Amid a massive shift in the healthcare payments system to an outcomes based model, it’s too early to predict the ultimate winners and losers.
“Post-acute and long-term care industry leaders will address this critical issue at the NIC Conference in Chicago.”
- New opportunities emerge for providers and investors.
- Winners adopt high-quality outcomes, efficient delivery.
- Industry benefits from cost savings.
Amid a massive shift in the healthcare payments system to an outcomes based model, it’s too early to predict the ultimate winners and losers. But skilled nursing property owners and operators that hope to thrive under the new system must be prepared to embrace the change.
A panel of industry leaders will explore these concepts and what the future holds for the sector at the NIC National Conference Oct. 2 in Chicago. The session’s title, “Wolves in Sheep’s Clothing: Who Decides the Model for Long Term and Post-Acute Care?” refers to the observation that it’s hard to know who will be competitors and who will be business allies, or whether they could even be both. While there’s broad agreement that hospitals aren’t the most efficient setting for post-acute care, it’s still unclear who will decide where that care should be delivered.
Should hospital systems make that call? What about the emerging accountable care organizations (ACOs)? Or should decisions be made by the companies that create care networks? “Entrepreneurs and large hospital systems are putting their business plans in place,” says Kurt Read, principal at RSF Partners, Dallas, and the NIC panel moderator. “The skilled nursing business is right in the crosshairs.”
The Evolution of Payments
The payments system last underwent a major overhaul in the 1980s. A fee-for-service model was introduced at that time to replace so-called cost plus pricing which adds a certain percent of profit to the average cost of care. The outcomes-based system now being rolled out is meant to address spiraling medical care costs and quality issues.
A 2013 study by consultancy McKinsey & Co. estimates that the switch to outcomes-based payments could save consumers, employers, and taxpayers more than $1 trillion over the next decade while improving the delivery of care. For providers, the new model will reward those that deliver high-quality care efficiently. That includes nursing homes which are expected to be a crucial link in the service continuum since they can provide care in a less costly setting than a hospital. The NIC panel will feature the following representatives of the top stakeholders in the post-acute long-term care sector:
- Michael Englehart, president of Advocate Physician Partners. The group is affiliated with Advocate Health Care, the largest integrated health care system in Illinois. In 2010, Advocate created AdvocateCare, an ACO covering about 380,000 lives.
- Clay Richards, president and CEO of naviHealth, a post-acute care manager. Well capitalized and growing quickly, naviHealth, and companies like it, will be key players in the new marketplace.
- Mark Parkinson, president and CEO at American Health Care Association (ACHA), an industry advocate that works with government agencies and lawmakers.
Roadmap to Success
Facilities must be able to produce good outcomes at a reasonable cost, says Parkinson, who also heads the National Center for Assisted Living (NCAL). The challenge posed to the operator can be summed up in one question, he says: “Are you good enough to be picked as a provider under this new system?”
As a representative of the industry, Parkinson believes nursing care operators must share in any savings generated by the new payments system as providers reduce costs. “The sector will be in real trouble if we don’t,” he says. Outreach to legislators and the Centers for Medicare & Medicaid Services (CMS) is crucial so skilled nursing properties are included in the decision-making process around payments, notes Parkinson. “We must be strong on the policy argument and strong politically. Our job is to make sure we win on Capitol Hill and at CMS.”
While an industry shake-up is unsettling, Parkinson emphasizes that property owners and operators that adapt will do well. “Providers that are able to create high-quality outcomes will do better under the new payments system than the existing one,” he says. “Those stuck in the past will face real challenges.” Ultimately, the changes will also be good for the industry, notes panel moderator Read. As an investor, he expects the industry to attract new capital to finance better properties and new technology. “There’s a direct correlation between great care and good returns,” he adds. “When patients benefit, investors make money.”
– NIC Staff