In spite of current trends suggesting a skilled nursing ownership shakeup, particularly an uptick in nonprofit operators either closing completely or selling to for-profit operators, one leader in the space has a differing view on their role in the sector.
Georgia-based nonprofit A.G. Rhodes CEO Deke Cateau thinks that amid all of this change coming down the pipeline, name recognition and fundraising abilities give nonprofits a unique position looking ahead.
“I think it’s a really positive forecast for nonprofits. Some of our programs that we have, our music therapy program, our horticulture therapy program … a lot of that is afforded to us because we are a nonprofit, because these are unfunded, unreimbursed programs. Our access to fundraising puts us in a uniquely competitive position,” Cateau said during an episode on the Skilled Nursing News Rethink podcast.
Deke also shared development updates regarding A.G. Rhodes’ three campuses; the operator is well on its way to converting properties to have only private rooms, starting with its Cobb campus in Marietta, Ga.
There are very few operators in the nation doing this for communities with a heavily Medicaid population, Cateau told Skilled Nursing News, and hopes the model becomes replicable to other operators in the state and beyond.
Highlights of the podcast, edited for length and clarity, are below. Subscribe to Rethink via Apple Podcasts, Google Podcasts, or SoundCloud.
On Cateau’s background and leadership style:
I do come from a far ways away. I joke with people and tell them I’m from the south, because Trinidad is actually the island furthest south in the Caribbean. I got into this industry when I moved to the U.S. Incidentally, my wife is from New York, that’s the real reason I’m here in the United States. She used to work in nursing homes well before me, and she’s the one that really encouraged me to get into the industry.
Coming into this industry being, one, a Black man and two, a Black man from a different country, has really allowed me to open my eyes and relate to a lot of our staff in health care and in nursing homes who look a lot like me, and who are from different ethnicities and different backgrounds as well. It’s brought some level of empathy and tolerance because of that as well, understanding what difficulties certain groups have in the workplace.
On future industry leaders:
I think that work ethic is so important for future leaders. As I mentor young leaders now, one thing they need to understand is the importance of working hard, the importance of staying up with the industry, learning about the industry. I spent a lot of time reading about the industry, about leadership. As future leaders come up, I think about that whole idea of being prepared for leadership.
No one is born a leader. Some people are born with leadership qualities and leadership skills and leadership traits, but leadership is really something that you have to continually work on. I consider myself a leader in progress and I’m never too old or too proud to learn from other leaders.
On Medicaid rate increases:
I proudly run a mission driven nonprofit organization, and most of who we serve are the underserved and the uninsured. They are on Medicaid, and the Medicaid system is, not just in this state but throughout the country, severely underfunded. I understand the antecedents and the reasons for that but it really makes the ability to give that high level care challenging.
I’m glad when I hear these discourses throughout the nation about increasing Medicaid rates. I’m very happy when I hear it because I think that is going to be equivalent to an increase in the quality of care and the quality of services that are received.
Most states are paid through Medicaid based on costs that are several years behind. For Georgia, we have moved to the 2019 cost report now … we’ve been paid based on the cost of goods and services several years back. I think this is a system that needs to be fixed – that’s a challenging one to fix, I don’t envy the regulators and the politicians, I don’t envy that task at all, because it is a very costly system and a difficult one to fix.
I would strongly recommend that providers continue to advocate for [Medicaid rate increases], and I think by doing that you keep it on the front burner of the legislator. Every conversation we have with legislators, we need to keep that Medicaid reimbursement on the front burner.
On the future of nonprofits in the skilled nursing space:
We’ve already seen some decline in skilled nursing inventory, nationwide. Undoubtedly, Covid and low occupancy rates had something to do with that. I’ve said for two years now that with reduction in inventory, I think the nonprofit nursing home sector is well placed because of the quality most nonprofits espouse, and because of our access to fundraising, our ability to innovate in the skilled nursing space.
I think it’s a really positive forecast for nonprofits. We do this business the right way. I’m not by any means saying that for-profits do not but I certainly think that nonprofits, for the most part, are able to provide a higher level of care and services. Some of our programs that we have, our music therapy program, our horticulture therapy program … a lot of that is afforded to us because we are a nonprofit, because these are unfunded, unreimbursed programs. Our access to fundraising puts us in a uniquely competitive position.
On the separation of long-term and short-term care:
I got into this industry right at the start or right after PPS and short-term care being such an important part of reimbursement. And then of course, I was in this industry in the 2000s, where nursing homes, just like A.G. Rhodes, suddenly became ‘health and rehab,’ everyone added ‘health and rehab’ to their names.
When I hear conversation about perhaps going back, my concern is where the reimbursement is, because that short-term reimbursement is what enables a lot of us really to make that bottom line. The shortfall in Medicaid funding, in most cases, is made up for by that short-term Medicare revenue. That concerns me, from that perspective. But, I think if we are able to continue to raise those Medicaid rates, there may be a path to it.
When we look at the importance of home-based services, and the movement toward home-based services, it makes me wonder what place short-term rehab is going to have. A good example I would give is outpatient rehab services, which we offer at our homes. We do a lot of it in our homes but it’s really not a financially lucrative service. It’s a service that we break even on, although it is a very important community service. I could see through those outpatient services, a lot of short-term care being done but we definitely need to look at reimbursement to ensure that providers are incentivized to do it, and are able to do it. Even as a nonprofit, we preach ‘no margin, no mission.’
On for-profit ownership scrutiny, from a nonprofit perspective:
I didn’t always work for A.G. Rhodes, I worked for a for-profit company prior, I understand a lot of the need to trace those funds, to see where those funds are emanating from and to ensure that those funds are being properly used. I think as long as you’re accepting government funds, then obviously folks should want to see or trace that. I do think we have to be careful. You have bad actors on both sides of the spectrum and I don’t think as a nation, we want to create a system which would stagnate businesses from being able to get into it. A lot of good innovation, a lot of technology also comes from these for-profit groups as well.
It’s a precarious situation that we’re in. I think the vilification of nursing homes has caused a lot of this. I’ll be honest with you, I’m glad I work for a nonprofit because we do not come under some of those scrutinies – our information is public anytime anyway, you could Google our financial information. I understand the public has a right to know the situation now, and I understand particularly after Covid and the level of death that we saw in our nation’s nursing homes, I think we need to be more visible. I tell my staff all the time, we can’t be afraid to let people into our industry to let them see what we’re doing.
On A.G. Rhodes’ shift to private rooms:
I’m very happy to report that in mid-July we did start our construction at our Cobb location, and it’s not just a retrofit, it’s a two-part project. The first part of it, we are building 72 brand new units, all private rooms, household model of care, 12 residents per household and we’re specifically catering that to our residents living with dementia.
The second phase of that would be to go back into the existing building and retrofit that building to ensure that we would have 58 private rooms, no more semi-private rooms. Hopefully by December 2023, January 2024, we would have complete private room accommodations. We’re really excited because, again, the clientele we serve, there are very few folks in the nation that are doing this now for the clientele we serve. We hope that it becomes a replicable model that others, not just in the state of Georgia could look at and see that this can be done.
We’ve innovated for quite a long time at A.G. Rhodes; we were first to do many, many things that people thought were not able to be done for this population, [like] horticulture and music therapy programs. We have leveraged the fact that we are a nonprofit, we have been very, very well and graciously supported by the Atlanta community to the tune of over $7 million that has come in to us in the form of donations. The project on our Cobb campus was also qualified for a governmental program called the New Market Tax Credit Program, which also qualified us for just under $7 million in equity towards this project as well. I talk about these public-private ventures, about really harnessing the community to achieve the desired result and I think this is a great example of that.
On the federal minimum staffing ratio mandate:
As an organization, we have always dedicated ourselves to have high staff ratios. Any regulation related to staffing would have never concerned me before recently. That’s quite simply because there’s a national, or even an international lack in staffing. We’re concerned that if we are mandated through a staffing regulation – which we support – but if we’re mandated to do it, there’s not the supply of staff at this time.
Staffing mandates, I think they’re a good thing. The timing of it is what concerns me, that we’re forced into a regulatory system we are not able to fulfill.
On the five-star rating system:
I still hope and wish the day would come where we see a person directed aspect of the five-star system. Person directed care and culture change has been written into our regulations since the 1980s, but very few people are actually doing it, very few people are actually practicing it. In fact, in most of our nation’s nursing homes, we do the opposite. We practice a medical model of care. I would love to see those that do practice person directed care are properly incentivized or properly recognized.
On the future of skilled nursing:
I spoke to someone recently who told me in 50 years, there will be no more nursing homes. I think the name nursing home probably won’t be there, but I think in 50 years we will still need to have communities – I stress and emphasize the word community – to take care of individuals who can no longer be taken care of at home, and who can no longer be taken care of in an assisted living setting. I see the forecast as being good, I just think that these models would change, the HUD models of housing would certainly be changing.
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