In order to survive an uncertain financial and regulatory environment, skilled nursing operators need to look at partnering with other healthcare systems and improving the quality of care, analysts say.

With the threat of looming Medicare and Medicaid cuts, and MedPAC’s proposal to rebase the prospective payment system, skilled nursing facility operators are justifiably anxious, an industry analyst told McKnight’s Friday.

Anne Tumlinson, senior vice president at Avalere Health, says providers believe the fee-for-service model is under attack. But she does have advice for providers hoping to weather these threats.

“Nursing homes need to create partnerships with other health systems — accountable care organizations fall into that category,” she said. “Nursing homes will need to broaden their referral systems. They’re going to need closer relationships with different actors in the healthcare systems to help improve rehospitalization rates.”

Tying Medicare payments to rehospitalization rates — as is called for in MedPAC’s recommendations — is a step in the right direction, according to Alan G. Rosenbloom, president of the Alliance for Quality Nursing Home Care.

But Rosenbloom notes that unnecessary rehospitalizations are a problem that should be dealt with systematically.

“A piecemeal approach that creates one program for acute care hospitals, another for SNFs, and yet others for different provider types will not achieve the integrated, systemic reductions in rehospitalizations patients deserve,” Rosenbloom said in a statement.

Apart from the potentially positive rehospitalization changes, cuts to Medicare reimbursements will continue to “hit hard” for providers, Tumlinson said.

“I would be uneasy if I were a provider,” she said. “In light of everything else that is affecting them now, the 11.1% cut, the potential for sequestration, the continuing need for offsets…to the extent that SNFs rely on Medicare to cross-subsidize Medicaid, I think that will diminish over time.”