Shortage of Skilled Nursing Beds, Best Buy Effect, Managed Care Growth Accelerate SNF-at-Home

Like many markets across the country, the Twin Cities in Minnesota are confronting a reduction in skilled nursing beds, which is forcing patients to remain in hospitals for longer periods of time — with skilled nursing-at-home gaining momentum as a solution to these discharge pressures.

“The average length-of-stay on the hospital side is eight days for patients waiting for a SNF bed, whereas those with SNF-at-home go home in three days — that tells you that this is solving a problem we have in Minnesota, where there are not enough SNF beds available,” Inbound Health Founding Chief Operating Officer Julia Crist told Skilled Nursing News.

Inbound Health offers hospital-at-home and SNF-at-home programs, and has enabled Twin Cities health system Allina Health to conduct more than 5,000 home-based acute care episodes, according to a press release issued last week. The “majority” of those are SNF-at-home episodes, Crist told SNN, with about 30% of Inbound’s patients avoiding a hospitalization and the remainder avoiding a SNF stay.

Inbound is poised to expand in new markets, while another significant hospital-at-home player — Contessa Health — is likewise seeing growth.

Contessa, which is part of home health giant Amedisys (Nasdaq: AMED), does not have hard data on how hospital length-of-stay correlates with SNF-at-home episodes. But Amedisys is hearing anecdotally of discharge pressures that are increasing length of stay, Chairman and outgoing CEO Paul Kusserow and Contessa Health Vice President, Strategy & Development Kendall Hagood told SNN.

Contessa continues to grow, with 11 health system and 30 health plan partners as of Oct. 2022.

“We have seen our post-acute or SNF-at-home model continue to grow as the model becomes more accepted, just like hospital-at-home has,” Hagood said. “It’s a little bit behind the hospital home model, but we do see it continue to grow and more and more patients interested in receiving their care at home.”

And then there’s Best Buy (NYSE: BBY), which last month announced a partnership with Atrium Health to grow the health system’s large hospital-at-home platform, bringing together two companies with massive clinical, technology and capital resources into the fray — yet another milestone in the shift away from SNFs and other facility-based care toward at-home services.

Rising demand for SNF-at-home

The Covid-19 pandemic created urgent demand for alternatives to inpatient hospital care in 2020. Allina benefited from the fact that Crist and her colleagues already had been exploring the potential for a hospital-at-home program, including by studying pioneering models created by Johns Hopkins, Contessa, and other institutions and organizations.

Allina’s hospital-at-home program launched in early May 2020 and went from zero to 60 patients within three months, said Crist.

“It was a really awesome experience,” she said. “We had a very aligned group of providers across the system that were able to put the platform together — SNFists, home care, doctors, et cetera — to create clinical care pathways and workflows.”

Crist and her team began to field numerous inquiries from other hospital systems curious about the model, revealing the widespread demand for more acute care to be delivered beyond the hospital walls. The recognition of this market need spurred the creation of Inbound Health, which was incorporated in June 2022 and came out of stealth mode the following fall, backed by a $20 million investment from Allina and Flare Capital Partners.

Since that time, post-acute care providers have been reeling from an ongoing staffing crisis and serious financial pressures, creating bed shortages as facilities have been forced to limit admissions or have closed altogether. As a result, the demand for hospital- and SNF-at-home has only become more pronounced.

“There’s a very real reduction in the number of available SNF beds in many markets,” Crist observed. “This is a model that works to take care of those patients who would have met the criteria for a SNF stay but have high enough functional status that they can be cared for in the home.”

This demand has helped Inbound reach the benchmark of 5,000 care episodes, and the company is poised to grow further by expanding into new markets. Inbound has a flexible model that enables hospital systems to marshal their own resources while also tapping Inbound’s to deliver hospital- and SNF-at-home care, Crist said.

And Inbound has created a “replicable” model to enable health systems to contract with managed care payers in their area to support hospital- and SNF-at-home benefits. Indeed, the continued expansion of managed care also is driving the growth of SNF-at-home, given the model’s potential cost savings and enhanced consumer satisfaction.

“Inbound Health has proven that the program lowers the total cost-of-care by 30%-40% on a risk-adjusted basis while achieving similar or improved clinical outcomes when compared to traditional facility-based care,” a press release from Inbound stated. “These outcomes have enabled Inbound Health and Allina Health to develop unique episodic-based payer contracts with multiple Commercial and Medicare Advantage payers in Minnesota.”

On the customer satisfaction front, Inbound has achieved an average net promoter score of 86, which is very high compared with averages across health care and other industries.

Managed care is not only fueling the growth of hospital- and SNF-at-home but the overall shift of more care into the home, creating a massive opportunity that has attracted the attention of corporate behemoths. Retail giant Best Buy (NYSE: BBY) is one example. Richfield, Minnesota-based Best Buy is in the midst of pursuing an ambitious health care strategy focused on at-home care, particularly for older adults.

If the company’s health products and services can succeed in keeping health care costs down, Best Buy could see 20% to 40% of the savings being gleaned by insurance companies, according to a 2019 Morgan Stanley analysis. That could equate to as much as $3,300 per member per year going to Best Buy, yielding up to $2 billion in annual revenue by 2025.

And last month, Best Buy announced a partnership with Atrium Health, focused on growing hospital-at-home.

Atrium touts having the nation’s largest hospital-at-home program, which the Charlotte, North Carolina-based health system now is looking to supercharge with Best Buy technology and customer service. For instance, the partnership can leverage the telehealth and remote patient monitoring of Current Health, which Best Buy acquired in 2021. And specially trained Best Buy Geek Squad technicians will be deployed to help patients set up the tech needed for advanced care in their homes.

Still early innings

In Best Buy’s most recent quarterly earnings call, CEO Corie Barry noted that hospital-at-home is a “nascent, emerging part of the health care industry,” and that the revenue contribution to Best Buy from the Atrium partnership will be small as the space matures in “the coming years.”

Contessa’s leaders likewise have emphasized the currently limited scope of SNF-at-home. About 18% of Contessa’s patients are clinically eligible for SNF-at-home, SVP of Growth and Development Drake Jarman said at SNN’s RETHINK event last fall.

“This is very early days here. It’s a very small subset of the SNF patients, specifically,” Jarman said. “The adage has been it’s the first inning of the at-home movement. I would disagree with that. I don’t think we’ve even reported for spring training.”

There are also impediments to the growth of hospital- and SNF-at-home. The Medicare waiver that is currently enabling fee-for-service payments for such services is not permanent, with a current expiration date at the end of 2024.

“I don’t know where CMS is going to land on this,” Inbound’s Crist said. “What I would be looking for is a reimbursement model that … allows providers to do well in this model and takes cost out of the system.”

While the SNF-at-home market might remain small, the fact remains that demand coupled with well-funded businesses have the potential to accelerate growth. Best Buy is a Fortune 100 company with a $16 billion market cap. And Advocate Health — created through the 2022 combination of Advocate Aurora Health and Atrium Health — serves 5.5 million patients across 1,000 care sites and 67 hospitals, with revenue of more than $27 billion. Amedisys — which has a $2.5 billion market cap — acquired Contessa for $250 million in 2021.

Furthermore, the longer that labor strife persists in the skilled nursing and home health sectors, the more appeal SNF-at-home will hold. That’s in part because hospital- and SNF-at-home companies might have a leg up on traditional skilled nursing facilities in recruiting clinicians.

“We do find that we have nurses really interested in providing the care for hospital-at-home and SNF-at-home,” Hagood said. “And a lot of that is because they feel like they’re getting more dedicated, one-on-one time with these patients in their home. They’re getting to see the patients in their own environment.”

Existing SNF operators have been aware of these trends, and some — such as PruittHealth — are also making moves to seize on the SNF-at-home opportunity by offering the services themselves.

But such plays are difficult, in Crist’s estimation.

“SNF-at-home demands expertise in deployed workforces, in-home clinical care, virtual care … These are not the core focus on facility-based hospital and SNF teams,” she said.

She does not anticipate that SNF-at-home will replace facility-based care, but takes the perspective that the writing is on the wall in terms of the shift to home, the reduction in traditional SNF beds, and the need for a more diverse array of post-acute options.

“How I see SNF-at-home in particular fitting in with facility-based SNFs is an alternative — but a necessary alternative,” she said.