Legacy Healthcare’s near-term growth strategy is centered around fine-tuning internal systems and processes to adjust for the ‘constant battle’ of the two Rs – reimbursement and regulation. And so, amid expectations of tighter scrutiny on private equity investment and legislation that could squeeze margins, the organization is betting big on AI to alleviate the operational pressures it can control.
But the team is careful to have AI support, not replace human decision-making, said Kevin McInerney, chief personnel officer and government affairs for Illinois-based Legacy.
The same can’t be said for other AI usage in the sector, including AI usage by Medicare Advantage organizations (MAOs).
“It’s completely within their wheelhouse to roll out AI en masse and to remove some of that critical thinking from it,” McInerney said of AI use in Medicare Advantage. “If you’re using AI responsibly, you’ve got a human being who’s interpreting the data and making decisions. For MA, there’s an incentive there to maximize AI.”
McInerney spoke with Skilled Nursing News about the boons and pitfalls of AI, along with regulatory hurdles on the horizon, including federal off-hours surveys, expected private equity legislation and state-specific laws on medical aid in dying, commonly known as “Deb’s Law” in Illinois, as part of SNN’s June RETHINK podcast.
This conversation has been edited for length and clarity. To listen to the complete episode, click below:
SNN: How is Legacy thinking about growth for the year or years ahead?
McInerney: We’re still coming off of Covid to some degree – the effects of that are still lingering, and what that period of time led to, at least for us. We patchworked a lot of things to solve issues that were emerging at that particular time.
As we’ve slowly come out of it and feel pretty confident that it’s in the past, we’re reevaluating everything that we do. We’re just combing through all of our current systems, all of our current processes, and just making sure we’ve got a good handle on everything that we are currently doing, and making sure that it’s as optimized as possible. That ranges from the uniforms that we were sourcing before, all the way up to making sure that we’ve got AI integrated with several systems to streamline and make things as efficient as possible.
Any advice for operators adopting AI, as Legacy is?
The key is not relying on AI completely, trusting the system is working as it should. I have a creative background, and so I always feel like AI should not be used for creative endeavors, but it’s really good when it comes to taking large data sets and organizing that data, collating that data, and providing a snapshot of what that data can look like, what operators need to do.
Then we take that data and put it in the hands of a human being who can actually interpret that information and make a decision with it. Having someone who’s got critical thinking skills, interpreting data snapshots is the critical component of making sure that you don’t go off the rails with it.
AI will be the next frontier for streamlining skilled nursing care and making some things more efficient.
How have you seen AI used in other areas of nursing home care?
AI is in [the Medicare Advantage organization’s] favor. Making decisions based on what the AI is scrubbing is really convenient, because if they paint a really broad brush and people are getting denied care and providers are getting denied reimbursements based on what the AI has seen, these Medicare Advantage plans are coming out ahead.
It’s completely within their wheelhouse to roll out en masse and to remove some of that critical thinking from it. I think if you’re using AI responsibly, you’ve got a human being who’s interpreting the data and making decisions. For MA, there’s an incentive there to maximize AI.
And how has advocacy been going in Legacy’s footprint?
We are a member of AHCA and our local affiliate, and so we follow the thread in terms of what they are seeing on a national level and advocating for in Washington, D.C. We feel comfortable with what they’re seeing and what they’re pushing. It always comes down to two main components: it’s regulation, and then it’s reimbursement, the two Rs.
We’re constantly having conversations with legislators and representatives to make sure that they understand the pain points that we’re having on both of those fronts. We’re not opposed to regulation, but it’s got to make sense; it’s got to be done in a way that doesn’t throttle innovation.
On the reimbursement side, all we’ve been asking for, for what feels like decades, is just enough money to cover the expenses that are going out, and we just have to get very creative in those ways. It’s a constant battle.
What regulatory hurdles are keeping you up at night?
CMS is pushing off-hour and weekend surveys. That’s one thing that we want to make sure that our teams are prepared for, the number of those surveys are going to be creeping up … obviously that has an impact with regards to staffing outcomes.
On an Illinois-specific level, one thing that’s coming down the pike is [medical] aid in dying, which is a completely foreign concept to this industry. We’re having conversations internally about what that will mean for our business, and whether or not that’s something that our facilities are going to be comfortable with accepting. It’s not just the technical aspect of caring for people, but you’re really getting into the ethics and morality of it, which I think is a really interesting conversation. So, those are two pieces.
The other thing that’s the elephant in the room is the private equity conversation that we’ve seen, with a number of federal legislators introducing legislation trying to regulate PE. If PE legislation isn’t coming today, it’s going to be coming soon and it will very much take a heavy-handed approach. We need to get ahead of that and make sure that we’ve got our talking points prepared as that comes down the line.
Any advice for fielding audits and overall risk management?
Part of our internal process that we’re doing this year is re-evaluating every single system, top to bottom, just making sure that we’ve got the right platforms in place, the right policies in place. When it comes to risk management, the key is starting with what you are trying to solve for, what is the policy, and making sure that you’ve got clear guidelines and clear direction for the folks that are supposed to be carrying those policies out.
You’ve got to identify what the issue is, you’ve got to craft a procedure for handling those things, you’ve got to make sure your people are educated to that, and you’ve got to make sure you’ve got adequate tracking in place so that you can measure against what your goals are. Making sure you’ve got everything buttoned up helps quite a bit when something breaks down later. It’s much easier to go back and do the root cause analysis of where the system failed or where you might be able to improve upon it in the future, but you’ve got to have a foundational understanding and framework for addressing those things at the outset.
Any more commentary on nursing home reimbursement, and what to expect in the years ahead?
Reimbursement has made marginal improvements from where it was, say, 10 or 15 years ago. Things were pretty dire, and you were seeing huge gaps in the RUGS system … I think PDPM is a net gain for the industry. The big challenge now is, governmental agencies are sensing that PDPM didn’t save them the money that they anticipated saving, and that’s where we’re seeing the proliferation of the Medicare Advantage come down the line.
To me, that’s sort of the next frontier … they’ve inserted a nice middleman. You’ve got these private insurers who are managing these plans, using AI to knock people out, delaying some of those reimbursements. With MA coming down the line, I feel like we are taking several steps back.
Thoughts on revamping the image of the nursing home sector for the public, prospective residents and their families?
People inside the industry understand skilled nursing extremely well, they understand the challenges, they understand why things are the way they are, but it’s so difficult to communicate that to people outside the industry who don’t have firsthand experience with it.
My wife is not in health care, and I still have a challenge sometimes going home and explaining … I have to give 30 minutes of context, right? I really think the key is getting people into the facilities to see for themselves about what this is, and educating themselves before there’s a situation where you need to place a loved one in a nursing home, or you yourself are looking for placement in care. I just think that folks just need to be a little bit more proactive on that.
That’s the best way to combat whatever image issues the industry has. If you’re getting people through your front doors to see for themselves, there’s no substitute for that. I’ve had a lot of conversations with legislators who just don’t have the first sense of what nursing homes actually do. Their eyes go wide when they see these are not facilities from 30 years ago, where people are just sitting in wheelchairs. We’re mini hospitals in many ways. You can talk all day, but until they see it for themselves, there’s still going to be a little bit of skepticism.
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