More empty beds: Medicare patients further weaken demand for skilled nursing

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Avalere's Fred Bentley says operators should shift their tactics based on hospital changes
Avalere's Fred Bentley says operators should shift their tactics based on hospital changes

Medicare beneficiaries are spending fewer per-capita days in skilled nursing facilities since 2009, according to a new analysis released Thursday.

The trend likely reflects what's happening inside hospitals — whose practices should shape the business plans of skilled nursing providers, a vice president for consultancy Avalere Health told McKnight's.

“To increase their market share, skilled nursing organizations need data on the specific hospital referral patterns in their market,” said Fred Bentley, who oversees the firm's post-acute division. “They need to be able to size up the competition in terms of market share shifts and performance; they also need to have a much more nuanced, targeted understanding of the unique needs of their upstream hospital and ACO partners.”

Based on Avalere's analysis of beneficiaries in traditional fee-for-service Medicare, SNF use has declined steadily since 2009, when there were 1,808 SNF days per 1,000 Medicare fee-for-service beneficiaries. That number sank to 1,539 in 2016 — a 15% decline.

Thursday's report puts blame for the decline on a move away from inpatient hospital care, including fewer admissions and more frequent use of “observation” stays, which result in fewer Medicare-covered SNF discharges.

Following hospitalizations for injury or illness, many patients are discharged to a post-acute care facility, where they can continue their recovery or manage their illness. Medicare covers up to 100 days of SNF care. But to qualify for coverage, a patient must first be coded as having spent at least three nights as a hospital inpatient.

To get more of the patients who do qualify, Bentley said SNFs should aim to set themselves apart by highlighting unique clinical capabilities with “compelling performance data.” That may be a particularly strong strategy of they can address upstream partners' pain points around readmissions, length of stay or cost per episode of help manage specific conditions like heart failure, sepsis and COPD.

They can also capture more business from inpatient rehab facilities.

“SNFs are typically less expensive than IRFs, and ‘super-SNFs' that can manage complex patient populations should be aggressively positioning themselves as a lower cost alternative to IRFs,” Bentley said.

Others are being even more aggressive. Bentley said some Avalere clients are structuring innovative contracts directly with Medicare Advantage plans, assuming financial risk for managing post-acute care in hopes of increasing referrals with solid value-based metrics.

According to Avalere, SNF use is also being affected by changes in discharge patterns among other post-acute care facility types and average length of stay. Average SNF length of stay has remained stable at about 24 days since 2009.

“The economics of post-acute care have been fundamentally changed as Medicare shifts its payment approach to capitation, bundles, and pay for value,” Dan Mendelson, Avalere president, said in announcing the data.