Hospital readmissions from skilled nursing facilities are costly and many can be prevented. More than 23% of Medicare beneficiaries discharged from the hospital to a skilled nursing facility were directly readmitted within 30 days at a cost to Medicare of $4.34 billion in 2006, according to a study published in Health Affairs. Seventy-eight of these readmissions were labeled avoidable.

Starting in October 2018, SNFs became subject to a penalty of up to 2% of their Medicare reimbursement for posting higher-than-average rates of hospital readmissions per the Skilled Nursing Facility Value-Based Purchasing Program (SNF VBP Program).

Executive leadership of these facilities are understandably anxious about the implications for their bottom line. Performance – meaning, the ability to reduce readmissions – will now influence payments. Through the program, SNFs will be rewarded or punished, depending on their ability to prevent costly and unnecessary readmissions:

  • The new value-based payment regimen starts with a 2% decrease in Medicare per diem payments across the board, which funds the bonus pool
  • SNFs that score at the top of the distribution may qualify for a bonus as high as 2%.
  • Those in the middle of the distribution will get part of that 2% back
  • SNFs that score below the 40th percentile of performance are ineligible for any incentive payment and their payment from CMS will be trimmed by the full 2%
  • The total value of the incentive payments will not be more than 70% of the total amount of the payment reductions

In order to continue to strive and thrive in this “new world order,” executives must realize the importance of a strong value proposition and innovative solutions that highlight their facility’s brand promise yet deliver via performance. SNFs are already competing against each other in protecting and growing their referral/revenue stream from hospitals. Now, SNFs will also be competing against each other to recover the decrease in reimbursements. Being placed in the lowest two quintiles will affect payment and profitability, along with their ability to attract new referral sources and maintain existing referral streams.

To make sure that facilities are prepared, executives need to understand the core strengths and key differentiators versus similar facilities. Research amongst stakeholders – e.g., patients themselves, their families, employees, Medical Directors, current referral sources, and former referral sources – will provide insight into the perception of the facility’s overall brand and reputation. Juxtaposing the underlying equity versus competitive sources will shed light on how the facility can better compete for referrals, and for talent.

To strengthen a unique value proposition, executives should also explore how innovative use of technology can better manage their readmissions exposure while also protecting their revenue/referral stream from hospitals. Virtual care platforms can help reduce readmissions and unplanned transfers from the SNF by enabling offsite providers to “put eyes on the patient.” SNFs can now treat their patients onsite by enabling the facility’s staff to immediately access the Medical Director (or other designated clinicians) and facilitate a video call when a patient has an acute change of condition. With the platform, providers can see the patient while the patient remains in the facility. This allows the SNFs to treat patients in place, which keeps patients at a lower cost yet clinically appropriate level of care provided by the hospital, while preserving the facility’s reputation and brand. The facility’s Medical Director can be “present” more frequently via video; additional clinicians and specialists can also connect with the SNF patients and staff to ensure that the patients receive the treatment they need without requiring a transfer back to the hospital.

As it is challenging to provide onsite physician care after hours (from a cost and scale perspective), a virtual care platform can help SNFs augment their core onsite staff by enabling patient and staff access to additional (and specialized) medical providers around the clock. Providing timely access to convenient, compassionate, and quality care can help alleviate the challenges and costs associated with transporting patients to hospitals, minimize the “revolving door” of readmissions, and strengthen brand equity. Virtual care platforms can also improve quality of life and satisfaction by preventing fragile patients from leaving the comfort and familiarity of a facility in order to participate in offsite medical appointments or be put at risk for complications upon readmission to a hospital.

By implementing a virtual care platform, SNFs are building their census by keeping beds filled (preventing avoidable re-hospitalizations), maintaining their incentive payments, and strengthening their own value proposition versus other facilities competing for the same referral stream.

Lee Horner is CEO of Synzi and is responsible for corporate strategy and development, with an emphasis on revenue growth, product direction and customer satisfaction. Before launching Synzi, Horner was president of Stratus Video Telehealth, president of CareCloud software, and senior vice president of Sage Healthcare.