Opinion: THE BIGPICTURE -- How to grow: the latest rub

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Perhaps comparisons to the phoenix are a bit extreme. But like the mythological figure, for-profits seem to be rising from the proverbial ashes.

For many operators, the recent recovery follows two tumultuous decades. Assisted living centers, home health and community-based services have collectively reduced the nation's nursing home population. Largely gone are the days when SNF beds were filled with low-acuity residents paying their own way.
So what's rehabbing the sector? In a word, rehab.
Increasingly, operators have found that the best way to ratchet up profits is to ratchet up services. Many traditional SNFs are turning to rehab care to augment or replace established service lines. While execution varies, the goal is generally the same.
Consider Manor Care Inc., which is now focusing on more profitable, intensive shorter-term rehab services. Among the customers Manor Care now seeks are those recovering from strokes, heart attacks and other serious conditions.
Manor Care is gladly trading longer-term residents for short-stay patients who generate about $400 per day in reimbursement. Of course, the company is also hedging the bet by building up its hospice, home-health, assisted living (mostly for residents with dementia) and outpatient rehab therapy businesses.
But it's not just the Manor Cares of long-term care that are embracing rehab. You'd be hard-pressed to find any for-profit operator who hasn't begun offering some kind of rehab care. Curiously, many nonprofits have eschewed this choice, although there are signs of change here as well.
Moreover, the option appears to be a bargain for the government, which often pays rehab hospitals $800 per day for services.
So what might ruin the party? There are quite a few possible hurdles, but the two that come immediately to mind are the past and the future.
It's no secret that rehab care was enjoying an escalation in the mid- 1990s – a growth that did not escape notice by federal actuaries or Congress. So in a fell swoop, Congress passed a deficit reduction act in 1997. Essentially, the law gutted rehab payments to nursing homes and therapy companies. Can it happen again? Has anyone noticed that the president plans to trim Medicare and Medicaid spending by $100 billion during the next five years?
Which brings us to the future. Rehab hospitals howled when CMS announced plans to gradually enforce the so-called 75% Rule. What are the odds the same people will quietly let nursing homes raid their cookie jar?
My suspicion is that rehab hospitals and long-term care operators will soon be going to war. And the loser may need more than rehab.
John O'Connor is vice president of McKnight's Long-Term Care News. Contact him at john.oconnor@mltcn.com.
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