Skilled nursing operators are dividing into two camps — those that are willing to take risks in order to innovate, and those that are highly focused on insulating their enterprise from risk.
At least, that’s what Cascadia CEO Owen Hammond thinks. And he believes that the future of the industry depends largely on how boldly providers can push the envelope, despite the significant risks — including in legal and regulatory arenas — that they face.
Other leads in the space, including Brickyard Healthcare CEO Wesley Rogers and ATI’s Fred Bentley, also view the ability to ascertain risk and make calculated decisions to drive innovation as crucial.
One of the areas in which Cascadia has taken more risk is by letting regional directors and leaders inform more top-level decisions.
“People are wrapping the risk around bringing in regionals and adding layers to the organization and taking away more and more from the administrator and giving them a smaller box to play with,” he said. “In their minds, that might give them less risk because the administrator has less to do with the actual decisions that are happening.”
Hammond says Cascadia’s “field-driven” philosophy was largely a reaction to the pandemic, when difficult decisions needed to be made at a local level, given that many Cascadia facilities are located in different health districts.
“Five buildings in a small geographic area might have two different or three different health districts,” he said. “All that information had to go to corporate, come back, and the time that it took to do that was just impossible.”
So, Hammond decided to give local administrators more autonomy.
“[Corporate executives] were able to go and sit down with [local administrators] and talk with them and make real-time decisions immediately,” he said. “And we’re able to keep taking patients, and we’re able to work with local municipalities to make sure that access was not a problem.”
Daring initiatives
During the pandemic, Cascadia opened a COVID-only building in a facility in Boise formerly operated by the Evangelical Lutheran Good Samaritan Society. The building had closed in April 2021, and Cascadia wanted to open it back up for August of that year.
“We went to them and said, ‘Could we reopen your building if we could get the state and the Feds to extend the license under the public health emergency? Can we lease it from you, and turn it into a COVID-only building?’” Hammond said.
The state came up with funding to help compensate Cascadia for the risk – since it was at a time when no one in the state was taking Covid admissions.
“One of our [local] leaders stepped up to the state, and the Feds allowed the license from his building to be extended,” he said. “He came up with the team plan and the ops plan to run the building as a COVID-only [facility]. And it was a win for everybody. But it was a lot of risk. And it was at a time, again, when nobody else in the state was taking COVID admissions. These people were just languishing in the hospitals, which is why you had the hospitals overflowing.”
Still, since the skilled nursing industry generally operates on thin margins and is at risk of regulatory noncompliance, lawsuits, and harm to residents – there are operators on the other side of the coin, and with good reason.
“ People are fearful of getting sued,” Hammond said. “They’re fearful of making changes and then the Department of Health coming in and slapping their wrists or, worse, getting CMPs [civil monetary penalties] or failing surveys. There’s just so many bad things that kind of trigger with those failed surveys that it’s just so unpalatable that they just say ‘No, we’re just not even going to innovate.’”
Hammond said that Medicare Advantage institutional special needs programs (ISNPs) will allow operators to be more innovative in how they manage the lives of people in community rather than episodic care. Yet, many operators are reticent.
“Obviously, if there’s one readmission, you blow that person’s per-diem per-month, but you know that creates more accountability at the facility level to take that on,” he said.
Operators in the Treasure Valley in Idaho banded together to create an ISNPwhen they realized that in creating a community partnership, taking the risk would lead to longer-term sustainability.
“One of our leaders, who was reticent at first, dove into it, and now he wants everybody in his building to be in the ISNP,” he said. “It’s giving people freedom to feel comfortable to innovate and take those risks, and not that if they’re going to take this risk and then if they stub their toe, they’re out of a job.”
Payoff vs. Consequences
Wesley Rogers, CEO of Brickyard Healthcare in Indiana, said that although Indiana is a favorable state to operate in, skilled nursing is still a highly regulated industry taking care of a vulnerable population, with constant shifts and updates in compliance.
“To try and stay up to date and educate and inform and implement all those changes is an ongoing challenge that comes to us very frequently,” he said. “Another risk to us is the workforce challenges that we’re seeing in our country right now as it relates to staffing.”
Still, that hasn’t stopped him from innovating to improve the lives of his patients. A year and a half ago, Brickyard began working with an international staffing agency to stabilize the staffing shortage at its facilities.
It was a long-term investment, Rogers said, but he is hoping the payoff will be worth it.
“It’s a significant investment for us to hire 91 nurses; it’s a $3 million investment, but we are hoping to be able to stabilize and provide a higher level of consistent quality care,” he said. “We have a three year commitment from the nurses that have accepted offers of employment with us.”
Fred Bentley, managing director at advisory firm ATI, said he usually asks operators a series of questions regarding the payoff of potential new initiatives and their unintended consequences, which he typically classifies as internal and external risks.
“Is this particular initiative or investment or new model going to disrupt staff?” he said. “Is it going to make what is already a challenging job even more challenging for our staff, does it create frustration and more friction?”
The other half of the equation is the impact on residents and families.
“How does this initiative impact our patients and residents? Does it cause undue burdens or unintended consequences for not only the staff, but the residents and patients?”
Costs and the impact on the revenue model are another consideration.
“There are also instances where investments are almost no-brainers because the writing’s on the wall,” he said. “You don’t want to be left behind when you know your competitors are doing this.”
While risks are very real, Hammond and other Cascadia leaders believe that the biggest risk of all might lie in too many operators being too risk-averse, which could lead to a stagnant sector that does not evolve for the future.
