Rehabilitation feature — Subacute surge
The 75% Rule and other recent events have thrust nursing homes' subacute expansion back into the limelightIt's a rare occasion when nursing home operators can feel both fortunate and confident about market events.
Yet those are the general feelings providers express when it comes to the profession's new thrust into subacute care. The tumblers seem to keep falling further into place. And this time the government is promoting the subacute/rehabilitation push — unlike a similar foray about a decade ago when it wound up stifling it.
The reason is simple: cost. Although a variety of factors are fueling the skilled-nursing conversion to therapy, none may be stronger than the 75% Rule. In brief, the rule is a refinement to Medicare's prospective payment system. It has led to the diversion of therapy patients from more costly inpatient rehabilitation facilities (IRFs) to nursing facilities and other less costly providers. (See story on page 12 for a 75% Rule pay update.)
"There's definitely winners and losers in this game, and nursing homes are the winners," says Brad Sidiski, director of rehabilitation services for The Wartburg Adult Care Community, Mt. Vernon, NY.
Prudent observers know, however, there are still powerful threatening forces to keep an eye on. There is,
for example, the ever-powerful American Hospital Association – a "loser" in this drama. And there are a handful of bills in Congress aimed at reversing, or at least blunting, the 75% Rule.
Yet while nothing is ever etched in stone, long-term care operators have made some solid plans — so solid they may actually involve bricks and mortar in some cases. Golden Gate National Senior Care's Aegis Therapies and Genesis HealthCare, for example, recently announced their aggressive creation of distinct rehab operations within existing facilities.
Also taking LTC therapy operations to the brink of a boom time has been a favorable twist to the much-dreaded Part B therapy caps. A sweeping exemption policy now steers most nursing home residents clear of cap restrictions.
New subacute opportunities, however, are not a simple matter. Providers will find they affect staffing, marketing, reimbursement, dÃ©cor and other decisions.
If there is a textbook case of how a provider can cash in on the subacute craze, The Wartburg Adult Care Community in New York may be it. Sidiski has had to increase staffing to keep up with a surge of rehab residents, and he's looking at upstaffing yet again.
"We've had our 40-bed short-term unit overflow. We've actually had people come in and accept a long-term bed to accommodate that," he said. "The complications arise at the cohort level. If you're a 65-year-old gentleman recovering from a hip replacement and eventually heading home, you want to be on a floor filled with people similar to yourself, there for a short period of time. There's a different feel to the units."
Other operators have recognized that need and are building new units with a distinctly different feel.
"It will be like a hotel. Everything will be separate – you'd never know you were within the walls of a good nursing facility," says Lou Ann Soika, vice president of customer relations and strategic development for Genesis HealthCare.
She's overseeing the buildup of Genesis Progression Rehab Units among the chain. Six of the units will be up and running by the end
of September — in Boston, Philadelphia, Baltimore, southern New Jersey, New Hampshire and Annapolis, MD — with more sites slated to open in 2007, she said.
Aegis also announced earlier this year plans to open a fleet of rehab units within existing facilities.
"Clearly, the 75% Rule has created the opportunity," says Maurice Arbelaez, president of AEGIS' Acute Rehab. "We've designed a program we feel is a void in the communities right now. Initially, I presented it to administrators as a defensive-offensive move. If they don't do this, somebody else will."
The Aegis model calls for 20 to 24 beds in a unit within an existing nursing facility.
"The unit has been remodeled so it doesn't feel like a nursing home. It will have flat screen TVs and the amenities people are looking for, for being comfortable," Arbelaez said. "We're increasing the nursing hours. They (residents) are coming into a specific orthopedic center. You have to have a building located in a community with a strong orthopedic program. My goal is to have 20 of these opened by year's end."
Genesis' Progression Rehab Units also have special requirements for lounges, cafes, gyms, dining and expanded staffing, Soika noted.
Knowing where the orthopedic surgeons are is key, she acknowledged. A prime target is the "young" resident — 70s or younger — who is recovering from a knee or hip replacement.
"We have received a nice financial return on our investment," Soika said, adding that increased community awareness and better staff retention are other positive byproducts.
The Wartburg's Sidiski says the increasing shift to subacute care can raise nursing facilities' profile among the professional community, as well.
"We've had a number of hospitals in the area contact us. They're starting to get out and look at where they are sending these patients, specifically to determine if the services we provide meet the needs of their clients. They're looking at our facility as a referral destination for patients who have traditionally done acute-care rehab," he explained. "It feels good."
What types of needs are there? Instead of a resident who needs 30 minutes of physical therapy and occupational therapy a day, higher intensity patients might need 21⁄2 or three hours a day. Some surgeons want repeat therapy sessions every day, he added.
And it's not just knees and hips, he pointed out. "Cardiac conditions, amputations, you name it and we've got it," Sidiski said. "It's a good time to be a therapist, but a bad time to be looking for therapists."
Yet, make no mistake: For the skilled nursing operator with proper staffing and protocols in place, subacute care is "absolutely good business," Sidiski stressed. It sows seeds for future success, too, he noted.
"We're not seeing the strong complaint about being in a skilled nursing home, even just for rehab, as frequently," Sidiski said. "We used to see, 'I don't want to be in a nursing home for even one week, two weeks or whatever.' I think with things like the 75% Rule, some of that stigma might be lifting."
Reasons for concern
Sidiski noted, however, that potential competitors are not taking things lying down. Acute care hospitals in the area are trying to compete with their own specialty units, if they can.
A top official with the National Association for the Support of Long Term Care, an advocacy group for many contract therapy providers, was even more cautious.
"Theoretically, it should help census, but we haven't seen a great shift yet," said Peter Clendenin, NASL's executive vice president. "I'm not skeptical, but I do have some hesitancy because we went pretty deep into subacute care in the 1990s and it disappeared pretty quickly."
Clendenin said providers' creativity spurred that subacute trend. But the trend was short-lived.
"HCFA (the current day CMS) came back and said we're essentially going to close that loophole. Even though the daily reimbursement rate costs less, we're getting much longer lengths of stay in the SNFs and the medical outcomes are not so strong," Clendenin recalled.
"It's been 15 years and we're smarter, hopefully," he added. "One reason I'm pretty positive about this policy is the fact that you've got a much stronger nursing home industry in terms of capability, resources and knowledge to care for these patients."
Clendenin added that he thinks CMS will be a little more circumspect about pulling the rug from under long-term care providers this time, if only because the trend can mean a savings or $300 to $800 per patient day when it comes to Medicare payouts.
"It should work to the nursing homes' benefit," he said. "But I don't think we've seen the last chapter in this book yet. Never underestimate the hospital lobby. They've got a lot of resources."
One of its biggest weapons could be much-anticipated results of an ongoing study into care outcomes for joint-replacement patients in different settings.
"Everybody's waiting with baited breath to see what happens," says Patti Naylor, an assistant professor in the physical therapy program at Maryville University in St. Louis. "Quality of care depends largely on the therapist. In a lot of places the intensity of care and type of care are not all that different."
'Ready, fire, aim'
The problem is, major payment policy was changed before finishing the study, said an exasperated Barbara Manard, vice president of long-term care/health strategies for the American Association of Homes & Services for the Aging. The study has been "fast tracked" and results should be available in about a year, she said.
"Our main concern is that CMS has gotten into the habit of doing 'Ready, fire, aim' policies," Manard said.
Joining the "hopeful but no bonanza yet" crowd is Tom Mack, COO of EnduraCare, which provides contract therapy services in 250 acute care and nursing home settings in 27 states.
"Surprisingly, what we're seeing is not so much of a shift to nursing homes but a lot of them are being discharged to home care," Mack said. "You do wonder what kind of outcomes they're going to have. It's not the windfall everyone was hoping for or expecting at this point. There's a lot of work to be done, a lot of education to be done."
Nursing home operators, referring doctors and inpatient therapists, families and potential residents all need more education, he notes.
"The biggest surprise we've had is we didn't spend enough time training our client facilities and nursing staffs about accepting higher acuity patients," acknowledged John Short, Ph.D., president and CEO of RehabCare. "That slowed down
the process somewhat and increased the cost. But it's clearly paying dividends."
Short said key lessons have emerged in the wake of dealing with the 75% Rule's effects for a year.
First, providers must have a complete clinical program, including highly trained nurses.
A provider's physical plant must have "a new facility feel to it," Short said.
"You've got to overcome the mindset of what a lot of people think a nursing home room looks like. It has to look state-of-the-art," he said.
A facility's referral marketing also has to be retooled. Referring doctors and case managers are keys.
"The need for local marketing is more important than ever to build up and maintain referral patterns," noted R. Scott Jones, president and CEO of RehabWorks.
Winners and losers
Falling caseloads at rehab hospitals could be a boon for skilled nursing facilities. Rehab hospitals' caseloads dropped the most in these areas:
Type of case # lost 2005 vs. 2004 2004 cases % change
Joint replacement -13,439 61,563 -21.8
Miscellaneous -8,096 32,077 -25.2
Cardiac -4,126 14,072 -29.3
Osteoarthritis -2,941 4,879 -60.3
"Other" orthopedic -1,786 13,007 -13.7
Pulmonary -1,667 5,896 -28.3
Pain syndrome -1,488 4,925 -38.2
Rheumatoid arthritis -1,007 2,655 -37.9
Hip fracture -938 32,629 -2.9
Stroke -780 41,793 -1.9
Total (all types) -36,620 256,580 -14.3
Source: MedPAC analysis of CMS data
LTC therapy giant in the making
Two major players in long-term care contract therapy have decided to join forces, forming a huge entity that will control about 10% of this highly fragmented market.
RehabCare Group will absorb privately held Symphony Health Services, parent company of RehabWorks, over the next 18 months. The $101.5 million cash deal was expected to close at the end of this month.
The companies currently have about 15,000 employees and contracts at 1,400 long-term care facilities in 42 states. About 38% of the sites overlap, company officials said.
"The contract therapy business is very competitive, and with the tight labor market for therapists, the only way you can reconcile wage growth with much slower growth in reimbursement is enhancing productivity and building your scale of economics," RehabCare President and CEO John H. Short told McKnight's Long-Term Care News.
About 100 duplicative jobs might be lost after RehabWorks' headquarters relocates from Hunt Valley, MD, to RehabCare's offices in St. Louis. But no direct care workers or managers will lose jobs, Short said. Symphony's other main subsidiaries, the Polaris Group consultancy and VTA Management Services, will retain their identities, according to Short.
Providers should benefit from the merging of talents because therapists will have a bigger base of best practices and professionals to draw from, said R. Scott Jones, president and CEO of Symphony Health. He will remain with the company and oversee transition issues.
In addition, all RehabWorks operations, which are largely paper-based now, will convert to handheld computer technology to get up to speed with RehabCare processes, Short said.
With total revenues of more than $500 million, RehabCare is about twice the size of RehabWorks, though their contract therapy divisions are nearly the same size, Short said.
Combined, he added, they will make up about 10% of the LTC therapy market, which should present no antitrust concerns. Publicly held RehabCare announced a definitive agreement to acquire Symphony Health after the close of trading May 3 and applied for federal antitrust clearance the next day.