Some leaders embrace change at the core, and Dr. Grace Terrell is one of them.
As CEO of skilled nursing-focused physician group Eventus WholeHealth, Dr. Terrell has been a driver of change and thought leadership throughout her career.
A leader of health care innovation and delivery system reform — and believer in the study of population health outcomes — Dr. Terrell was the former CEO of Cornerstone Health, served as the founding CEO of population health management company CHESS, and was CEO of precision medicine company Envision Genomics.
As a 2020 Changemaker identified by Skilled Nursing News, Dr. Terrell spoke with us about her vision for long-term and post-acute care payment models, how to get operators on board with embracing change, and where she sees health care innovation going in the next five to 10 years.
Tell me about your background.
I’m a general internist who has practiced primary care since I got out of training in 1993. My background is a little different than that of many people in the space. For a long time, I was the chief executive officer of a large multi-specialty medical practice called Cornerstone Healthcare, that was one of the first to move towards value — and we’re thinking about it from a redesign of payment models at the same time that we were redesigning models of care. So we had some really good results from some of that early work from, say, 2007 to 2015, showing decreasing costs and improved outcomes. That was a little bit ahead of its time.
We spun off a company called CHESS. That is a population health management company that I also was the CEO of, that ended up being the enablement partner for accountable care organizations. We took risk contracts, including ACO contracts with Medicare Advantage products as well as a Next Gen ACO, and we’ve been very successful in that within the region of North Carolina.
So I had that background, and then actually worked in a start-up in something that sounds really different, but it’s not underneath — and that is I was working in the rare disease space in a startup that was focused on whole genome sequencing and designing models of care around people with rare disease.
So if you listen to the themes of all that, a lot of that is around thinking about: How do you design better ways of taking care of people, and doing it in a way that you’re paid differently or paid in a way that’s sustainable in the world of alternative payment models? I’ve got some background in terms of some policy work I do in Washington; I’m one of the commissioners for PTAC, or the Physician-Focused Payment Model Technical Advisory Committee. And I’ve also been very involved for many years with the American Medical Groups Association, and its work on really integrated care.
I do have some skilled nursing background as well, including everything from washing dishes in the nursing home in high school to being the medical director of a large nursing home earlier in my internal medical career, in the late 1990s and 2000s — and then the work we did at Cornerstone Medical Group, where we had multiple SNFs that we provided services for, along with other types of medical care.
But I got the opportunity, and was recruited in this position, in November of this past year, in 2019, and really felt like it was my dream job [working with] a population of patients that are vulnerable and high-risk in a market that’s just really ripe for innovation.
We all know that the median margins for skilled nursing facilities is about negative 1.3% right now. You’ve got complexity. You’ve got old physical plants. You’ve got a highly regulated market. And if you can really think about starting from a care-model point of view in redesigning care for patients that are really vulnerable, and do it in a way that’s really focused on a much more integrated approach, then there’s going to be, I believe, a real opportunity as the population continues to age at doing something that will have some real meaning. So that’s what attracted me to this position, and I’ve never looked back. It’s wonderful.
How do you get operators to embrace looking at the big picture when, as you mentioned, margins are razor-thin and there are all of these other pressures affecting them on a day-to-day basis?
There’s a complicated question, but I think that the way I’m thinking about it is that right now, at Eventus, we are providing a group of services that are clinical in a fee-for-service model for skilled nursing facilities that, by and large, are fee-for-service too — and the business model behind that is to be efficient and get variance out. And everybody does better, as we know, with higher quality, including the SNFs with their higher star ratings.
So you can start where we all are now, which is focused on improvement in clinical outcomes; that makes sense in fee-for-service. On top of that, you have to invest in integrated information. And this is the part where it has not been easy to do within the skilled nursing space — which was excluded, as you know, from much of the initial meaningful-use monies, and did not make some of the some of the investment that was done by the rest of the industry, for better or for worse, into integrated information.
Some of that, of course, is being regulated now, and we’ll get better. But if you’re able to provide and look at information about the population you’re taking care of, and understand the opportunities, the risk and the variance — and then you apply that, then the financial model actually is much better than where the skilled nursing facilities are now. As we are able to integrate care model redesign with information integration, then you start to put together a framework for population health that is not just in theory or high-minded, but is actually something that can be implemented in incremental ways that will be better for patients — and financially possibly a much more viable model in the long run for the operator.
The problem for SNFs is everybody’s seen it as an opportunity, in the short run, just to take money out of it. Just think about the hospital-focused ACOs: “Oh, well, let’s just reduce the length of stay in SNFs.” Well, that’s a very threatening thing under the current model. A different model would be a skilled nursing facility partnership. Say we have a population of patients that’s highly vulnerable, high-need, and if we had global payments, we could redesign care in ways that would be financially sustainable and better for the patients — and that flips it on the hospitals, quite frankly.
The nursing home itself has really changed in the last decade or so, evolving from primarily institutional care to a higher-acuity setting. Does the nursing home model have to evolve more than it has over the last 20 years, or is the current level of acuity creep good and it’s just time for the models to evolve?
Yeah, I think it probably is. But I think that there can be different payment models as well as different models of care — and for that, you have to be really specific about the population that you want to take care of, and what the value is that you’re bringing to that.
So another thing that skilled nursing facilities need to think about is: Where are they going to be in the ecosystem of the 94% of the population of seniors who live at home? And how are they going to relate to home health? How are they going to relate to the transitions in care from acute to post-acute stays, and what is going to threaten them with some of the new models that technology can do?
One way or the other, I believe there’s going to be a portion of the population that will never be able to have adequate care provided at home, that do not need hospitalization. And if we get really, really good at providing that care in a way that’s of high quality and humane and cost efficient at the same time, then there will be a business model out there that will thrive.
One of the things that the COVID-19 crisis has illustrated is the need for investment in infrastructure for the future, and not just what we need right now. As we look to the future, there’s a very real chance that we won’t have the long-term care beds necessary for the eventual wave of demand. How do we get people excited and interested in putting money toward tomorrow’s needs and anticipated demographic shifts?
If you think about it, who mostly is the source of funding for skilled nursing now? It isn’t the 20% that’s the post-acute care for rehab. Almost all of the rest of it is Medicaid, and it’s Medicaid that’s different from other groups. It’s people that have outlived their resources; many were middle-class, and they’ve outlived their resources, and they need long-term care, so they’re all Medicaid.
As we’re thinking about who will be the appropriate partners for that, it will have to take an approach that understands what the limitations are, but also the opportunities to think about that population — and how we will need to partner with companies that are really thinking about redesigning care and spaces for that population. I think it’s some of the state governments that will ultimately have the burden of most of those calls, as well as some of the managed care companies that are quite focused on the Medicare care world — such as Centene and Humana — that will have some Medicare Advantage and will ultimately get to some of these.
I think the players will need to be thinking about it as well as the policymakers. We don’t need the silver tsunami to be the next COVID-19 that we’re not ready for. We need to be thinking and planning for it right now.
If you could build your desired model for paying for post-acute and long-term care from scratch, what would it look like?
I think that the way that we’ve got things divided between Medicare and Medicaid right now — that you know was invented in the 1960s — maybe there’ll be an opportunity to rethink that. Maybe there won’t; it’ll depend on the politics of the company and the country.
But if I had the magic wand, and I could start from scratch, I would say it would be something where there was a probably a single payment source — whether you called it a new type of Medicare, or a new new type of Medicaid that is funded by states or the [federal government] or a combination. It doesn’t matter, but you have that funding source.
Then from that, you would have population payments that would take care of the group of patients that we’re talking about. You could have companies that would take risk on actually providing those services for that population in ways that would be cost-effective and high-quality. That’s the way I would see it as being ideal. But we’re not in an ideal world; you just have to sort of innovate in the world we’re in.
So if we can innovate this world, where will that innovation come from over the next five to 10 years?
There are several things to think about. I mentioned investment in integrated information. So information technology — companies that apply resources to this population of patients are certainly going to have a place at the table. I would suggest that some of the feeling about the way that the skilled nursing industry is organized right now — it’s quite fragmented for many reasons, some of it for regulatory reasons, some of it for other reasons. You’ve got the real estate investment trusts, you’ve got the operating companies, you’ve got the subsidiaries of the operating companies that may be providing various types of services to the space.
Probably any of those that are successful in any one part of that could start looking at a much more unified model. So let’s just talk about the real estate investment trusts. The average SNF is about 40 years old and it can take $179,000 to replace a single bed. There may be opportunity just to stay a real estate company, but there may be an opportunity to think about it from a redesigned-from-the-ground-up [way]: What if a REIT were also an I-SNP?
You start really thinking about the capital that is being applied and invested, and if you invested in different models, what would it look like? So I don’t know who will be the one to do it. But I would think that those that are currently putting their investments in the current structure, if they could take some of that and think about some redesigned opportunities, I think they’re going to be coming down the pike.