Despite most nursing home residents being vaccinated, the skilled nursing industry is still faced with record-low occupancy, higher expenses, and regulatory uncertainty with a new administration taking the reins.
Skilled Nursing News got a chance to sit down with Cory Christensen, the Chief Executive Officer of Plum Healthcare Group, to hear about how they are managing through these tough times and the biggest challenges they face going forward.
The company has over 50 facilities in California and Nevada and primarily focuses on higher acuity residents. Despite COVID, Plum continues to grow and has a few new developments that are coming online soon.
Please note that this interview has been edited for length and clarity.
COVID has been tough on everybody. With vaccinations well underway and some areas of the country opening, how are you positioning yourself to come out of this?
No one’s going to say that we’re out of it yet, because we’ve seen this come in waves before, but currently, pretty much the only few cases we have throughout our entire system are cases that are coming in from the hospitals.
That remains our biggest challenge, although we’re concerned about the possibility of additional spread as we’ve opened up for visitation, and we’ve actually seen a few [COVID] cases from residents receiving visitors.
I don’t think anyone is going to be completely out of this until we’re either fully vaccinated or a combination of fully vaccinated and immune due to previous infections. It’s going to be a challenge going forward.
The biggest challenge we have is being able to smoothly get both new hires and newly admitted patients vaccinated.
How do you manage when people are being referred from hospitals? It’s got to be so challenging.
We put them in isolation just as a matter of practice. You just have to, given that situation. They come into a special yellow unit and they’re cohorted there, which again adds an element of risk until we can confirm that they’re not positive.
Are you seeing referrals from hospitals and other referral partners starting to come back now?
Yes, we have been for some time. It’s been slow, although, knock on wood, we’re seeing it faster than what we’re hearing about national trends, and we appear to be a few percentage points above what we hear about the California average occupancies.
I think that’s probably because Plum is more oriented towards short-term patients, and they’ve been quicker to come back.
Our partnerships with Kaiser and other managed care providers, they were really the first to come back strong, and it’s the custodial — the Medi-Cal patients or Medicaid patients — who have been slower to build back.
Do you think the Medicaid patients will come back eventually?
Yes, but it could be about a year before we’re back to normal occupancy levels. We’re not at normal levels now. We’re right around 80%, which is low for us and challenging economically.
I was doing some research that you were opening up a new SNF in the Bay Area focused on short-term, high-acuity residents. Is that still an important strategy going forward?
Yes. That’s the one, it’s substantially completed. We haven’t received the certificate of occupancy yet. That construction was delayed by COVID, but we’ve got two more opening and they are all private rooms.
Those are new builds, and we’ve got three or four of them under operation.
They’ve had way fewer issues regarding spread [in those buildings], and it’s a model we like.
It’s not a model we’re getting paid for yet, so the challenges with that are reimbursement. That’s something that I think the industry will continue to move towards. It’s easier to do in some places than others.
Can you elaborate on what you mean by not getting paid yet?
Well, these are very expensive buildings to build and current reimbursement rates are such that even if you just do all skilled — predominantly all Medicare patients — they’re not as profitable as other buildings. Then you’ve got to get to very high levels of occupancy to break even on them, so they’re challenging.
The current reimbursement rates take into account a mix of beds across the country that are more two- and three-bedrooms. If you go to an all-private room model, your rates don’t get any better as a result of that, except for private pays. Private pay is a small part of the market. You want to see that happen outside of the upscale neighborhoods.
Has COVID put some of your newer initiatives like this on hold or has it forced you to change your strategy at all?
Well, yes, it put a lot of things on hold. When you can’t have visitors in buildings, you can’t be doing construction in buildings, so other than emergency or COVID-related HVAC or modifications to improve infection control, [everything] had to be stopped by necessity through this.
As I said before, it doesn’t feel like we’re through this yet.
On top of that, I just think the financial questions from this year [remain]. We’re continuing to spend tremendously on PPE and a lot on the vaccinations, including time for our staff to come in and get vaccinated because it doesn’t always happen when they’re working.
We’re spending a lot on a lot of different things, additional labor, additional training, more nursing.
Again, the reimbursement rates aren’t covering for these, and we don’t see any new help in terms of providing relief funds, so [we are] recognizing these unusual expenses.
I’m sure that is putting a strain on everyone’s budgets, in terms of being able to do the necessary refurbishment and longer-term repair-and-replace capital expenditures that are necessary to keep our buildings the way we’d like them for those we serve.
Are you concerned for the industry when the CARES Act does run out?
Yes, I am. It’s a new administration and we need to give them time to see what they’re going to do, but it doesn’t appear that we’re a focus or a priority for them right now.
With the new administration coming, there’s likely to be a lot of reforms. Coming from an operator’s standpoint, what would you like to see them focus on?
I hesitate to say there’s one solution, but I do think that we as an industry, as well as the policymakers that we work with from a regulatory standpoint as well as from a rate-setting standpoint, need to address the issue of what is the right kind of format, physical plant, what are the requirements that we ought to adhere to moving forward.
In other words, what have we learned from COVID about physical plant and its impact on our ability to manage infection?
We’ll have to make changes to reimbursement, obviously, in order to afford whatever is decided. The impact on the taxpayer being significant, we have to take that into account, but it’s pretty clear that it’s time for us to rethink our approach from a physical plant standpoint.
Then related to that, this episode really bared some weaknesses in our reimbursement program, meaning if we’re always lagging by two years, and you have an extraordinary event like this, then the nation’s ability to afford the quality of care that its citizens deserve just isn’t there and is limited.
To expect every time [something like this happens], a combination of presidents and the U.S. Congress and governors and state legislators are able to quickly respond in a way that doesn’t put lives at risk is something we need to look at. Maybe there are things we can do to our reimbursement program in order to better anticipate future events similar to this.
The Biden Administration has made some announcements that they want to support in-home care more than they have in the past. As a person who operates SNFs, are you concerned about that as a trend or do you worry that SNFs could be being overlooked by the new administration?
I don’t worry about SNFs being overlooked in the long run because eventually, the world will discover two things. I’ve owned and operated home health as well. I’m a big believer in the model to a large extent, but to a very large extent, it can never be a replacement model of care for the patients that we’re now serving in SNFs.
In other words, the acuity of patients who we are serving, if you tried to handle that completely remotely, you’re going to have significant increases in morbidity.
Our patients need to be watched and monitored very closely. Their need for responses to changes in conditions are much more rapid than the often half-hour to an hour that travel times require [for home health]. That’s one part of why I’m really not concerned about this as a trend that will negatively affect our segment.
The other reason I’m not is the biggest problem health care faces, whether it’s in the U.S., Germany or Japan, is an acute shortage and a growing shortage of nursing talent.
If you shift an increasing amount of business to home health, you’re shifting nurses from a highly efficient mode where an average licensed nurse can touch the lives of 15 to 30 different patients a day very efficiently. When you factor in travel time for [home visits] they may be able to serve 5 or 6 in a day.
The impact on that nursing shortage is going to be tremendous. Now you’re going to need even far more nurses than you already do. The gap has already grown without that.
This notion that that [home care] will be the answer to growing health care costs is naive and not very well thought through.
It definitely has a place and a role and it’s helpful in the spectrum and can play a significant role in reducing readmissions to acute.
We see them as valuable partners but there are going to be limits to how far we can go in terms of looking to treat patients at home.
I’m very confident that the vast majority of [higher acuity] patients that we’re serving now in SNFs could not be adequately cared for in a home environment.
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