Some look at the ongoing COVID-19 crisis and question how they can make their buildings safer. Eric Tanner, CEO of transitional and skilled care specialist OnPointe, sees the crisis as a launching point for irrevocable, industry-wide change.

A long-time advocate of innovative payment and care-delivery models, Tanner is calling on the new federal administration and investors burned by this year’s skilled nursing occupancy collapse to reassess how they do business.

Eric Tanner

“What we’ve been doing for 50 to 60 years is we’ve been playing to the median, and quite frankly, we’ve been paying for the median … I just think that’s the wrong strategy,” Tanner told McKnight’s Long-Term Care News. “We have to fundamentally change what we pay for. The only potential way to gain in our industry is through occupancy. I would love for us to be paid for value.”

Tanner envisions a world of SNFs in which clean, bright buildings offering 5-star care with well-paid staff and delivering outcomes that outrank their neighbors earn more for their services. While he’s focused on quality, he’s not as willing as some in the industry to wait for the kinds of incremental changes that allow some providers to inch upward.

His radical ideals have been emboldened both by COVID-19 and the knowledge that President Joe Biden has made healthcare a high-priority issue.

“We’ve been talking about this around the margins for 10 years at all the meetings and think tanks,” Tanner told McKnight’s this week. “Do we need more evidence that it’s not working? It’s not working! We should be using (COVID) as an inflection point to create real and lasting change. If there wasn’t something that was going to shake us to the core like this, then I don’t know what will.”

Must take risk, ‘have skin in the game’

Late last year, American Health Care Association CEO and President Mark Parkinson told McKnight’s his organization is exploring “bold” ideas for skilled nursing, including those that: make a “real” difference in resident care; are capable of being implemented, pointing out that minimum staffing requirements, for example, may not be practical given the workforce shortage; and will not worsen already low profit margins.

Advocating for improved Medicaid rates to boost salaries and redeveloping the survey process are in consideration.

A group of notable geriatric researchers this month called on the Biden administration to “test and adopt successful innovations and concomitant payment models to expand services to improve the quality of care in nursing homes.” The Health Affairs commentary noted that alternative payment models and plans that create flexibility — such as Accountable Care Organizations, bundled, capitated and other value-based payments — are “urgently needed.” But those types of innovations have often disregarded skilled nursing providers as the drivers of change.

Breaking through those barriers, they wrote, “will take … a commitment to prolonging optimal health and independence, the restructuring of financing and unwavering support for person-centered care.”

Tanner’s OnPointe is moving toward those goals, even if the federal government isn’t yet fully on board.

The company has about 800 beds across seven buildings. Its operating philosophy centers around shared risk and includes partnerships with Medicare Advantage plans, at-risk physician groups, ACOs, health systems and other post-acute care companies, and those partnerships offer guaranteed cost savings.

“The thesis is, if we want to be valuable, we have to provide value. How do we provide value? We look to our outcomes,” Tanner said. “The more we pinched and prodded and parsed away at that, the greater reality was we had to have skin in the game as it relates to the premium dollar risk.”

Specializing a key

In Texas, that takes the shape of a hospital-based transitional care unit that merges hospitality and therapy and derives revenue on acute-to-post-acute episodes of care.

in New Mexico, the company’s skilled nursing services fall under a prospective payment plan for a modified case mix.

The idea that the same company would operate multiple facilities without trying to offer every possible service at each one is core to Tanner’s vision.

“We’re moving out of the warehouse mentality that one building can do 10 things for 10 different subsets of populations,” he said.

Offering subspecialities — say short-term rehab instead of dementia care, or vice versa — may make facilities more attractive to potential investors. 

“How does whoever’s paying you trust you enough to take risk on outcomes, on the value that you’re providing be that either on length-of-stay, be it a small subset of the population and managing that population really well or there are some interesting I-SNP products out there,” Tanner says. “There are different ways you can thread that needle, but you’ve got to be in the game.” 

Investor advice

Encouraging SNFs to take the lead in value-based systems takes capital and management time many don’t have, Tanner concedes.

Finding new investment partners — particularly non-real estate investors —  could be key to faster innovation. As providers wait for the federal government to increase funding and reward quality, Tanner suggests they should find backers from private equity, technology, software and other industries interested in supporting a new approach to long-term care or rehab.

Otherwise, facility leases will continue to bind value to occupancy.  

“Is there a funding mechanism that we can in some ways dissociate the real estate holders from the actual operating business? People say no, no, no, you can’t do that,” Tanner says. “Well, I’m looking at hospitals going up left and right of me in DFW, and the hospitals seem to be doing OK.”

Tanner’s goal is for the federal government to incentivize providers to improve their facilities, staffing levels and outcomes. He believes the extent of nursing home deaths due to COVID will encourage Biden appointees to back change.

Of course, the ultimate aim is to push the federal government to “find what works and incentivize everyone to get to that.” As the nation’s top nursing home customer and regulator, he said it behooves the government to learn from the pandemic and thwart the next skilled nursing crisis.

“We have a new administration and within that administration, there are a lot of knowledgeable people who want to fix the problem,” Tanner said. “We have a voting block of 55- to 70-year-old people who, at some point in time, will need care that’s delivered to them by someone other than themselves or their significant other. So let’s create a system where over the next five to 20 years, those people can feel safe, and the people that are taking care of them can do it in a dignified way while they’re able to provide for their families … and the investors feel good about putting money into it.”