about whether or not it would be ready by then, but I think CMS has really gotten its act together and worked hard on this. I think most providers have. We fully expect it to go live October 1.

What does the industry look like in five to 10 years?

I think in five or 10 years, it will look pretty much physically the same. It’s just not possible to rebuild the whole sector in that short of a period of time. But I think from a care perspective, it’ll be fundamentally changed. The successful providers will be the ones that have taken available opportunities out there to control populations.

The successful providers will often be their own insurance companies — they’ll be their own Institutional Special Needs Plans, and probably have branched out into the community, so that the nursing facility is really the focal point of care for older people and people that are approaching aging within that community.

Operators that don’t do that are just at risk of becoming a commodity in other payment models, and that’s really not sustainable. I think you’ll see more and more providers becoming managed care plans, more and more providers getting into population health management outside of the walls of their buildings, and those are the folks — provided that they also provide exceptional quality — will not only survive, but will thrive over the next five to 10 years.

I think people who hold onto the old payment models and the old role that we played in various networks are not going to do very well.

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