Operational pressures continue to shape the landscape of the skilled nursing sector as many organizations with assets across the care continuum are divesting nursing homes in favor of other service lines.
Responding to pressures from staffing and low reimbursements, Ohio Living decided to act “proactively” and downsize its skilling nursing segment while growing its services in other areas. The move has also allowed the organization to achieve a scale large enough to accommodate some good sense value-based care measures, according to its CEO, Larry Gumina.
Ohio Living cut its skilled nursing beds by 350 this year alone, Gumina said.
“Operational complexity is going [to grow]. It will be more challenging to access capital. Leadership turnover is going to continue. So I think that we want to proactively position ourselves with others,” he said. “Our industry segments are very, very challenged financially right now … operating pressures are very intense. So we’re going to continue to position ourselves [accordingly].”
Currently, Ohio Living offers skilled and rehabilitative nursing care as well as assisted living facilities (ALFs), independent living, home health care and hospice — including continuing care retirement communities (CCRCs) with multiple service lines — across 48 Ohio counties.
Gumina sat down with Skilled Nursing News at the recent LeadingAge conference in Chicago to discuss not only “right sizing” and value-based care arrangements – through its participation in and ownership of Medicare Advantage special needs plans via the Perennial Consortium – but also the federal government’s staffing proposal, “mega-trends” and his growth projections for Ohio Living.
The following interview is edited for length and clarity.
Can you share more about Ohio Living reducing its skilled nursing facility (SNF) assets?
Three years ago, we had over 1,000 skilled nursing beds. And now we’re going to be operating just over 500 of those beds. This was a proactive move for us because we were spending exorbitant amounts of dollars on agency staffing. And so now our commitment continues to be caring for the existing resident base. And again, it’s [because] costs of operating that very important segment of our delivery system are just getting increasingly expensive and the staffing mandate will just promote that expense.
What are some of the other trends that you are following?
Part of the mega trends that are taking place with respect to operational complexities are [related to] leadership turnover, access to capital and the scaling within our industry segments. These are going to continue … for Ohio Living and other providers.
Scale going forward is going to continue to be more important for providers to assume risk from a value-based perspective, not only with the existing lives they have under their ecosystem, but to grow beyond. And I think if you have a larger base, [that makes] you more efficient in terms of spreading your cost structure out. So, we’re going to continue to scale in Ohio and then also in our contiguous states, Michigan and Pennsylvania.
How can scale help organizations in the sector?
As our world continues to scale, I think that more and more of those value-based innovative strategies can be more important for their sustainability. And if you have a small organization, [you’re] hard pressed to jump into that space.
What did growth look like this year for Ohio Living?
This year, we saw a 90% increase in our home-based service footprint. We saw a reduction in revenue in our communities, mainly because we’ve pulled out of about 350 skilled nursing beds. So that [hurt] our revenue. But yet, we also improved our operating performance [compared to] when Covid was underway.
We wanted to move forward with some growth strategies in the greater Columbus market, so we borrowed some cash and built [new units] in Westminster. That campus is filled up.
We hear so much about Medicare Advantage, rate pressure and administrative burden in skilled nursing. Can you speak to how you’ve experienced that?
We’ve had to dance for both spaces right now. Through the Perennial Advantage plan, we have the control to bring resources to the bedside.
So what that affords us to do, when and if we can provide care and skill in place at the bedside, is to avoid a trip to the emergency room that eight times out of 10 results in admission. And again, we’re paying for that. But we’d rather pay more upstream … So, again, it gives us the control. And it gives us the ability to introduce more efficient and quality care.
Does the outcome of your MA plans give you an edge in negotiating with the bigger players?
What it gives us an edge in is with those who we are serving. So we’re saying to our family members that we’d rather have our Ohio Living clinicians make the health care determination for your loved one, as opposed to an unrelated party. To me, if we [are] putting our brand at risk, we have to deliver and we have.
What are you looking at in terms of new growth in 2024?
We’re going to continue to concentrate growth strategies domestically within the greater Columbus and Greater Cleveland markets. We’re going to continue to proactively position ourselves to partner with others, whether it’s on the home health based service front, whether it’s on the campus community front, because those [operational] mega trends are not going to decline.
Where are you seeing the biggest pressure in terms of operations?
Our staffing challenges are not going to be fixed next quarter. They’re not going to be fixed next year. So we have to be more efficient delivering the care with less. We have to continue to invest in our workforce from a retention perspective. We’re real proud of our culture, [certified] a Great Place to Work for six years in a row. And we’ve got to recruit. We have to create opportunities to introduce talent into our industry segment.
What has been one of the successes you’ve had on the retention front?
It’s not one magic bullet. Its culture, culture, culture. It [helps] if you are creating that trusting environment, and our trust index validates that.
In some markets, we’re seeing labor come back, but yet, you know, we spent significant unbudgeted dollars on agency expenses. And I know the whole industry is dealing with that, and now with a staffing mandate … that’s kind of impossible.
What is going to happen in the future given these challenges you’ve mentioned?
Unfortunately, I envision access issues. [The Biden Administration] is introducing a staffing mandate at a time when you’re seeing declining nursing school enrollments.