Why Avalon Health Care Group Sees Third-Party Rehab as the Answer to PDPM Problems

When the federal government announced the new system for Medicare reimbursement, skilled nursing operators across the country knew it meant a sea change, especially in the area of rehab and therapy.

For Avalon Health Care Group, the Patient-Driven Payment Model (PDPM) meant that it was time to draw on a national perspective on the coming shift. And, management determined, the company could only achieve that goal by changing its rehab model from an in-house business to one offered by an external provider.

“When you are a company of 55 facilities, you run the risk of believing that everything you do is the best that can be done and that there are no better ideas out there,” Lane Bowen, Avalon’s executive vice president and chief strategic officer, told Skilled Nursing News. “We felt like it was important that we might consider bringing a partner in who had a bigger national footprint, who could expose us to other things people are doing in our long-term care space.”


Of Avalon’s 55 buildings, eight are assisted living facilities, while all the others are SNFs — concentrated primarily in Hawaii, Oregon, Washington, and Utah. That West Coast focus, according to Bowen, somewhat isolates the company from innovations and practices in the East Coast, the Midwest and in the South.

So in December 2018, it started on the process to transition its rehab and therapy out from the purview of its in-house subsidiary company, Brighton. In April of this year, the Salt Lake City-based Avalon officially outsourced its therapy to the Plano, Texas-based Reliant Rehabilitation.

The actual transition itself ended up being “fairly seamless,” with only a handful of departures when Reliant took over Brighton’s staff, Bowen told SNN.


“They assumed all of our managers at the facility level, at the district level and also at the region level,” he said. “So we didn’t have any disruption whatsoever. Obviously the change in payrolls and benefits and those kinds of things were well-received, because you become part of a much bigger organization that has much deeper resources.”

One of the benefits of partnering with Reliant — the contract is for more than two years, according to Bowen — is in easing workforce pressures. In some of Avalon’s locations, the company faced challenges in finding the right number of therapists, and by bringing in Reliant as its therapy partner, recruitment became broader and faster.

The result was that instead of the change leading to a decrease in the number of therapists, it led to a decrease in the use of contract therapy and contract labor outside of the relationship with Reliant.

“I think the biggest challenge one faces in this is: Can a company come in and can the therapy department be part of a different company and yet be part of the team at the facility level?” Bowen said. “In our case, [Reliant] came in and they stressed the fact that this is a facility team … and we’re not going to let the contract parameters dictate our day-to-day interaction. In other words, we’re going to continue as though we were before.”

That integration is critical, given the changing role of rehab under PDPM. In the old reimbursement system, SNFs were paid based on the amount of therapy minutes provided; now the condition of the patient, and the accurate documentation of the resident’s needs, determines payment.

That means the role of nursing has become more prominent than ever, which Avalon is keeping top of mind as the new system kicks into gear. The new focus on the clinical needs of patients were part of what drew Avalon to third-party therapy and Reliant, Bowen said, particularly since Reliant had begun to examine the right levels of care, intensity, and frequency for the various categories of diagnoses — a factor that didn’t get as much attention under the old minutes-driven system. The model was developed by clinicians over time, with an eye toward what the final PDPM rule would allow facilities to do, according to Bowen.

“In all honesty, we’re still in the refinement phases of that,” he said. “We’re still learning how therapy and nursing interact differently and more holistically than they did in the past.”

The programs will be tweaked over time, but it was the foresight that was striking, he said. As is true in the broader skilled nursing world, patients are becoming and more complex, with fewer joint patients and more complicated conditions to treat in the SNF. Some of Avalon’s SNFs specialize in kidney care, with dedicated dialysis dens; others have respiratory and tracheostomy beds. Chronic care and wound care are also becoming more common.

Between those forces and PDPM, in other words, there’s a drive to specialize.

“In the past, I think facilities were more generic in their approach to patient care,” Bowen said. “I think we should begin to see what we call niche programming in our facilities now in certain communities. I think that comes from cooperation with the acute-care world and developing clinical programs that can support the individual community needs.”

Because of the importance of clinical programming, the contractual partnership between Reliant and Avalon includes plans to revisit their arrangement after the first quarter of PDPM to see if they made the right assumptions about the care and the collaboration — such as the greater function of restorative programs and the need to have therapy involved in nursing matters, Bowen said.

That process of revisiting assumptions also likely won’t stop after that first-quarter meeting.

“I don’t think the first quarter’s going to solve the problems,” Bowen told SNN. “I think we’re probably going to sit down several times throughout this next year and debate and discuss the assumptions that we thought were right that may or may not be right.”

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