Increasing Medicaid rates are finally allowing skilled nursing providers to deliver the level of care their residents need, as acuity is only expected to increase.
This is the perspective of Stuart Lindeman, president and CEO of Mission Health Communities. Because of this increasing recognition among states that Medicaid rates must increase, he believes it’s an exciting time to be in the business, presenting an opportunity to expand on services “we never thought we could provide.”
One caveat, though: Medicaid dollars could be adjusted in coming years, if states believe funds are being misappropriated.
Lindeman offered insights into Medicaid rates and other changes, weighing in on ownership transparency, how the sector will evolve to meet resident demand, and plans for strategic growth at Mission Health.
He has been at the helm of the Tampa, Fla.-based company for more than a decade now, coming from senior living giant Revera. Mission managed about 11 buildings in a couple of states at the time when Lindeman came on board. Today, the team operates around 60 buildings in nine states, he said.
On Medicaid rate increases across states:
Stuart Lindeman: I think that states have recognized that they’re going to have to do something about the Medicaid rates. Not all of them, many of them are looking at our current costs … we are seeing states finally adjust the Medicaid rate to help support the costs that we have. This has been an issue for as many years as I’ve been doing this. Medicaid has always been underfunded.
A couple of years ago, we decided to hire our own lobbyists in the states that we operate in and it’s been very effective. We’ve been working with the state governments, with the legislators in the states, alongside with the [American] Health Care Association, to work on those Medicaid rates. States are recognizing [this need]; some are not recognizing as fast as they should, but others are doing a great job. I’m going to call out Kansas for doing a great job; there are others that are working towards getting better.
It’s the first time that Medicaid is responding. For years and years we’ve been beaten up by Medicaid and we’re finally seeing some increased dollars there, we’re going to get reimbursed for the higher quality or higher acuity patients. Those higher acuity patients for years were very difficult to place. To me, it’s an exciting time to be in the business, it’s exciting that we’ll be able to do that, we’re actually now providing services that we never thought we could provide. We have trach, dialysis units that we’ve opened up … it’s really been a great time to expand our services. Now that Medicaid is going to reimburse for those higher acuity patients, we can take care of it.
I think [Medicaid rate increases are] going to continue, but I think we have to be careful. If [legislators] think that we’re not spending that money, they’re not going to get to keep it, it’s going to get adjusted. It concerns me when investors and buyers are just focused on this one thing.
Ownership transparency in the SNF sector:
I think that lack of transparency is definitely hurting the industry. I’m in favor of more transparency. The way that the industry has hidden behind different structures has really hurt the credibility that we have with outside investors, with the states, with the general public. I think that we have not done a good job around that.
We have a management side of our company that takes on a lot of troubled buildings and troubled portfolios through our mission management services. This is where I see a lot of those problems start, is with companies and investors that don’t have a lot of transparency, and they don’t really understand the business. We have ended up taking over a lot of receiverships and temporary management in companies that don’t have good transparency.
SNFs of the future:
I think it’s going to be all private rooms, built with more amenities. The group that’s aging now, their expectations are much higher, more used to personal service, more amenities, less medical, more hospitality-based care.
Our current nursing homes that are out there, most of them are of such a vintage stock, they’re not going to be acceptable to the next wave of folks coming through there, right after this next grey tsunami that everyone talks about. We’re going to have to have a better product to provide our incoming residents and patients.
I think we’re going to see much higher acuity – it continues to grow every several years, we see people that used to be in the hospital. So I think more technology, more hospitality, higher quality buildings.
Growth at Mission Health:
We will continue to grow where it makes sense. Being the largest provider in Kansas, we are in states throughout the Midwest, in the Southeast. I think that we’ve been very intelligent about our growth. We’re not just growing to grow, we’re picking areas that make sense. We’re focused on building regions.
With Mission, we don’t try to run our buildings from Tampa – we have processes and systems in place, but we set up a local regional team that manages the buildings; they’re in the local markets. What works in Clearwater, Florida doesn’t necessarily work in Clearwater, Kansas.
Currently, we’re looking at other states that make sense.
On ancillaries and support services – absolutely. Today, we don’t own or operate any ancillary businesses, but it’s something that we are looking at with either partners or ourselves within the next several months.
SNF bed pricing and dealmaking:
I think bed values can be misleading. Are the beds empty? Are they full? You know, people publish things and sometimes I wonder if they have the net bed value. We try to look at what value we can get out of it, does it make sense.
As more people come back into skilled nursing, as we see our census grow, I think those numbers will start to moderate more. That’s my hope. We also have to remember that there are certain elements out there that’s driving the market higher. There’s a lot of money being paid, sometimes unrealistic amounts, that are causing the bed values to go up. That’s something that I think is a danger to the industry and to the profession.
I’m not going to buy something that doesn’t make sense for Mission, and doesn’t make sense for our strategic positioning. I get frustrated, but I also have to tell you that I’ve watched where bed values are very high, and they don’t end up staying that high.
I don’t get deterred. I’m very patient, we’ve been very patient.
Strategic vendor partnerships:
Our strategic vendor partners are extremely important to us. One of the relationships has allowed us now to bring robotics into the building. Our first robotics came into the building [in February]. Over the next several months, we’ll be rolling out what we’ve done with Tapestry, Omnicare.
You have the milkman and the bread man, but the people that can affect your business are much larger. We have special relationships with the leaders of those organizations.
The ideal SNF operator size:
Honestly, I don’t think it’s the size, it’s the division of what the organization is trying to do. You’re not going to be able to do everything for everyone. If you’re focused in markets that make sense for you, you have the right people in those markets, it doesn’t matter if you’re a 30-facility company, or 150-, 200-facility company.
I don’t know if there’s an ideal size, but you need to have a strategy that makes sense. That’s where I think some of these organizations have gotten into trouble – they were trying to do it all for everybody.
Staffing mandates, shortages and initiatives:
The staffing mandate is a concern. Not having the ability to actually fill the positions is my biggest concern about it. The idea of having more staff is not necessarily a bad thing, it’s a good thing, it can be a very good thing. I feel positive about having more staff to be able to take care of our residents and patients, but to mandate something that’s impossible for us to reach because of all the staffing issues that we’re having across this industry doesn’t make sense. Having an unfunded mandate when margins are negative doesn’t seem like a very wise thing to do.
Virginia is an example of something that’s positive. They’ve implemented a mandate that is being rolled in, that has the ability to give facilities, communities, chances to correct issues over time. It’s a much more measured system. I know that goes away if the federal mandate comes in, because the federal mandate will be more strict than that.
We don’t have any states that have staffing mandates, but programs we’ve implemented are all helping us recruit and retain nursing home staff.
We’ve implemented various [staffing] initiatives during the pandemic, and even before the pandemic. We have a program called Discovery U, which is a university training for our staff where they can earn different stripes and stars to learn different skills, where they can earn more pay, a career path we implemented at regional recruiters in all of the states and regions that we work in.
Also during the pandemic, there was a lot of remote education for [certified nursing assistants] CNAs. We trained well over 500 folks … and they’re now working in our buildings. We’ve had a retention rate well over 80%.
The other thing is around technology. We’re adding a scheduling tool now where people get their schedule on their iPhones or Google so that they can plan their own schedule – that’s getting ready to roll out now. An applicant tracking system is something that we’ve also rolled out. We feel like we’re looking at more technology to give our employees more ability to manage their lives besides just work.
Click below to listen to the entire episode, including discussion of changes to the MDS, how investment in technology is crucial for the sector and what providers should “Rethink”: