Guest Columns

Compensation for better outcomes and costs

Betsy Rust
Betsy Rust

As the Darwinian economics of healthcare in the United States evolve, skilled nursing  facilities and physicians must learn to adapt, particularly to the new payments ecosystem.

In particular, SNFs must make sure the right personnel mix of healthcare and business expertise exists, especially as doctors become de facto insurance administrators.

Here's the end-goal: If a skilled nursing facility can prove itself a valuable partner to a managed care organization, an Accountable Care Organization, or a hospital-led bundled payments care improvement demonstration, there should eventually be the opportunity to negotiate for some of the monetary benefits of providing good outcomes at low cost.

But first, a few simple considerations can help make healthcare providers smarter, more efficient and stronger partners to the doctors and hospitals that refer to them. This is what will ensure greater cost efficiency, survival and even financial rewards for Accountable Care Organizations.

To begin, you need to understand the regional market and local trends. That means everything from managing services and utilization to tracking costs. Get a sense for the consumer choices in your region for Medicare plans. 

In Grand Rapids, MI, for instance, 60% of enrollees chose Medicare Advantage over traditional Medicare As such, in this market you find vastly different average metrics for utilization of services and length of stay.  If you aren't managing your performance to the health plan standards you might get left behind.   

Within your local patient population, discern when and how best to use case managers or nurse navigators. Identify "frequent flyers" and review their higher use of healthcare services. Use a manager or nurse navigator to build relationships with patients that may need more intervention to remain compliant with care plan instructions.   

A critical element is to use data analytics to guide your operations.  Collect, analyze and monitor data that will demonstrate  that you have achieved quality outcomes with cost effective processes. 

Once you understand the right performance metrics and benchmarks—aim to surpass them. CMS, health plans, ACOs and BPCI conveners are all driving change through increased focus on standardization. Achieving and exceeding these benchmarks provides more negotiating power and leverage. Be aware, too, of individual patient care and targeted prices for health care service to understand how to align health care costs at or below those targets.

If you are achieving quality outcomes through cost efficient processes, you will be able to negotiate from a position of strength. To start, first focus on the basic price. Then inquire about opportunities for performance-based bonuses. For example, consider opportunities for enhanced payment related to achieving  readmission targets. If readmission rates on average are less than the target, ask to get paid for some of this performance that will result in savings to the insurer.

It is inevitable that, large health insurers will negotiate with skill and tenacity. So it is critical to have performance data to support your end of the bargaining.  SNFS should also consider aligning  themselves with physicians, that can also demonstrate an ability to manage patients cost effectively without compromising care. 

A final point: survival of the fittest sometimes means the survivors were the first to change. That's why early ACOs and bundled payment adopters are beating old targets now!

Betsy Rust, CPA, is a consulting partner with Plante Moran's senior care and living practice.

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Guest columns are written by long-term care industry experts, ranging from academics and thought leaders to administrators and CEOs.

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