Guest Columns

Post-acute facilities must start acting like businesses

Betsy Rust, Plante Moran
Betsy Rust, Plante Moran

Fading fast are the days of post-acute healthcare providers viewing patients as their primary customers. Today, in the early stages of the age of managed care, health plans, accountable care organizations and case managers are the clientele.

Such is the new healthcare consumerism in the United States. Patients, get used to being merely middlemen, in a manner of speaking. Providers, get ready to cater to payers.

For skilled nursing facilities, rehabilitation centers, and even home healthcare services, it comes down to a simple proposition. What is your value as a partner provider to the purchasers of the services?

This concept has not been the orientation of the healthcare industry until recently. But think about it: If you're a skilled nursing facility, your revenues are someone else's costs, whether it's an end user's cost, the old perspective, or the cost to whoever is paying, the new perspective.

It requires mind-shift from the fee-for-service model, having a patient and getting paid with few questions asked, to selling yourself and thinking more like a scrappy entrepreneur.

Facility operators, I cannot emphasize this enough: Your revenues represent someone else's costs.

It's an important mantra. Fee-for-service is going the way of house calls; value-based purchasing is the next paradigm. Insurers that are buying your service want to know what they're paying for, why and how it compares to competitors.

And instead of the payer being traditional Medicare or Medicaid, which, let's face it, pretty much gave carte blanche to providers on balancing cost with value – the new payers really do care what they're paying for and are reconciling the value of the service to the cost.  

Specifically, many, if not most, insurers today will focus on efficiency. For instance, is a patient ready to go home on day 10 versus day 12, which might have been standard before?

And why not? Efficiency matters. If you were the buyer of the provider's services, which outcome one would you find more attractive? The one that gets the patient ready sooner with the least amount of service utilization and cost? Or the one that requires a longer length of stay with a lot more ancillary services?

It's often not easy for facilities to ascertain how they stack up on these metrics compared to competitors, however. Medicare claims data can be accessed to compare provider results for traditional Medicare patients but health plan claim data is not required to be made publically available. Privacy laws are also a barrier that requires time and paperwork to overcome. Accurate database analyses are difficult to compile and often require teams of expert consultants and specialists.

This new world of change should not daunt providers, even independent or small facilities, which already face challenges from changing demographics and other issues. If you have the right metrics – quality outcomes, reasonable lengths of stays, efficient service utilization – you'll still attract the attention of accountable care organizations and health plans.  In short do the right things for the right reasons, and you'll be successful.

In fact, these metrics are so critical that it pays to make sure your staff and systems are up to the job of tracking your own metrics. Also, you should start asking questions of insurers and partners to gather intel on how you stack up against others in your local market.

Of course, this shift to perceiving the insurer as the main consumer can push the pendulum too far in one direction, and healthcare facilities could become more concerned with cost and efficiencies than, well, healthcare. So always make sure the individual patient's health is the primary focus.

Calling it consumerism also may sound to some like clever corporate flackery or Orwellian newspeak. But, really, it's the language of healthcare nowadays.

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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