Health System, Hospital Acquisitions Show Nursing Homes Still a ‘Critical Ally’

A number of new partnerships have formed between health systems and skilled nursing facilities centered on offering consumers access to new services or services that require specialized skill sets.

“A high-performing SNF is a critical ally for health systems, particularly those that are focused on performance in value-based care arrangements or looking to enable earlier discharge,” authors of a recent report by management consulting company Kaufman Hall noted.

While the number of transactions between hospitals and health systems – 13 in the second quarter of 2022 – is still not at the levels seen before the pandemic, the $19.2 billion transacted is significantly higher than any year since 2015, according to the report.

The $19.2 billion more than doubles the $8.5 billion in total transacted revenue seen in Q2 2021 despite there being a similar number of announced transactions, as the report noted several “mega transactions,” or any transaction in which the seller has annual revenues in excess of $1 billion, seen.

Kaufman researchers found these deals led to a number of new partnerships between health systems and SNFs, centered on offering consumers access to new services or services that require specialized skill sets.

“A high-performing SNF is a critical ally for health systems, particularly those that are focused on performance in value-based care arrangements or looking to enable earlier discharge,” authors of the report noted.

Admittedly changing dynamics, ranging from regulatory headwinds to new consumer preferences, are forcing some health systems to look to sell.

Others, however, have explored partnerships with specialized operators in the form of joint ventures and management services agreements, or even “doubling down” and increasing investment in “next-generation or super SNFs” that accommodate higher acuity patients, the report said.

Kaufman Hall felt Hackensack Meridian Health’s recent sale of the majority of its long-term care facilities to Complete Care Management illustrated how some health systems are approaching the long-term care sector.

The facilities acquired by Complete Care included Hackensack nursing and subacute facilities located in Brick, Hackensack, Holmdel, North Bergen, Ocean Grove, Plainfield, Shrewsbury and Wall, as well as two assisted living facilities.

However, the two entities were said to maintain a care collaboration agreement to ensure quality care for hospital patients and residents in a clinically integrated care continuum.

Tryko Partners also recently expanded its New Jersey skilled nursing portfolio after acquiring two facilities from one of the state’s largest health systems, Virtua Health, which will reportedly continue to collaborate with the facilities by providing physician and specialist providers, ancillary and home care services.

In both cases, ongoing partnerships with the new owners ensure that patients retain access to high-quality skilled nursing services, Kaufman Hall researchers said.

They expect to see continued activity in the space and think health systems’ willingness to partner with specialty providers to provide a full complement of traditional inpatient and outpatient services will only continue to grow.