Nursing homes have long been seen as the place where elderly Medicare and Medicaid patients spend their final years, but as these institutions look to evolve post-COVID, their role in the long-term care continuum continues to expand.
Over the course of the year, SNN has seen operators open in-house dialysis units, renovate their facilities for more open space designs and private rooms and add more clinical specialists to their teams, all to attract a sicker resident population and build back hospital referrals lost during the pandemic.
But as nursing homes continue to see an influx of higher acuity patients, one way facilities can better keep up is by diversifying their service options, investing in value-based care and using data and metrics to guide those decisions.
More operators have started their own institutional special needs plans (I-SNPs) to build a foundation for the future, but it’s going to take more to fix the structural problems in the skilled nursing economic model as fewer patients are choosing SNFs.
With the PDPM system now in its third year – initially launched in October 2019 – increased cost pressures, such as staffing, combined with unsustainable reimbursement challenges may drive some SNFs to close or see continued consolidation in the market with price per bed evaluations still sky high.
In the second part of SNN’s executive outlook series, we get a better understanding of how consumer expectations and preferences are driving care for nursing homes and how some operators have looked to take on risk to be in more control of their reimbursement path moving forward.
Neil L. Pruitt, Jr., Chairman and CEO, PruittHealth
As a profession, we have worked to mitigate the effects of COVID-19 and must continue to evolve with the science designed to protect us. We have proven to ourselves and our patients that we are stronger than COVID-19 and will outlast this terrible virus. It doesn’t have to dominate our lives, but we must act now to ensure COVID-19 becomes a diminishing part of our future.
Such action includes speeding up the evolutionary process that our profession has been grappling with for some time. Like many skilled nursing companies across the United States, occupancy at PruittHealth skilled nursing centers is down. This is, of course, due in large part to COVID-19, but there’s another significant, deciding factor at play here: healthcare consumer preference.
Last year, I predicted that skilled nursing operators that failed to respond to consumer demands may not survive. That fact is even clearer today. Many of us have made a concerted effort to anticipate consumers’ expectations with the inclusion of more private rooms and suites, complete with amenities that make skilled nursing centers feel like home. However, with increasing demand for care in the home, we need to do more to ensure our businesses not only survive, but thrive in the years to come.
That’s why at PruittHealth, a family-owned company for more than 50 years, we plan to introduce PruittHealth Family First in 2022. This concierge service provides patients and their loved ones with next-level care to help clients maintain their independence and optimize their health amid the comfort of home. This is something I believe consumers have wanted for some time, but now is considered a need in the wake of COVID-19 as more families opt to keep their loved ones home, whenever possible.
What excites me most about PruittHealth Family First is that it truly was designed to meet patients and their loved ones wherever and whenever they need us. Consumers have signaled they want us to partner with them to deliver a patient experience better suited to their families. PruittHealth Family First does just that.
It is because of this ability to listen closely and quickly adapt that our family-run organization went from being in a position where we were just under $200,000 from missing payroll in the midst of a global pandemic to one with a much more promising future — all because we remain committed to patient-centric care and move nimbly to respond.
Marc Zimmet, CEO, Zimmet Healthcare Services Group, LLC
The pandemic exposed structural issues within the SNF economic model. While the government provided interim relief, there is no quick fix to the escalating, enduring staffing crisis and inflationary profile of general operating costs. Comprehensive reimbursement reform is desperately needed, but rational policy cannot be developed without accurate information. To that end, I’m hoping 2022 is the “Year of Good Data.”
SNF stakeholders now have access to an array of diverse resources to inform decision making. There’s only one problem – reporting from distinct sources on the same metrics are often inconsistent, sometimes significantly so. Providers submit data to fragmented agencies in different formats using outdated, disconnected documents that have been retrofitted for contemporary reporting. We’re left with a data wasteland – multiple answers to the same questions – all correct in their own way, but completely devoid of context. We can’t even get consistent industry-wide occupancy benchmarks, let alone the comprehensive performance profile required to properly quantify provider distress.
Federally, we face potential PDPM rate recalibration, yet CMS’ proposed formula was based on unreliable data. Our contextual analysis clearly demonstrated how CMS’ calculations fell far short of removing COVID distortion, as evidenced by the disproportionate ratio of “isolation” scores left in the equation. Completely ignored was the explicit shifting of funds from freestanding facilities to hospital-based transitional care units. A litany of other shortcomings plagued CMS’ approach, but none more upsetting than the additional dollars provided through the October 2019 transition that were ultimately used against us in the proposed recalibration logic.
MedPAC just added fuel to the recalibration fire by using devastating Medicare Advantage growth against us. Skilled nursing depends on Medicare fee-for-service utilization – a pay source being cannibalized by the private option. Our CORE Analytics platform highlights the insufficiency of Medicare Advantage rates and the impact of draconian case-management pressures. SNFs accept MA patients because a facility’s high fixed costs must be covered; it’s about time CMS started mandating reasonable payment from a program that, in MedPAC’s own words, “has never resulted in a net savings to the government.”
Nowhere is accurate data more important than on the state level. States want higher RN staffing and Medicaid-reserved private rooms for better infection control. Meanwhile, fewer patients are electing SNFs, which invariably leaves providers with more acute (and expensive) patients. The industry needs accurate data to justify requests for additional reimbursement.
Finally, the industry’s unreliable data is being used against us in court. Plaintiff’s “experts” use decades old direct care time studies applied to statistically-deficient RUG scores as absolute values – the result is a ridiculous benchmark against which understaffing claims are based. CMS didn’t help our cause by using terms such as “expected hours” in the calculations. In our experience, staffing data is brought into the equation in the absence of documentation even implicitly suggesting provider-fault. Think about it – millions of dollars are predicated on highly flawed, 25-year-old research that gave us the most statistically-deficient payment system in Medicare’s history.
So here’s to 2022 being the “Year of Good Data.” We can’t afford for it not to be.
René Lerer, M.D., CEO, Longevity Health Plan
Back in March 2020, I don’t think anyone thought that, two years on, we would still be dealing with the COVID pandemic, but here we are. 2020 and 2021 were among the most difficult years on record for skilled nursing facilities and the people they care for and employ. It appears 2022 is shaping up to be as challenging as ’20 and ’21, yet the outlook need not be completely bleak, especially with the right focus.
As I write this, fast-spreading Omicron is overtaking Delta as the dominant COVID variant. While SNFs will again face significant risk for resident and staff infection, we are in a better place now than two years ago, with better understanding of infection control and a majority of residents vaccinated. The morbidity from COVID has clearly improved over 2020, but we still must keep vigilant in all aspects of patient care and make certain that boosters are available for all residents.
Staffing challenges in facilities have not abated and, in fact, are worsening. Burnout and fatigue continue to take their toll on health care workers and, for some, vaccine requirements are another reason to leave. Absent the ability to hire and train staff, SNFs have to limit census. Ultimately, unsustainable revenue and cost pressures will drive some SNFs to close entirely or force continued consolidation.
From our vantage point as an I-SNP, with nurse practitioners working arm-in-arm with facility team members every day, the SNFs that will fare the best as we continue to navigate COVID will focus on clinical excellence first and foremost, culture, partnerships and value-based care.
We know from recently reported data that it is not just wages and vaccine mandates driving staffing challenges. In fact, wages in nursing homes have actually increased. It is easier said than done, but skilled nursing facilities have to become places that people want to work. They must create the kind of culture that attracts committed, qualified workers to the mission of caring for residents and maintaining the highest level of clinical and social support for those who entrust their lives to SNFs. Those organizations that create the best cultures for their team members, investing in their talent with training, reward and recognition and retention strategies, and focus on their mission are much more likely to weather the storm successfully.
The issues that long-term care faces in the current environment demand a partnership approach. Going it alone or relying on the same transactional models will not cut it in the dire situations we have faced. SNFs that seek out and engage with business partners (I-SNPs and others) who understand their challenges and can bring expertise and creative thinking to the issues will fare better. We have had conversations with forward-thinking SNFs about myriad ideas, including augmenting staffing, designing unique clinical solutions to serve their entire population, and sharing ideas on how to expand earning potential to position facilities for long-term stability.
Finally, SNFs must invest in their value-based future. CMS and payors have been abundantly clear about their intent to move to paying for value and outcomes. Value-based care models built on a foundation of patient-centered clinical management are designed to support both quality and financial objectives for SNFs by delivering consistently high-quality care for residents and recurrent predictable cash flow for operators. Successful SNFs will seize a leadership role in this arena. They will design proactive strategies to begin working with the right partner in transparent and collaborative relationships with aligned incentives. Otherwise, they risk being held back from the future they desire.
Aegis Therapies: Martha Schram, President & CEO, Dawn Greaves, VP Home Services, Mark Besch, Chief Clinical Officer & Cindy Kasson VP Outpatient Services
As we look toward 2022, we are all very anxious to put the past two years behind us. As an industry, we agree that we are facing many of the same challenges we’ve identified in the past; however, the impacts of the pandemic have, in many ways, highlighted the urgency to act on some specific items.
As an industry, we are committed to caring for our elderly and vulnerable populations and collectively embrace the need to address population health regardless of setting. 2022 is an opportunity to prioritize meaningful change. Many factors, including COVID, staffing challenges, consumer/patient/family expectations, reimbursement challenges – all underscore the need to better and more predictably become more proactive in how we work together to identify those at-risk.
At Aegis, we have seen first-hand the benefit that comes when we work across settings and disciplines to provide comprehensive care to individuals wherever they are. For example, enhancing skilled therapy (outpatient and home health) with directed, collaborative wellness and activities has allowed for an increased average length of stay for the AL/IL and decreased overall falls risk in communities where we have deployed these strategies.
Supporting individuals in multiple settings, and being able to train various staff, clinical and non-clinical team members, to observe for signs of risk or decline not only has had an incredibly positive impact on managing risk and population health, it also reduces the overall burden and cost of care. In addition, it has a positive impact on employee engagement and satisfaction and public perception of nursing home experience. Staff report feeling a greater sense of purpose by addressing the wellness of individuals in addition to effectively responding to illness, and patients are more inclined to accept the necessity of a nursing home stay when a focus and a path to return to home is clearly demonstrated.
As we move out of the pandemic and begin to re-address issues that were on the backburner for the past 24 months, including facing regulatory and reimbursement changes, perhaps the most significant benefit of a focus on population health is that we can move the needle in a positive way to ensure that we are all optimizing our time, skills and resources. As pressure continues to increase, it is more critical than ever that we provide for patient needs in a proactive way, with the right level of care and with the appropriate hand-off to improve their spell of wellness and decrease the need for more expensive, reactive care.