CHICAGO — The headwinds for skilled nursing operators are significantly more numerous than the potential tailwinds, but there are reasons for provider optimism.
That was the core message from a top national leader Wednesday during his keynote appearance at the annual fall meeting of the National Investment Center for the Seniors Housing and Care (NIC) here.
The demographic surge of elderly patients, greater use of sustainable revenue models, more assumption of risk by providers themselves, and the exploitation of new technologies will boost nursing home operators, said Phil Fogg Jr., president and CEO of Marquis Companies and immediate past board chair of the American Health Care Association.
Those hopes are set against the headwinds of workforce supply, unfunded mandates, aging physical plants, increased ownership scrutiny and politics, to name just a handful, he pointed out. But there are ways to compete, he stressed.
“One of our tailwinds will be our census and our access,” he explained. “I think we’re about three years away from the demographics really impacting long-term care, and then it’s going to really impact long-term care.”
He predicted skilled nursing capacity may continue to decline — 600 facilities have closed since the start of the pandemic, he noted — which will eventually create incredibly strong demand for services and facilities that remain.
“If you have that capacity issue, you’re going to see the occupancies increase and then you’ll have access [to beds and services] challenges,” he said. ”And if you have access challenges, that could be the one thing I personally see that seems to get the attention of [the Centers for Medicare & Medicaid Services], state governments, of hospitals.
“While we don’t have a lot of tailwinds, in three to five years, you’re going to see that we’re going to increase our negotiating power, probably not just with MA plans but with Medicaid and Medicare,” Fogg added.
Rivals in new roles
Marquis, which has 22 campuses in the Northwest, had to restrict admissions for the first time during the pandemic. Fogg said that was when hospitals began lobbying officials to increase skilled nursing payments so they could clear their acute-care beds faster.
He said skilled care providers should start getting to know their marketplaces and competition better now.
“You have to be able to come together and work collectively with your providers, even if they’re your competitors, to be able to lift the payment bar,” he counseled.
He said Marquis has worked collectively with others in its marketplaces because when it comes to competing with Medicare Advantage plans, “it’s all about access. It’s about network adequacy. If you don’t have the ability to influence that, especially if you’re a high-performing network of providers, you’re going to be at risk because they’re going to do whatever they can to you.”
He said that when Marquis first launched its special needs plans, he noticed most other provider types were starting negotiations at 105% of Medicare fee schedules, whereas nursing facilities were accepting only 75% or 85%.
“I think you have to lift the tidewaters for everyone and compete on the amazing quality and length of stay, value-based payment provisions and not weaken the sustainability of payments by trying to be really competitive,” he said.
“We need to be able to own our own risk and stop having third parties trying to monetize savings off post-acute care episodes or part A and B costs,” he added. “Five years from now, did SNFs get to own that risk or be able to convene that risk or not? Those are the things I look at.”
Technology’s jet stream
Other tailwinds should come from improved use of technology.
“Predictive AI will be a game-changer with population health management,” he said. “I can’t think of a better application of AI than the ability to data mine our EMRs and build intelligence around predicting when somebody’s going to have a change in condition or somebody’s going to be at high risk for a hospital admission.”
He drew parallels to when electronic medication records were first employed and generated “huge savings” through saved nurse labor.
Another tech area to exploit will be remote patient monitoring.
“Monitoring the biometrics of vitals is the next thing in skilled nursing that could be a big deal because it could take a workflow off of staff,” he said. “Then with the interfacing with the EMR you would immediately red-flag any changes in biometrics that could be leading to a change of condition or hospital admission.”
This will help with day-to-day care, as well as the administration of special needs plans, which encourage providers to assume more risk coverage themselves.
‘Getting our butts kicked’
Fogg said he personally didn’t anticipate the devastating impact COVID-19 would have on the long-term care workforce, particularly how hospitals would burn out their nurses and then raid the already-diminished skilled nursing pool.
“There was a certain part of the workforce challenge that would have occurred without COVID, where we just had demographic challenges, especially with licensed nurses and therapists and professionals [in short supply],” he said. “I just don’t think we reacted to the workforce challenges quick enough.”
“[Workforce challenges] could kill us,” Fogg said of the sector overall. “It’s the No. 1 thing that will affect our qualities, that will affect our occupancies. When you have unfunded mandates [such as the administration’s staffing minimum proposed rule] that don’t have any relation to the reimbursement at a state or federal side, it changes the economics in a way that could absolutely kill you.”
He said the non-professional ranks of employees are rebuilding in the workplace but the deficits of nurses, therapists and physicians remain considerable. He said a halving of H-1B visas, some of which go to nurses, hasn’t helped.
“The lack of supply on the immigration side has absolutely damaged and been a major contributing factor to our workforce challenges,” he noted.
“I personally have very little confidence in our education system to increase supply to the levels we need to fill the gap,” he added. “So when I think about this long-term, in the next three to five years, we need to get the foreign healthcare workers into the United States. I think America, we’re losing this battle. At a national level, we’re getting our butts kicked by Canada, and England and Germany.”
He said the declining situation was made clear to him even before COVID hit, when he was on vacation in Croatia, where local talk was about a surplus of healthcare professionals, all English speaking. But he was told the extras typically head to Germany.
That’s why lobbying efforts by AHCA have included a campaign for a new foreign healthcare visa, which would remove dependency on highly competitive H-1B applications and the green card process. A coalition of “every single Medicare provider that works with CMS” is pushing for this, he said.
“I do think it’s a short-term fix while our education system kind of gets its act together and goes to the capacity we need,” he explained.
No homes on the range?
The urgency is especially acute for rural and semi-rural providers, he said when asked by moderator Steven Monroe if those operators are likely to “just disappear” if staffing pressures don’t subside.
“Yes, I think they will,” Fogg answered. “I think rural healthcare in America is at risk.”
One answer would be creating a “critical access” designation for at-risk rural providers, much like the hospital sector has. That guarantees the government covers operating expenses, up to an allowable level.
“If the government wants to save rural long-term care, it’s going to have to do the same thing — designate rural skilled nursing facilities as critical access and be able to pay the costs,” he said.
He said he hopes five years from now, progress has been made.
“In an optimal world, we were able to affect foreign healthcare worker visas that brought in 200,000 to 400,000 healthcare professionals a year and the education system filled the depth of need,” he mused of a desired look back. “In an optimal world, we filled up the buildings because there was a lot of increased capacity. We create access issues that increase our negotiating power. And that would create an economic model that’s going to make this profession very sustainable.”
