Leading players in this burgeoning niche offer operators practical advice
By Matt Valley
The transformation of healthcare from a fee-for-service model to a value-based paradigm that pays for patient outcomes will lead to dynamic change in the U.S. seniors housing industry. In fact, the ripple effects are already being felt through increased consolidation among care providers in order to leverage their size and scale.
The federal government has identified $1.2 trillion of waste in the nation’s healthcare system. Meanwhile, the U.S. Department of Health and Human Services has set a goal of tying 85 percent of Medicare payments to quality and value by 2016 and 90 percent by 2018.
“With this value initiative comes ACOs (accountable care organizations), bundled payments, shortened length of stays, hospital readmission liability and increased regulation,” said Scott Reid, president of the Alignment Covenant, the nonprofit foundation of Orange, Calif.-based Alignment Healthcare.
Reid’s comments came last fall at the 25th NIC National Conference in Washington, D.C., during a panel discussion that focused on business strategies and opportunities in the post-acute care space. Reid served as panel moderator.
Other panelists included Brian Beckwith, CEO of Formation Capital; Tom Coble, president and CEO of Elmbrook Management Co.; Dean Johnson, senior vice president of enterprise sales for Kindred Healthcare Inc.; and Mark Parrish, CEO of TridentUSA Health Services.
The textbook definition of post-acute care is the range of medical care services that support an individual’s continued recovery from illness or management of a chronic illness or disability following hospitalization. More broadly, in seniors housing the term has come to include any services provided outside the hospital setting.
What should a post-acute care continuum look like now and the future? Highlighted below are some examples of how companies are leveraging their strengths in the post-acute space.
Intricate logistics operation
What began as a private equity venture in 2008 has grown into the largest network in mobile imaging and mobile laboratory services in the country. Trident-USA Health Services is a national provider of bedside diagnostics, laboratory services and hospice.
Based in Sparks, Md., the company provides services to more than 12,000 post-acute facilities across 43 states and has customer relationships with over 7,000 skilled nursing facilities (SNFs). Mobile X-rays, mobile ultrasounds and electrocardiograms are just a few of the services TridentUSA offers.
The company started with one operation in Southern California, generating about $60 million in annual revenue. Thanks to rapid growth, TridentUSA’s annual revenue was on pace to reach $460 million in 2015.
“We’ve been able to find a spot in healthcare services which was unconsolidated,” said Mark Parrish. “We have the benefit of servicing patients in multiple settings all across the post-acute care continuum.”
In addition to SNFs, TridentUSA’s customers include assisted living facilities, home care agencies and even correctional facilities. Trident believes that its services are a high-quality, low-cost alternative for healthcare providers and Medicare.
How does the process of mobile imaging work exactly? Technicians go into the facility in which the patient is staying to perform the necessary procedure, explained Parrish. “We literally have a van — we have 2,000 vehicles on the road every day — that is equipped with a portable X-ray unit. That unit is rolled into the patient’s room, whether the patient is at home, in a skilled nursing facility, long-term acute care facility or assisted living facility. We slip the cartridge for the X-ray underneath the patient and perform the X-ray examination onsite.”
The X-ray is then digitally transmitted to radiologists and sent back to the home within four hours, along with a report on the condition of the patient and the radiologist’s recommendation.
“It’s very much a logistics operation and an information exchange operation to get this done, and to get it done within the service parameters,” noted Parrish.
The suite of services Trident-USA is rolling out enables more acutely ill patients to be treated at home rather than a hospital. “We think this positions us well for the changes coming in healthcare. I use the term ‘diaspora of health-care.’ The patients are moving out of the hospital.”
One minor procedure that TridentUSA routinely performs on patients is the insertion of peripheral venous catheters used to administer medication or draw blood.
“This is a service that five years ago you didn’t see in skilled nursing facilities. This was a service that was almost done exclusively in a hospital, but it is somewhat indicative of the change that is going on in post-acute care as these services migrate out of the hospital into the post-acute care setting,” said Parrish.
Bending the cost curve
To say that Kindred Healthcare (NYSE: KND) is a large healthcare company is an understatement. Based in Louisville, Ky., Kindred treats over 1.1 million patients annually and has annual revenues of approximately $7.2 billion.
As of Sept. 30, 2015, Kindred through its subsidiaries employed approximately 102,200 people providing healthcare services in 2,723 locations in 47 states.
As a result of its acquisition of Gentiva Health Services Inc. in February 2015 for about $720 million in cash and stock, Kindred became the largest home health and hospice provider nationally. The company’s annual revenues in that combined space total $2.5 billion annually. Kindred treats about 124,000 patients and residents in that business unit alone.
Kindred’s pursuit of Gentiva lasted for five months before the two sides reached an agreement. What made Gentiva so attractive?
“The attraction was everything that we’re talking about: cost containment, looking at the future, looking at the least expensive medium to deliver quality post-acute care, which is in the home,” said Dean Johnson of Kindred. “It’s where everybody wants to be. They want to age in place, and we want to keep them there if we are really going to bend the cost curve in post-acute care.”
Kindred House Calls, a “home visit” medical practice that cares for seniors in their homes throughout its service areas, is another potential growth area in the post-acute setting, said Johnson. “We’re just starting up that business, but it’s going to become significant for us.”
With the focus in healthcare today on patient outcomes rather than fee for service, Johnson said it’s imperative that skilled nursing facilities be able to measurably demonstrate to hospitals that they can provide quality care.
“The days of discharge planning groups and case workers giving referrals to whoever brings good brownies on a Friday — that’s problematic because now I’m seeing SNFs being held accountable for quality beyond the time that resident is within the four walls of the SNF.”
Johnson also recommends that independent living and assisted living operators give strong consideration to including home health and hospice in their business enterprise “because it is an excellent and proven resident retention strategy.”
One way to help ensure that a seniors housing community has good clinical oversight and a sound clinical infrastructure in place is the inclusion of home health and hospice. When resident retention is high, “good things are happening clinically and financially,” said Johnson.
Earn your spot at the table
Elmbrook Management Co. owns and operates six skilled nursing facilities and one assisted living facility in rural, South Central Oklahoma.
Led by Tom Coble, the Ardmore, Okla.-based company has formed an integrated care delivery model that includes the Medicare Advantage Health Plan and Medicare Special Needs products for both institutionalized and dual-eligible members. Coble also serves as chairman of the American Health Care Association’s Board of Governors.
Although he believes that it’s a “fantastic time” to be working in post-acute care and help shape the healthcare delivery system of the future, Coble said the government and health plans are offloading risk on skilled nursing providers at a rapid pace.
Developing or joining a network of quality providers is an important step that skilled nursing operators need to take, he believes. Equally as important, providers are going to have to prove they can deliver quality care in an efficient manner and that they have the systems in place to do it.
Skilled nursing providers need to explore ways to expand their services in the post-acute space, said Coble. “For example, our company has relationships in therapy, with some home health companies and with hospice. So, we are able to reach up and down the continuum and touch a patient from the time they enter our facility until they are discharged home and after that.”
Although building a Medicare Advantage health plan is no small task because the requirements can be daunting, Coble said that it’s a viable option that even rural skilled nursing operators should consider.
“It is doable. We’ve replicated it. Now we’re taking it to scale. You have to have the right footprint of quality providers that are thinking outside the box to participate in this.”