2018 will bring significant financial and regulatory changes
There is no crystal ball to show what challenges and changes 2018 will bring to the post-care and senior care industry. That said, as consultants and operators, Health Dimensions Group predicts several major trends that will impact senior care. Due to increasing regulatory and financial pressures, there will be operational and ownership changes in senior living, as well as continued progress toward a value-based payment system.
First, look to see changes to senior living ownership and operators. In response to strong future demand, there continues to be domestic and international financial interest in the senior living and skilled nursing industry. In 2018, expect growth to continue in these sectors, with ramped up investing in new senior living properties, especially among larger investors looking to build multi-site organizations.
Among skilled nursing facilities, ownership changes will flourish as owners leave the business and demand for more focused post-acute settings increases. The divestiture, bankruptcy and reorganization of assets from large organizations will also continue to flood the market.
Second, the shrinking labor market will continue to affect healthcare facilities in 2018, especially in rural communities. We anticipate that facilities will collaborate and centralize key business functions in response to staff shortages and cost concerns. To address these challenges, facilities are turning to creative solutions. Centralization will aid providers as workers with specific skills become harder to find. Healthcare providers will combine forces and centralize human resources, payroll and billing operations to gain efficiencies.
Third, regulatory changes from the federal to state level will affect oversight, penalties and the overall industry frameworks. We are nearly to the halfway point of implementing Centers for Medicare & Medicaid Services' major Requirements of Participation updates, also known as the Mega Rule. These changes are the biggest ramping up of SNF oversight in nearly three decades. The federal government has provided some delays and leniency, but providers are still struggling to gain traction and maintain their CMS 5 star ratings. Adapting to new federal standards and regulations will keep SNFs busy in the year ahead.
The trend toward rewarding value over volume is also here to stay. Expect a continued emphasis on incentivizing value directly through payment systems, including modifications to the SNF and home health prospective payment systems. The goals will be to shorten stays, reduce readmissions and to utilize the most efficient level of care. When looking toward alternative payment models, many accountable care organizations will move toward accepting downside risk through Track 1+, subsequently increasing their focus on post-acute care.
In terms of bundled payments, look for the voluntary Bundled Payments for Care Improvement (BPCI Advanced) to take off. BPCI Advanced links quality and costs in an episodic payment framework. The system replaces the canceled mandatory episode payment and previous federal bundled payments programs. With the shift toward voluntary bundled programs, there may be a more immediate and sizable impact as motivated participants more quickly adjust to curtail risk and change behaviors to maximize payments.
Providers across the nation are preparing to thrive in this ever-changing financial and regulatory framework, and we can continue to learn lessons from one another.
This is the first of a two-part outlook on 2018 Trends. Watch for Part Two in January.
Erin Shvetzoff Hennessey is Executive Vice President, Consulting, at Health Dimensions Group.