HMG Healthcare CEO Reflects on First Half of 2024, Leading Legal Fight to Stop Nursing Home Staffing Mandate

Even though Derek Prince, CEO of HMG Healthcare, has been encouraging new initiatives to improve staffing at this organization and is celebrating wins on that front, he is fully aware of the unfolding crisis the federal minimum staffing mandate will represent for providers across Texas.

Hence, Prince, who is also a board member of the Texas Health Care Association, agreed to join the American Health Care Association in filing a lawsuit seeking to dismiss the staffing mandate.

In his conversation with Skilled Nursing News, Prince noted that Texas, due to longstanding funding issues, ranks poorly in staffing metrics nationwide. In the midst of this, the staffing rule poses an immense challenge to Texas facilities, which face a staggering shortfall of certified nurse aides (CNAs) and registered nurses (RNs) required to meet federal requirements, threatening closure of facilities and disrupting care continuity for older populations, he said.

Beyond the staffing mandate, Prince reflected on HMG Healthcare’s achievements and challenges. He discussed his organization’s success with two deficiency-free surveys amid regulatory volatility, creating HMG University to generate clinical workers, and reducing lengths of stay at its facilities.

However, he also acknowledged significant hurdles, such as Medicaid recertification delays impacting cash flow—a shared burden across Texas facilities.

In 2024, Prince’s focus is on improving labor practices and supporting team members as staffing shortages are expected to continue. His goals include enhancing recruitment and retention through innovative educational programs and improved benefits.

HMG’s assets include 37 post-acute care facilities across Texas and Kansas.

Highlights of the podcast, edited for length and clarity, are below. Subscribe to RETHINK via Apple Podcasts, Google Podcasts, or SoundCloud.

How did the lawsuit come about, and why is Texas a good place to stage this fight against mandatory staffing ratios?

Our facilities have been woefully underfunded in the state for quite some time. And when you have funding issues, those are obviously going to lead to staffing issues.

The quality that Texas provides, given the amount of resources, honestly, is to be commended. But you can’t have great staffing numbers without the funding.

When we get into the mandate, specifically, when you look at the initial analysis that the American Health Care Association has done, two thirds of all the facilities in Texas do not meet the requirement. When you couple that with the number of clinicians that would be needed to hit this mandate, we’re somewhere in the range of 9,000 CNAs, and just below 4,000 RNs. It’s untenable. None of our facilities are going to be able to make those [numbers]. And so, when you don’t have the staff to take care of the population, we end up having to close wings and units, and ultimately, facilities.

It’s an unfunded mandate that basically is going to shut down facilities across the country, specifically in Texas, and it’s going to disrupt the health care continuum.

Can you describe one big challenge that HMG has faced over the last several months?

Our biggest challenge really comes in on our collection side, with the Medicaid recertification. The state just doesn’t have the capability to process that many applications. So unfortunately, that has led to a delay in cash payments. It puts a pretty severe burden on the facilities and making sure that they have the cash flow to meet that. And so that was certainly the biggest thing that HMG has experienced.

From what I’m told, a lot of my peers and other providers in the state are experiencing the same issue, and this possibly goes beyond the borders of Texas.

Looking ahead to 2024 what are your top priorities and goals as CEO?

When you walk into my office, there’s a big neon sign that says, Take Care of People. We’re talking about our patient population, but more importantly, we’re talking about our team members. As we talk about the staffing mandate [and] about compressed labor markets across the country, our biggest priority is affecting our labor situation. And so we’re sharpening our pencils on all the different things from our onboarding process, training, continuing education units. The big priorities for me going through the rest of 2024 are going to be team member focused.

Are there any workforce-related initiatives that HMG has undertaken specifically to improve recruitment and retention?

Going back to 2012, one of the things that I really wanted to initiate was for HMG to have its own educational department, our own learning institution, our own campus, and be able to put people through the classes and actually get them into the workforce, specifically CNAs, LVNs, RNs.

Right now, we’ve got 57 students that are going through various educational programs. The majority of those are CNAs going to the LVN program, with some of our LVNs going into RN and BSN programs.

We have counselors. We’re making sure that the schedules are lined up with the educational requirements. There’s no out-of-pocket costs. All of the bills come to HMGU, and are funded through that – it’s a not-for-profit LLC that is distinct from HMG.

We hope to continue to grow that program.

What are staffing pressures like across the sector?

Across all sectors in the country, the labor market is certainly compressed. In long-term care, we just don’t have the number of people that are required to take care of the population. We’re in a situation where there is a really, really high demand and a really, really low supply. And so we’re all fighting for the same individual.

And would you say that staffing pressures eased in the first half of 2024?

Maybe to a very, very small degree, but it’s still our number one problem that I think about every day.

Is HMG feeling the pain from Medicare Advantage? How are you responding?

When you look at HMG’s overall skill mix, 70% of that population is in a managed care Medicare Advantage program. And so yes, we certainly feel that pain.

The majority of issues are related to increased paperwork. It’s increased supervision [audits, and appeals] … And so we have to do a much better job at crossing our T’s and dotting our I’s as we move forward. We’ve had to take a really hard look at our systems and operating procedures to make sure that that occurs.

As we go through that, our biggest challenge has been on the collection side. And unfortunately, for a while, we were operating in really more of a silo and allowing our central billing office to take on that burden solely. And so we put different processes in place.

It starts with admissions [and] our MDS Coordinators and our reimbursement nurses follow through with our business office managers and then ultimately with our billing team at the central billing office. We’ve had to really fine tune that [process] … but it’s certainly a challenge on making sure that you are getting compensated for the care that you provide.

How have surveys been going for HMG? How’s the situation in Texas?

We’ve had two deficiency free surveys that we got earlier this year. But, I will say over the course of the last 18 months, it has been an extremely challenging environment, specifically in Texas, [where] there’s been some rearrangement of the survey team.

Enforcement is such a change in Texas … We experienced much higher immediate jeopardies In the last 18 months. We experienced much higher civil monetary penalties [CMPs] across the board.

Are there any metrics that you can share related to how HMG has been able to bring down systemic healthcare costs, reduce hospitalizations, etc.?

We’ve been really focused on looking at our length of stay in the Medicare spend for beneficiaries, and trying to become a value add for our acute care partners at the hospitals.

We were a little bit ahead of the curve. We went from having a length of stay between 30 to 35 days, but dropped that to below 15, which was good from a value proposition; we were getting quality outcomes. But when you look at that from a business model, if you’re not seeing the volume pick up on the other side, that puts you in some precarious situations. So those metrics are still in play.

The good news on that side of it is that 70% of our skilled mix moving forward has been from the managed care Medicare Advantage plans. And because we put systems in place to be more effective and monitor those things early on, we’ve got some strong relationships with those organizations.

Can you describe any other value-based care initiatives currently being pursued by HMG?

Our biggest shared savings is on our I-SNP. We’re an active provider and a provider-owned I-SNP where the basis for the I-SNP is proactive care that’ll help sustain quality outcomes and reduce hospitalization. So it’s a win-win for everybody.

This podcast is called Rethink. What’s something that you think leaders in the nursing home SNF sector need to “Rethink”?

We need to rethink how we’re doing to take care of our team members. What are we putting in place to make our profession, our facilities, our companies, a more desirable place to be able to recruit people to our profession, to our field.

And then once we’re able to recruit them, what do we have in the way of benefits, educational training, and helping out during trying times, simple things.

To listen to the complete episode, click below:

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