How value-based care will affect senior living

Operators must improve communication and data management to meet new regulatory requirements

By Asif Khan

The fee-for-service model in healthcare, in which providers charge fees for specific services, contributes nothing to improving overall health. Care is fragmented and disjointed, leading to inefficient delivery and wasteful delivery of services. In fact, in 2011 alone, overtreatment healthcare costs were estimated at $192 billion. These numbers are set to grow as our population ages and chronic conditions increase.

As a result, we face unsustainable growth in healthcare spending paired with worsening health outcomes. Simply put, we’re not getting what we pay for — and people are suffering.

Under the new value-based care model, however, the fundamental shift of paying for health outcomes rather than service volume is here. Ushered in by The Patient Protection and Affordable Care Act (PPACA), value-based care advances new reimbursement models that better align payment/reimbursement schemes, to incentivize healthcare providers to achieve improved outcomes and lowered costs.

Since PPACA was enacted five years ago, nearly 20 percent of all healthcare payments are value-based. Experts anticipate this to increase to 75 percent or more by 2020. For those counting, that’s a nearly trillion-dollar-value shift taking place in the next four years.

With value-based care, each stakeholder has a role to play as the focus shifts to quality over quantity. Successful systems change requires the collaboration and coordination of payers, providers, physicians, regulators and patients/consumers. This will take everyone outside their comfort zone as it flips the current fee-for-service structure on its head.

Providers nationwide must now evaluate and meet the demand for value-based services in their own communities, insurers must reward providers in shared savings and patients/consumers must demand price transparency and the best possible care.

Value-based care is built on the premise that better care provided early ultimately prevents more costly care later. Since seniors typically incur the greatest portion of healthcare costs in the United States, value-based care will have an inevitable impact on the senior living market and how senior care is provided. Additionally, there are indications that value-based care will not only be required by both federal and private payers, but will also carry penalties for those who don’t participate.

A recent AARP report estimates two-thirds of seniors do not have private insurance or savings to pay for senior care. Most rely on Medicare and Medicaid, the predominate source of coverage and financing for long-term care services for the elderly. Further, the majority of healthcare expenses climb at the end of life when chronic conditions begin to multiply. In fact, the most recent federal study conducted on the topic by The Agency for Healthcare Research and Quality showed 5 percent of the population spends almost half of the total amount on healthcare.

To that end, senior living providers are at a crossroads as curators of the most expensive healthcare in America. They will continue to play an important part of the continuum of healthcare and should anticipate playing a significant role as healthcare structures change and health care is transformed in our country.

Senior living programs were recently allowed into the Federal Accountable Care Organization (ACO) program with the Shared Savings Program, a payment strategy that offers incentives for providers to reduce healthcare spending for a defined patient population by offering them a percentage of any net savings realized as a result of their efforts. This is the largest way value-based care is being pushed forward in seniors housing.

Early results show ACOs improved performance in 30 of 33 quality measures. In fact, a report released by CMS earlier in 2016 indicates the Pioneer ACO program generated more than $384 million in savings to Medicare in its first two years while delivering high-quality patient care.

Senior living organizations that do provide high-quality care have an opportunity to save an ACO money by reducing hospital readmission. However, ACOs can’t achieve their goals without the use of data collected via electronic health records (EHRs). Currently, Senior living organizations aren’t required under Medicare and Medicaid to adopt EHRs, but will be required to report statistics on the care they provide.

Without an EHR, paper records will make it difficult — if not impossible — to track, measure and analyze the extensive amount of data required under upcoming healthcare payment structures. That said, ACOs are only as strong as their weakest links and aren’t likely to partner with a senior living organization that has poor quality ratings.

Since ACOs form referral partnerships between hospitals and senior living communities, more post-acute providers will turn to senior living providers for long-term care. Consequently, senior living providers have an opportunity to prove their value as members in this new ecosystem.

Implementing value-based care through participation in an ACO will require senior living operators to reinvest profits into themselves through the purchase of technology that will help provide better care coordination, collaboration and communication. As a result, jobs will change for staff and will require a whole new skill set. Employees will see a higher turnover of residents out of the rehab beds, taking away the luxury of forming bonds. This could potentially lead to job dissatisfaction unless a senior living operator is careful to promote culture change by showing how this will improve care and lead to more positive outcomes.

Senior living operators that want a competitive advantage in the market will look to update care methodologies, improve quality, invest in tech and consider diversification in the types of senior care offered. 

Value-based care goes hand in hand with technology. The two are inseparable. Change is the law of life.

Those who look only to the past or present are certain to miss the future — and the future is rapidly approaching as the population ages and regulations are written to curb spending and improve care.


Asif Khan is the founder and CEO of Caremerge, a management and communications software product for the healthcare and seniors housing industries.