Backlogged hospitals want back into the nursing home business — without the hassles of ownership

Many hospitals and health systems that have cut back on their own skilled nursing capabilities over the last two decades are now looking to take back additional control over their post-acute processes.

Experts say that demand presents new patient and revenue opportunities for skilled nursing providers who can position themselves properly, both from clinical and legal perspectives. 

“Hospital and SNF collaborations may allow both providers more control over their bed supplies and the care transitions for post-acute patients,” said Stefanie Doyle, an associate attorney working on Baker Donelson’s Hospital-SNF initiative. “Research indicates that some of these collaborations may also lead to lower costs, shorter lengths of stay, and better outcomes for patients.”

A significant number of hospitals have converted their SNF units into other bed types or siphoned off on-campus nursing homes to new buyers in recent years, citing increased regulatory scrutiny, the high costs of skilled nursing care, staffing shortages, and, most recently, the pandemic.

But now that they’re finding it more difficult to discharge patients who are ready to leave the acute-care setting, some are considering new, albeit limited ways to get back into the SNF game. Modern arrangements might include management and lease agreements, bed-reservation contracts, sharing of clinicians and more.

In Western Massachusetts, CareOne teamed up with Baystate Medical Center to share premium labor costs and reserve beds for short-term, post-acute patients being discharged from the hospital. The arrangement led to the nursing home’s reopening of a 16-bed unit it had closed due to staff shortages and also boosted occupancy from the mid-70% range to an 88% average.

At York, PA-based WellSpan Health, leaders last year started a review of post-acute strategies under the guidance of Health Dimensions Group. The eight-hospital system needed solutions that would counter increasing acute care lengths-of-stay; address having too few licensed and staffed post-acute care beds to which it could send patients; and meet rehospitalization and other goals of its value-based care partners.

The system had developed its own plan in 2015, but leaders are looking to be more innovative in a post-pandemic reality that has driven up hospital length of stay among Pennsylvania’s 15 largest hospitals by an average of two days per patient.

“We have immense focus on care coordination and focus on things being done right in the post-acute setting because It’s crucial to maintain and achieve good outcomes for the patients’ recovery standpoint, as well as make sure that they’re not getting readmitted back to the hospital,” Vipul Bhatia, WellSpan’s associate chief medical officer of post-acute and continuing care, told McKnight’s Long-Term Care News.

The WellSpan approach: Hospitals helping SNFs

The system owns an institutional rehabilitation facility and has a WellSpan at Home service line, but it has no skilled nursing beds of its own. WellSpan created its first preferred provider network in 2018, said Bhatia, and it now stretches across all five counties the system serves.

But that’s no longer enough, and the acute provider wants to do more to streamline its direct line of access to skilled beds in its geographic footprint — while also realizing that nursing homes are facing their own staffing and margin pressures.

The first step in WellSpan’s newly expanding strategy is the Omega Bed Program, in which the hospital has identified a group of nursing homes that will take clinically stable, discharged patients whose Medicaid applications are pending. The hospital shepherds through that paperwork, reducing the risk and workload for selected skilled nursing providers who participate, while also giving them needed census.

Bhatia said the system is also in the very early stages of considering bed leasing or similar arrangements. 

The system also plans to grow its hospital-at-home and post-acute home care volume by 75% over the next three years, but even so, Bhatia acknowledges the demographics prove that the system will still need just as much, if not more, access to institutional post-acute care in years to come. 

Research points to collaboration

At the dawn of Medicare’s value-based care push, researchers said that hospitals might be more apt to buy skilled nursing beds if they were being held accountable for post-discharge outcomes and encouraged to cut costs.

Doyle and her colleagues recently authored a brief in which they made a case for renewed hospital ownership of SNFs or other relationships that fall short of outright ownership. They cited an early 2023 JAMA Network study that care by hospital-owned SNFs resulted in quicker recovery times for elective hip replacement surgeries, significant cost savings for Medicare and lower readmission rates.

Those kinds of studies haven’t sent most health systems running to buy SNFs. That said, the mounting closures of nursing homes, particularly in rural areas, Doyle said, adds pressure to develop strategies for vertical integration. Today, it’s more about partnering in a way that meets both parties’ financial and operational objectives.

“Bed reservation agreements allow a hospital to have an arrangement with a SNF, if structured appropriately, to hold a certain number of beds for that hospital’s acute-care patients that are being discharged,” Doyle explained. “The benefit for them is that they have a guaranteed flow of patients or residents that they know are coming in. It helps with their daily census, it helps with their billing.”

But bed reservations also require special attention to legal stipulations to avoid violating anti-kickback regulations or the Stark law, Doyle said. The Centers for Medicare & Medicaid Services’ Provider Reimbursement Manual outlines how the agreements can work in specific ways that withstand scrutiny.

Everyone wins with more coordination

The consultancy arm of senior living management firm Health Dimensions has seen an uptick in its work developing post-acute and senior care strategies for health systems  post-COVID and with the subsequent labor crisis. 

“We have also supported hospitals in redesigning the way they partner for post-acute care through networks, operational support and education, and divesting of their owned SNF assets to meet needs through partnership vs. ownership,” said CEO Erin Shvetzoff Hennessey. 

“We see that as a strong strategy for the future: engagement with operators with expertise to support the needs of patients in the right setting,” she added. “This has also positioned our post-acute care clients in expanding their relationship and integration with referral partners including hospitals and health systems and provided them a seat at the table. They have been elevated to a critical partner from a discharge destination. Providers have stepped up with clinical capacity, data and analytics, and thoughtful partnerships around staffing and payment.”

While these agreements are usually hospital-initiated in Doyle’s experience, she said nursing homes with speciality care units may find themselves best positioned to benefit.

Given the current staffing shortage, another appealing option could be clinician sharing or care coordination between settings, the Baker Donelson team said. Both specialists who can oversee recovery from specific procedures or acute-care stays and RNs — much in-demand at the skilled nursing level — could be in play.

“When you have these kinds of arrangements set up so they can share coordinators or share providers, that gives the hospital the ability to get more information about the patients, and the people that are involved in the patient care can continue to coordinate that more closely with the SNF,” Doyle said. “It’s about collaboration. Hospitals and SNFs should be talking to each other.”