A winning strategy for nursing homes

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James M. Berklan, McKnight's Editor
James M. Berklan, McKnight's Editor
Journalists are notorious for picking nits over just about anything they can. It's in their blood and has earned them an often notorious reputation.

At the root of it is a desire to cut through the baloney and tell it like it is. This does not typically endear them to public officials, or much of the public sometimes.

The truly terrible element of this scenario is that, then when a journalist writes something complimentary or in praise of an official, it is often met with suspicion. Pandering, they say, or “going soft.”

I'm here to tell you it's not necessarily an either-or proposition. Last week, I heard one of the most insightful, no-baloney talks I've heard in a while from a long-term care official.

Mark Parkinson makes a lot of sense when he talks about the future of long-term care. “How We Win” is the title of a presentation the president of the American Health Care Association likely will give several dozen times (or more) this year. Its two main tenets are: 1) Providers must be “the cost and quality solution” and 2) they must be a political lobbying powerhouse. For reasons of time and space, I'm addressing only No. 1 here.

Parkinson's hypothesis is that government is not going to have enough money to pay all the different types of providers there are, so it will become “more rational” with its payouts. Providers who put up good numbers and outcomes will get paid well; those that don't are liable to be left out altogether.

It's remarkably similar to a theme that Larry Minnix, his counterpart at LeadingAge, has been repeating for a handful of years now: In the future, there will be only two kinds of LTC operators — the excellent and the non-existent.

Parkinson's advice to providers is threefold. First, learn everything you can about new payment models. The way you will be reimbursed by the government is going to change. Nobody knows exactly how quickly it will happen, but a revolution has already started.

Second, quality will become a reimbursement issue. Some would argue it has already. The advent of the Five Star Quality Rating System has paved the way. Noble caregivers will still be valued, but successful outcomes will be rewarded the most. “In the future, only quality providers will survive,” Parkinson says.

Third, as a provider, you must adapt and diversify. There is precedence for this, he points out, noting providers' elevation of post-acute rehab and assisted living since 1980. This means home health, hospice, pharmacy services and more might become a greater part of your operations. Dementia care facilities are significantly under built Parkinson adds, a position that is impossible to contradict. Local governments and their reluctance to certify more beds are the big impediment here, he acknowledges.

Where Parkinson makes even more sense is when he gazes into his crystal ball on the topic of hospital readmissions. As early as 2013, hospitals can lose up to 1% of their federal reimbursements if they readmit too many patients within 30 days of discharge. In 2014, it slides to up to 2%; in 2015, the ceiling will be a possible 3% loss.

This means hospital CEOs and CFOs are going to start taking a stronger hand in where their patients are discharged to. “Business decisions” will take precedence more than ever.

Right now, one nursing home might receive 40% of a hospital's discharges, Parkinson gives as an example. Four other long-term care operators might each get 15%.

In the future, however, he believes that just one or two providers might get all of a hospital's discharged patients. The other three or four LTC providers in the scenario above would get nothing. Zip. Zilch. Their flows of clients wouldn't just go down — they could be eliminated.

It's not a far-fetched idea. Hospitals will play hardball with this issue and will want to partner only with the LTC providers that have the best outcomes. Measurable data will become king.

Like any good leader, Parkinson doesn't just throw an armful of papers in the air and exit the room. He also brings optimism. He thinks the above scenario presents outstanding openings. High-quality operators can corner greater market share, he thinks, and he's right.

He also has a vision of how LTC providers can make successful use of comparative hospital information found on the federal “Hospital Compare” website. (Just like Nursing Home Compare.)

The smart LTC provider, Parkinson maintains, will find what a local hospital is not scoring well on and create a care, recovery or rehab program that will improve the numbers. Grateful hospitals will then create a clear, profitable pipeline to and from LTC facilities that do this.

“It's a time of great opportunity,” Parkinson says with conviction.

There's not a nit to pick with that position.

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Daily Editors' Notes

McKnight's Daily Editor's Notes features commentary on the latest in long-term care news. Entries are written by Editorial Director John O'Connor on Monday and Friday; Staff Writer Tim Mullaney on Tuesday, Editor James M. Berklan on Wednesday and Senior Editor Elizabeth Newman on Thursday.

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