Facilities have opportunity to improve operations and re-think patient care
Long-term care facilities are facing new pressures as a result of the Patient Protection and Affordable Care Act. As part of the shift to integrated care, reimbursements will be linked to patient outcomes rather than the traditional fee-for-service model.
That's a major shift for managed care reimbursements but even bigger changes are possible in the future. The U.S. Department of Health and Human Services' 2014 budget proposal includes a recommendation to reduce payments to skilled nursing facilities with high rates of preventable hospital readmission. Payments could be reduced by up to 3% and proposed penalties would take effect in 2017.
In light of the current and potential changes, the overall message for owners and operators is clear; they must actively manage patient health outcomes to avoid losing out on Medicare and Medicaid payments. One area of focus, for example is the hospital readmission rate. Nearly 14% of Medicare patients discharged from a hospital to a skilled nursing facility are re-hospitalized for conditions that could potentially have been avoided, according to the Medicare Payment Advisory Commission.
The potential loss of income is just a part of the story, however. On the positive side, owners and operators could embrace the opportunity to improve operations and re-think some aspects of patient care, which could improve margins and long-term economic health.
Facilities could increase the number of Medicaid and Medicare patients they treat and be fully reimbursed for patients' care. They can take steps to become more efficient and run a more cost-effective operation. By establishing a track record of positive patient outcomes, they can become preferred partners to hospitals and other healthcare providers, giving them a competitive advantage.
To be sure, there is no simple path to follow when transitioning from one model to another.
One of the most important components of success, however, is the right infrastructure. Specifically, this means having electronic medical records and information technology capabilities to support patient tracking. Every facility will need to quickly and accurately measure, document and report patient-care outcomes and other quality and trend data.
Facilities must also implement an operations strategy to bring about desired outcomes, such as faster turnover and shorter patient stays. They must also develop clear processes and procedures to ensure greater coordination among healthcare organizations, ensuring continuity of care and patient safety.
While much of the focus nationwide has been on avoiding reimbursement cuts, it's not the only model under consideration. A test project in three states – New York, Arizona and Wisconsin – takes a different approach. The participating nursing homes receive financial rewards if they decrease their threshold of avoidable hospitalizations and meet certain other performance measures.
With so much in flux and at stake, facilities will need to look at virtually every aspect of their operations. How they address that challenge will go a long way toward determining their long-term viability and profitability for the future.
Imran Javaid is the Managing Director, Commercial and Specialty Finance, Capital One Bank.