Once wary of accountable care organizations (ACOs) and other new payment models, nursing home owners and operators are beginning to turn in favor of these value-based care structures — in the hopes of gaining leverage in a complex skilled nursing market burdened by high costs of care and staffing pressures.
And although the push to move patients straight from the hospital to home care to decrease spending has been a major concern, more nursing homes are joining ACOs or embracing Medicare Advantage plans to stay relevant.
Skilled nursing heavyweight Genesis HealthCare (NYSE: GEN) for example, created its own ACO — known as LTC ACO — with intentions of drawing in external providers. In addition, industry leaders expressed heightened interest in working with ACOs in 2020 in response to an SNN survey, which indicated that the appeal of joining ACOs far exceeded interest in Institutional Special Needs Plan (I-SNP), a type of provider-led Medicare Advantage model.
Grace Terrell, the recently appointed CEO of the private equity-backed Eventus WholeHealth, brings plenty of experience with alternative payment models to her new role — which will see Terrell look to expand the company’s footprint in the skilled nursing and assisted living sectors.
Based in Charlotte, N.C. Eventus WholeHealth is a physician-led medical provider for skilled nursing and assisted living facilities, offering a range of services from psychiatry to internal medicine to optometry.
Prior to joining Eventus, Terrell spent 20 years as the CEO of Cornerstone Health Care, a physician-owned medical group that touts itself as the largest company of its kind to move to value-based care. She also founded CHESS, a population health management company that worked with multiple ACOs, and has co-written a book about value-based care strategies for health organizations.
SNN sat down with Terrell to learn about her new role, and to explore her perspective on how SNFs can win the day under new payment models.
Let’s start off with hearing about your new role as CEO of Eventus, and any early initiatives you’d like to highlight.
I’m a practicing general internist, and actually still do that one weekend a month now at my old practice. I’ve been in practice since 1993 and have a fairly long history in the nursing home space — everything from being 17 years old, washing the dishes at my first job in a nursing home to being a medical director of the nursing home in the 1990s and early 2000s, as well as being part of a large medical group that had multiple relationships with multiple skilled nursing facilities.
But a lot of my career has been as the CEO of a large multi-specialty group called Cornerstone Health Care. That was one of the very first [health care companies] to sort of move to electronic records, and one of the first patient-centered medical homes. We spun off a population health management company, CHESS, that manages multiple ACOs.
And then I was the CEO of a startup [Envision Genomics] that was focused on populations of patients with rare and misdiagnosed diseases and bringing and models of care that was bringing genomic [data into clinical care].
How did you become affiliated with Eventus?
Just serendipitously, someone had reached out to me on LinkedIn of all things for the CEO role. And I just, I mean, I get chills. This is like my dream job. I just think that there is so much that needs to be done for patients in this space. And there’s just a lot of opportunity to take some of my experiences from the past and bring them to a company that’s really focused on doing some pretty extraordinary things. So I’ve been here since November 1, and couldn’t be happier.
Would you say the new role fits more into your clinical or business experience?
A lot of my past work has been on redesigning models of care that greatly improve the care patients we’re getting — at a lower cost. So when we were at Cornerstone, we did some models that were basically bringing integrated behavioral health into models of care for frail elderly and heart failure clinics. And it was a very, very clinically integrated approach to care. It was a little bit ahead of its time, but I’ve also got experience — having been in a CEO role of various companies since I was 39 years old, so about 20 years, including the medical group and population health management company and a startup.
But I’m just very passionate that if we’re really going to make an impact in care, you actually have to have new models of care and new payment models that come together. And so when I heard about Eventus — where you’ve got truly focused, clinically integrated care that’s bringing psychiatry, psychology, primary care, as well as services like ophthalmology, audiology, and podiatry into a model of care for the patients in long-term care facilities — that was just exactly the way I think that good care is provided. And so it just made a lot of sense to me.
How do nursing homes fit into the Eventus model, and also the wider world of ACOs and value-based care more generally?
You know, nursing homes have been a neglected place in space, by and large, in our national conversation about how to improve health care. I mean, you get some exceptions to that, but the focus has mostly been on hospitals, acute care facilities, and the truth is that there isn’t a lot of opportunity to take our sickest, frailest patients and provide them care that is redesigned in ways that will improve their lives. And it [ACOs] can also provide high-quality care while lowering the cost of care.
And so Eventus brings a clinical approach to this. It was founded in 2013 by some very visionary founders in both behavioral medicine and primary care who together said, in skilled nursing facilities and assisted living facilities, we can work together as opposed to in separate silos and really start doing a much better job. So the concept of whole health is real. And it can be applied directly to how you approach medicine — and it’s not necessarily the way it’s been in the past.
So as far as nursing homes go, with your broader question about accountable care, [nursing homes], to a large extent have been sort of left out of the conversation — and therefore left out of the picture when it comes to design. You’ll see things like in the next generation ACOs where there’s the direct admits to skilled nursing homes that bypass the three-day hospital stay. You see with the bundled payment system a lot of focus on actually preventing the short-term stays in skilled nursing facilities as a way of bundling services and excluding skilled nursing facilities.
But we’re now at a time when we’ve got an aging population and some very old payment models that are starting to really not work anymore. One of the places and spaces where I think you could probably get a 10% to 20% reduction in the total cost of care, and do a much better job for patients, is by thinking about what the skilled nursing facilities of the future look like and start designing to get it there. And it’s going to require an integrated approach to care. There’s just a lot of opportunity, and everything from telemedicine to integrated approaches to much more integrated information systems are just really focused on patient needs — as opposed to sort of the way a lot of things have been done over the past.
With ACOs in particular, there are two schools of thought: The ‘if you can’t beat them, join them’ mentality or there’s, ‘ACO’s are hurting us.’ What are some of the reasons nursing homes can’t acclimate to ACOs and what would need to happen to get more involvement?
ACOs have mostly been organized by medical groups and hospital health systems. So there hasn’t — up until, of course Genesis this year — been a skilled nursing facility leadership that’s looked at ACOs as an opportunity as opposed to a threat. And so if you’re not at the table and part of the game and basically able to say: “We provide value in the whole value equation,” then quite often you’re seen as a threat or something that’s an expense that can be reduced — as opposed to someone that needs to sit at the table so that we can provide the most efficient, best care possible.
There have been several unfortunate things through the years. One was the exclusion of the skilled nursing community from the HITECH Act [of 2009, a federal law aimed at increasing use of electronic health records], so you didn’t get the original regulation that ended up bringing all the worst parts of the meaningful use and whatnot in terms of the overregulation.
You also didn’t get in the initial legislation, the skilled nursing homes part of the integrated information systems that were happening out of the HITECH Act, so it was sort of neglected and they came late to that table, which was passed during the recession.
That was what actually provided all the money. It wasn’t the Affordable Care Act; it was the HITECH that provided the money for all the meaningful use bonuses. But nursing homes were excluded from that. And so they were sort of late to investing in information systems that would allow them to be part of an integrated system. There’s been some legislation and rules making headway with CMS; it’s still been late.
The other, [obstacle] of course, is the regulatory environment of skilled nursing homes is just quite, quite large. And sometimes, in an overregulated environment, it’s hard to innovate. It’s not impossible, [but] it can be more difficult.
Is government funding related to those regulations?
It’s more than that; everybody gets government funding. Government funding is in hospitals; you get government funding in most physician groups. The difference is that with nursing homes, there is just a different place in space — if you think about it, it is where somebody is. It is a home; it’s where they’re living. So there’s an overall fear, to a large extent, about how the monies are sometimes used, and all the old stereotypes of patients that are not getting the best care possible. So the way that our society has decided to respond to those fears and sometimes legitimate concerns is by making it a highly regulated environment in the health care space.
Then switching to sort of the positive side of it — how can nursing homes be attractive to ACOs?
It should be a nursing home that is really taking a very patient-centered approach to their business model in really thinking about how can they actually provide high quality at an affordable cost. How can they partner with the overall health system, including some very basic things such as transitions of care between hospital admissions, hospital discharges to nursing homes, discharges to home, and having the ability to basically not only provide good care while somebody is at your facility, but also be part of a continuum of care and a larger ecosystem that includes when they leave the facility, when they get readmitted to a hospital, how do you prevent the readmission from the hospital? And that requires a much more comprehensive approach to business than just doing really good at the thing you do, which is providing care in the SNF itself.
And so I know it’s obviously so tricky right now with all things changing, from protocols and procedures and coding. Do you expect any challenges with these partnerships in terms of efficiently gathering clinical information?
If you look at what the basic business components are for value based care, investment in information systems is really crucial in most nursing homes – which are under invested in information systems because it hasn’t been required for the fee-for-service business model that they’ve been under.
So there will be some challenges, and those that are successful will not only be thinking about clinical care in the partnerships that we’ve been talking about, but they’ll also be thinking about how they can efficiently have information that’s integrated and determine what can be measured and how they can do it. And that’s just not some of the traditional skill sets that they’ve had. But that is absolutely crucial in value-based care, and it’s an investment that in general, the skilled nursing facilities are going to have to have to understand — and it’s very different than just electronic medical records. It’s just being able to identify patients at risk, and understanding cost structure in different ways.
Do you think that nursing homes might need to be able to afford to outsource to get help with streamlining technology in order to survive? There are all of these companies kind of popping up, like telehealth providers, etc.
Anytime there’s a market, there will be people out there to fill the market niche. So if it is a requirement to survive that you have to have information integration, which I think in the future it will be, and you don’t have that skill set in the short run … then you can either partner with people, you can build it from scratch, or you can merge or whatever. And for most skilled nursing home companies, right now [they] are going to be partnering with people, because it’s just not part of their DNA as it relates to what they’ve done in the past. So that’s the nature of any change in the business model.
When you say partner, does that mean hiring outside help?
It would be looking for vendors who could help provide the types of services that would allow nursing homes to be able to measure quality and cost of care and provide that information, an integrated platform, to those that need it. So I don’t think you’re talking about consultants, necessarily. You’re talking about somebody that that’s their business, and you become a client of theirs.
Is there anything that you think ACOs have done really well for individual residents? Are there examples of individual residents and ACOs that have really helped along the way?
I practice outpatient ambulatory medicine, just a little bit, and it’s a geriatric practice. From time to time, through the years, it’s clear that they need to get into a skilled nursing facility.
The families in the past were doing anything they could — or we had to wait until they were just at the most dire straits in that inpatient criteria for admission to a hospital, basically, to get them into a skilled nursing facility. And in that particular pathway, you had to be pretty sick before you could get in. And so some of the ACOs right now, with the three-day SNF waiver, I’ve seen in my own practice … it’s improved things for patients because you’re able to identify somebody that has skilled needs without going through the old-fashioned fee-for-service [hospital process] because the ACOs have waivers, and can determine if they meet criteria that they can work directly with the SNF.
They can get them better faster — and faster before they’re sicker, and without a big hospital bill or a hospital admission that they didn’t need. It’s common to think of nursing homes as being the place you don’t want to go; you want to stay at home.
But I have seen the opposite. A patient that I was taking care of last year was in a very end stage with her dementia, and her husband wanted to keep her at home. It was just not a good situation. They didn’t have any family. They didn’t really qualify for any social services. And he was having trouble with just the basic things that any skilled nursing home could do easily. I think they were eating chicken nuggets from a chain three times a day, so she was getting all sorts of problems. Well, he ended up having a small stroke. As a result of that stroke, she was able to get into a nursing home because there was nobody there to take care of him.
And when I saw him, she was so much better. He was [also] doing so much better. It ended up being a great thing. We typically don’t think of things like that. They both got better because it was just way too much of a burden. He couldn’t handle it, and there weren’t home social services available.
Now, if we had a much richer home-and community-based type of social services to identify patients with issues like that and provide services, that would be one thing, but we do not in most communities.
Outside of ACOs, can you can think of ways that SNFs can participate in value-based care initiatives and how they can take the lead in that conversation?
So I believe that Eventus WholeHealth — which is providing a group of clinicians that are particularly looking at skilled nursing and the long-term space — could partner with skilled nursing facilities themselves, and we could together be an ACO that would not be part of some community ACO, but could basically take risk and provide better care by really changing the conversation. And that’s something that I believe more skilled nursing facilities need to be thinking about: Could they be part of something like that? Other aspects of it would be to partner — value-based care is a broad term. So as the communities are looking at bundled services, you can imagine with some of the direct contracting that’s just coming out of Washington — and by the way, I serve on what’s called the Physician-Focused Payment Model Technical Advisory Committee (PTAC) in Washington, which [works on] alternative payment models.
One aspect of what the skilled nursing facilities could do would be to look at it from a community-based approach. Are there ways that there could be direct contracting, where it would provide new alternatives to the current payment system in ways that would be that would be better? Are there possibilities, particularly in the rural areas across the country, where skilled nursing facilities could partner with technology companies and provide specialty care and other things in environments that where those resources have been scarce?
If we had an integrated telemedicine system where specialists could literally provide consultations in the skilled nursing facilities, it could be a real cost saver with respect to the types of costs that you get from shipping patients into acute care settings or large medical centers. At the same time, and it would be better care for the patients.
You hinted at growth in ACOs over the next decade. Do you have any particular outlook as to why things are shifting so much in the skilled nursing space?
So if you look at what the current administration is saying, including [Health and Human Services] Secretary Azar or [Centers for Medicare & Medicaid Services] administrator Seema Verma, you will see that just like the previous administration, although the politics are different, there is a real focus on pushing the health care system in general to taking on more risk.
And there’s two types of risk: there’s actuary risk, where you’re taking on risk for the total cost of care for a population, and there’s professional risk or service risk, where you’re taking on risk for doing a good efficient job for the services you provide.
And I believe that all of us, particularly skilled nursing facilities, need to realize that the push to put more risk on providers of health care services is not going away. And those that really focus on that within the context of their own services …are actually going to enjoy it. It’ll be a whole lot better than just sitting there with some star system-based on process measures and penalties, because it will be the real measure of outcomes.
I don’t think that push is going to go away, although it’s not going to be an easy journey.
Because they’re adding more complex patients to nursing homes, I’m wondering if cost cutting would be a challenge with this population — because I imagine care would be more expensive although reimbursements tend to be higher.
It just depends. You have the cost covered of providing the services, but a lot of the cost of things like that is in the acute care setting. It’s not just the cost of providing ventilators, for example, [you might ask]: “What is the cost of providing ventilators in an acute care setting with all the overhead you get from hospitals and all the cross-subsidization?”
So when you take that out, and you say, “Well, what does someone really actually need?” There may be costs associated with it, but it’s not near what it would be potentially in an acute care setting. So what you get would be decreased cross-subsidization if things dwere pulled out of more expensive settings.
But you still have to have those costs of the services covered. And you’re absolutely right that the acuity of patients and skilled nursing homes is going up and that is something. It is [cheaper] if it’s done right.
Providing IV fluids to somebody in a nursing home — which not all nursing homes do — sometimes is all that’s needed [to] prevent a hospitalization that could be thousands of thousands of dollars. So yeah, you’ve got to cover the cost of having the skill set of people that are providing IV service, but you’re not covering the cost of ER on top of it.
It’s really common when when you’re in one business model and the world’s changing, you have complaints and fears and concerns about it — but there’s also opportunity. It just makes you have to rethink what your value proposition is.
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