Experts warn of skilled nursing market changes, researchers offer strategies to avert havoc

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Preliminary results of a survey of 36 large skilled nursing company CEOs paint a challenging picture for operators, who will either rise profitably from already strong positions, improve with proper initiatives or fail resoundingly, researchers said Monday. They discussed their findings and offered six critical strategies in a kick-off session at the LTC 100 conference in Dana Point, CA.

“As we move to more free-market evaluations, the top of the market will do really well. All spoils go the victor,” offered David Ellis, president of Lincoln Healthcare Leadership, which hosts the annual leadership and strategy gathering of top providers and industry vendors.

Study co-presenter Kathleen Griffin, president and CEO of Care Management Innovations, noted that survey respondents said the last six months in particular have brought accelerated narrowing of provider networks. Griffin and Ellis declared themselves cautiously  “bearish” on the current skilled nursing environment until a promising demographic boom hits in a handful of years. Final results of their study are expected to be released by late summer.

To cope with a potent cocktail of new initiatives, regulations and market forces, however, the researchers offered a half dozen distinct steps providers should take, beginning with “strategic pruning.” This includes renovating old physical plants, selling weaker performers (“a great time to sell”), planning eventual acquisitions (“scale will matter but wait about two years for prices to drop”) and concentrating holdings geographically.

They also emphasized the inescapable need to provide quality care – to the point of being a “best in class performer in the market.” Lower readmissions rates, lengths of stay and staff turnover will be important factors, they said, while also posting high clinical and Five-Star Nursing Home ratings scores.

Next is an imperative to gather, understand and act on performance data points. Hospitals want to know what the “total cost of care” will be in a partnership with a skilled nursing provider, Griffin and Ellis emphasized.

The fourth recommendation is to “really invest downstream,” meaning to own or closely link with home health, assisted living, outpatient care and other non-acute operators. That dovetails with advice to “develop a comprehensive, integrated continuum” for handling risk. Using electronic medical records for predictive analytics and better care coordination will help immensely in a future strewn with bundled payments, accountable care organizations and other non-traditional alliances and payment models, they added.

The final recommendation is to “be tomorrow's hospital,” meaning to capitalize on the Centers for Medicare & Medicaid Services' vow to increase pay for medically complex care. This will require SNFs to raise their complex (and chronic) care competencies. This is important especially if significant rehab care currently handled by skilled nursing and rehab facilities is siphoned “downstream” to assisted living or home settings, as several experts predicted Monday.

Part of the "becoming hospital" point should involve targeting patient conditions traditionally treated in hospitals that SNFs can manage instead on their campuses at a lower cost, Griffin pointed out.

The ticket, the researchers said, is to move beyond the first three strategies (pruning, quality improvement and data aggregation) to advance in the last three (downstream investment, risk assumption and increasing acuity of care). It is likely that combinations of the six strategies will be effectively employed for success, they added.

Another major theme emphasized by presenters during sessions Monday is the unflagging growth of Medicare Advantage plans.

“Ignore it at your peril,” cautioned Dan Mendelson, president and founder of Avalere Health. He noted that many healthcare execs have been averse to discussing or planning for it. “This is the future of the Medicare program, no matter who is elected president.”

Another rolling boulder that providers need to get ahead of or risk injury is the government's push toward value-based payments. This new reimbursement tactic has progressed so quickly and well in regulators' eyes, it is “a year ahead of plan,” one analyst pointed out with a raised voice.

“There's an unprecedented pace of change.It's much faster than anything you've seen,” warned Sheryl Skolnick, Ph.D., managing director and director of U.S. Equity Research for Mizuho Securities USA, a subsidiary of Japanese financial giant Mizuho Financial Group. "Those who will be unprepared will not make it."

Those who will be unprepared will not make it,”

Those who will be unprepared will not make it,”