Editor’s Take: Skilled Nursing Industry Shouldn’t Block Out the Long-Term View When Making PDPM Changes

Just about every major policy change, no matter how well intentioned, has butterfly effects that no one can foresee — along with changes that, while foreseen, still can cause real harm to real people.

The news of therapy layoffs and hour reductions that swept through the skilled nursing world earlier last year fell into the latter camp.

From the day it was announced, the Patient-Driven Payment Model (PDPM) was positioned as a way to cut down on therapy services that the federal government had long deemed unnecessary or excessive. Officials at skilled nursing operators and their landlord partners touted the use of group and concurrent therapy as an expense-saver in a post-PDPM world where minutes don’t directly generate Medicare revenues, and advocates trumpeted a return to clinician-led care plans that had nothing to do with reaching certain volume thresholds.


The skilled nursing industry, for better or for worse, had built its entire therapy mindset around minute counts, incentivized by a now-defunct Resource Utilization Group (RUG) system that paid out for the time that operators put in.

Mark Parkinson, CEO and president of the American Health Care Association, summed up the conundrum in an interview with Skilled Nursing News back in August 2018, soon after the rule change was announced.

“They have created a system that is heavily focused on therapy, and then are complaining about the inevitable result it would create,” Parkinson said of CMS, adding that the government’s description of providers abusing the payment rules was “offensive.”


Like many other leaders in the space, Parkinson has also since repeatedly emphasized that PDPM’s focus on patient need should be a good thing for both operators and residents in the long run.

But those two truths — PDPM’s stated intentions and skilled nursing’s decades-long reality — meant the writing was on the wall for rank-and-file therapists. Though they didn’t make the rules, and didn’t necessarily set the strategies, they found themselves out of jobs, switched to as-needed status, or staring down mounting productivity demands.

Many of them reached out directly to me in October, filling my inbox with stories of personal financial worries and fears for their residents in the days ahead. These employees stand as early casualties of the new model, and they have every right to be upset about a working world that changed seemingly overnight without their input.

While it won’t provide comfort to therapists in an uncertain time, there was an inevitability to the news — and a sense that, at least in terms of pure balance-sheet calculus, the cuts could have been worse. To paraphrase many people I’ve spoken with in the wake of the change: “What else did CMS expect was going to happen?”

That brings us to the unforeseen consequences. Part of what made the therapy headlines jarring was the fact that the shifts came so quickly: Surely, some believed, operators and their therapy partners would have waited for the first few billing cycles before making any adjustments to staffing levels or therapy strategies.

To be clear, not every skilled nursing or contract therapy provider has jerked the steering wheel in the opposite direction, and it’s likely wise to wait for firm results on minutes and outcomes before making any sweeping judgements about the strategies that operators and their partners have deployed.

But if there’s one immediate takeaway from the shift, it can be found in the words of a therapist whose job was cut shortly after PDPM took effect in October. This therapist, who recently spoke to SNN for our anonymous Confessions series, took pains to emphasize that their issue wasn’t with the system itself — in fact, the therapist noted that in an age of squeezed reimbursements, changing the rules to focus more on patient care can only be a positive.

“PDPM should be a good thing because they’re running out of money, and we don’t want to be giving services [that people don’t need],” the therapist said. “And I know there are nursing homes that just keep people 100 days and give them lots of minutes of therapy when it’s not appropriate.”

That opinion puts our anonymous therapist in agreement with pretty much everyone in the space, from lawmakers to resident advocates to investors to operators. But unlike anyone else, PDPM for the therapist represented the final straw in a long line of problems that stretched back for nearly a decade, from static wages — the therapist reported not having seen a pay raise since 2011 — to smaller issues that added up to make he or she feel unimportant in the workplace, such as a lack of support from techs and increased paperwork demands.

“It’s all the small little things that make you feel like you just are being erased, and you’re not valuable to them because you’re not making money anymore,” the therapist said.

In an industry that has struggled with a persistent inability to keep its buildings fully staffed, operators simply can’t afford to make any employee feel irrelevant. Everyone knows the population is aging — if a therapist doesn’t feel valued and wanted at a nursing home, he or she can go next door to an outpatient clinic, or a private-pay senior living facility that has increasingly invested in their clinical capabilities.

In fact, in the latest edition of our 2020 Executive Outlook series, Bill Janis and Mario Wilson of Helios Healthcare Advisors identified the latter trend as a growing area of competition for nursing homes.

“We have seen a number of assisted living communities build rehab gyms. This is achieved either by renting out space to a therapy company, or actually obtaining the license and providing these services themselves,” the managing directors told SNN. “From a marketing standpoint, it’s easy to see how a post-acute patient might feel more comfortable receiving care in a more vibrant community with healthier residents.”

The demand from seniors who require physical, occupational, and speech therapy will only grow through the 2020s and beyond; competition from senior living and home health operators, which already provide services that consumers find preferable to nursing home care, will balloon accordingly.

PDPM is a complex system, which prompted operators to make difficult decisions in the short term. But in the long term, skilled nursing facilities’ ongoing success will rest on their ability to attract and retain therapy talent, while also proving to the next generation of therapists that the nursing home industry has something to offer them — other than uncertainty.