I saw serious moral issues with the idea that what Mainstreet and others who are deep into transitional care space would end up doing to seniors and those who worked in those traditional nursing homes.

By Steve Moran

I have watched over the last couple of years the accelerating interest in and development of transitional care centers, a trend that is being aggressively led by the Indiana-based company Mainstreet. 

The Danger Zone

As I have spent time thinking about what this trend means, here is what I saw . . .  and got wrong. 

In any given marketplace there are a limited number of high-value Medicare/HMO discharges that go straight to skilled nursing rehab. 

The nursing homes that receive and serve those residents are highly dependent on those high-value residents to stay in business. That extra revenue allows them to care for custodial level residents where government reimbursement is always inadequate. 

A Free Market Bleeding Heart

I am a free market bleeding heart. So as I processed this, I figured over time the market would adapt. From a free market perspective, this would mean some skilled nursing centers would lose their margins and have to close. In turn this would mean some residents who needed skilled care would end up at home, and honestly, some residents wouldn’t do well, but over time the market would figure it out.

The niggling part of my thinking was my bleeding heart. I saw serious moral issues with the idea that what Mainstreet and others who are deep into transitional care space would end up doing to seniors and those who worked in those traditional nursing homes. It seemed like there would be hundreds or thousands of innocent victims until the market sorted things out.

Wrong Thinking

I first met Zeke Turner, the founder and CEO of Mainstreet at the NIC national conference in Chicago last year. We had a great conversation and I turned out to, in that case, not be a very good blogger because the article I planned to write never got written.   

So . . .  with some embarrassment, a few weeks ago I reached out to ask for a second chance to interview him. He said yes and last week we talked by phone.

My first question to him was about this potential damage to old school operators. The subsequent conversation convinced me that I had it wrong and here is why:

  • Their target customers (patients) are individuals who are admitted to the hospital from home to have something fixed, like a knee or hip replacement, and are planning on returning home.
  • Between 25%-40% of their residents are younger than age 65, meaning they would not generally be a candidate for senior living.
  • Most of the residents receiving rehab services in nursing homes will not leave the nursing home when the rehab is over. They will move to the custodial side of the house.  

Most Importantly

Their business model has always been built on the idea that when they came into any market they would exclusively be admitting residents that are simply not being served or at least not served well by any part of the healthcare system.  

They now have enough history to demonstrate that they are not negatively impacting existing skilled providers and that there may ever be some benefit to them.