James M. Berklan, McKnight's Editor
James M. Berklan, McKnight’s Editor

Almost immediately after the 2006 schism that threatened to fully tear them fully apart, some stakeholders wanted to see the Alliance for Quality Nursing Home Care remain united with the American Health Care Association. Gradual Alliance attrition, combined with the effects of hard knocks from regulators and lawmakers, helped make it a reality this week.

The timing was largely driven by “a cascade of events” over the last four years, Alliance President Alan Rosenbloom told McKnight’s on Wednesday. That waterfall has included massive funding take-backs, additional reporting requirements and general attacks on operating margins, he noted. More carnage is likely on the way, he added.

Rosenbloom spoke matter-of-factly about the reunification, strongly endorsing it, even though it’s costing him his job come July 1.

“The Alliance came to the decision that we really needed to be speaking even more collectively, with one voice, than we have in the past,” Rosenbloom said.

As to the common retort that “there have always been tough times like these,” he indicated that is clearly not the current case for the skilled nursing sector. He rattled off a list of body blows that have been absorbed, or might be on their way, as evidence: payment changes that preceded healthcare reform, healthcare reform (“and all its implications”), various provisions of budget deals that have been put in place or might be soon.

There are also looming threats, such as possible fallout from federal deficit reduction talks and from how Washington will pay to avert massive scheduled Medicare payment cuts for doctors.

On top of that, the cost of delivering compliant care is rising, Rosenbloom noted, and the administration is pushing for providers to take a bigger hit on “bad debt” provisions.

If regulators decide to “drop the next shoe,” Rosenbloom warned, it “could precipitate another BBA [Balanced Budget Act] of 1997-type situation. And, no, that’s not an exaggeration.”

A handful of the largest provider chains filed for bankruptcy in response to BBA reforms.

Huge shifts will help some providers but hurt many others, Rosenbloom predicted. He thinks consolidation across many healthcare fronts is on its way.

All of the above developments explain why the veteran healthcare policy wonk and attorney thinks consolidating long-term care lobbying voices is a good idea.

“I appreciate that there’s always some concern that any healthcare group is crying wolf. But I would challenge folks to look at what is happening in terms of the finances for the sector,” he told me. “If you look at what’s happened to overall operating margins, they’ve shrunk, and not only because of payments but because of expenses.”

He warned that providers have already picked their “low-hanging fruit” and have fewer options for dealing with funding challenges. “There is a certain sensitivity [in Washington] that it’s nursing homes’ turn — they haven’t gotten nicked in a bit.”

He said that even after some funding was restored in 1999 and 2000 after BBA 1997 wreaked its havoc, subsequent quality data showed significant “deterioration” had taken place.

Providers are going to need the loudest voice they can muster to address the “very challenging picture” ahead, Rosenbloom reiterated. “There is no more plank to be walked.”

Major stakeholders agree with much, if not all, of what Rosenbloom described. The gavel dropped on the deal after several months of serious high-wire discussions between Alliance board members and AHCA leaders.

A contributing factor was Alliance membership dipping in recent years. Among the losses was UHS-Pruitt, which left the Alliance when UHS-Pruitt CEO Neil Pruitt Jr. become AHCA board chairman.

In 2010, Rick Matros, a strong Alliance proponent, also saw his status change, when he left Sun Healthcare to lead the real estate investment trust Sabra, which split from Sun. No longer the head of a provider company, Matros has remained involved in Alliance affairs as an ancillary member.

He said Wednesday that this week’s merger announcement had roots leading back to 2009, when “pretty serious conversations” took place between the Alliance and AHCA. Talks picked up again after the most recent regulatory and reimbursement challenges hit, he said, adding that another boost was the arrival of a new AHCA president and CEO, Mark Parkinson.

Matros said he thinks one of the final events that moved major players toward the merger was Kindred Healthcare President and CEO Paul Diaz’s very recent decision to withdraw from the Alliance. A spokeswoman for Kindred, which has not publicly announced such a move, had not responded to a request for comment by Wednesday evening. Kindred was still listed as a member on the Alliance’s website Wednesday.

Ultimately, sources agree that Steve Guillard, who is the Alliance board chairman and also a top executive at HCR ManorCare, must have had his merger concerns addressed. His company is the largest provider of skilled nursing services in the country and one of just two Alliance members not already an AHCA member, a situation that will change by July 1.

AHCA officials must have given Guillard and other Alliance stalwarts assurances that their voices would still be heard when it comes to lobbying for Medicare and other funding reform.

With the merger, the Council for Post-Acute Care (CPAC) clearly will be loaded with heavy hitters from the industry more than ever before, sources agree. CPAC has had a strong hand in representing long-term care interests before regulators and lawmakers, including the Senate Finance Committee. That is the name of the game for high-powered lobbyists like these.