Why and how skilled nursing is being reinvented.
In the last few days the US Census Bureau released a report titled 65+ in the United States: 2010 (the link will download a free pdf of the 192 page report) . . . yes I know it is 2014, but the issue date is June, 2014. The single most important data point: The number of individuals residing in nursing homes has decreased by 20%.
Pivoting With the Data
Very early in the history of Senior Housing Forum I responded to an article that predicted an impending shortage of nursing home beds. My belief was that they had it all wrong. As I have watched the senior living market space I am more convicted than ever ware in the early states of a long declining slide for the skilled nursing industry. I am convinced that in the next 5-7 years we will see the number of skilled nursing beds and buildings decrease by another 1/3. Here is why:
- More Alternatives – There are better options for many people than have ever existed. Home care is more widely available, medical model assisted living communities are proliferating and hospice care makes it much easier for people to die at home.
- Most Skilled Nursing Communities Are Unpleasant Places – Last year, about this time, I published an article which included this line “nursing homes suck”. This year I am more politically correct. For a variety of reasons, including funding, skilled nursing communities are just plain not great places to live.
- Money, Money, Money pt. 1 – In an effort to control costs the government is continuing to encourage more home based services for seniors. People are generally happier living at home and the cost is substantially less than what skilled nursing costs.
- Money, Money Money pt. 2 – The Assisted Living Medicaid program will continue grow grow because it saves about 1/3 of the cost of skilled nursing and provides a higher quality of life.
The New Paradigm
Here is what I think we will see:
- Affiliated Post Acute Rehab Facilities – These facilities will serve post-acute residents (mostly seniors) who need significant amounts of rehab services. 90-100 day stays will be rare with most lengths of stay in the 2-3 week range. We already see some chains moving in this direction.
- All Managed Care – Sooner rather than later every single senior will have their care paid for through a managed care program. This will be true for both Medicare and custodial Medicaid. Containing costs will be critical. The facilities that will win will be those close to hospitals and that can demonstrate high quality outcomes (which will primarily mean low readmission rates for all diagnosis).
- Serious Case Management – As payer sources move around the chess board, figuring out how to make money and keep costs down, one of the things that will happen is that physicians and case managers will want to have all of their patients/residents in just a few skilled nursing communities. They will also want low readmission rates.
They will strongly encourage post-acute patients, including custodial patients, to choose a few select skilled nursing buildings that have close geographical proximity and have high quality outcomes. Ultimately there are some skilled nursing facilities that should not be caring for residents and so this consolidation will be a good thing. Forward looking Skilled Nursing Operators will ultimately benefit from these changes because they will have higher occupancy rates. Residents will benefit because the will get to choose between higher quality options. Steve Moran
If you like this article (or even if you don’t) it would be a great honor to have you subscribe to our mailing list HERE
Good article, as always. I am a regular reader of your posts and since I work at a CCRC in SF, they often resonate with my experience. Your prognostication about the Skilled Nursing industry is probably spot-on as Assisted Living takes on higher acuity, but there’s another reason that I think that these care centers (I absolutely refuse to use the word facility) are endangered and that is the regulatory environment is so onerous. No company in their right fiscal minds would want to build or run them because, at least in California, the number of regulations that continue to be imposed are crushing. Doable, but crushing. Our SNF gets consistently excellent reviews by the State during our yearly inspections and the staff is exceptional. The behind-the-scenes daily preparation and work require truly dedicated people who work within these expectations while balancing some very difficult resident family relations. So my concern is that there won’t be enough beds that will be needed down the road for the acutely ill, just due to the sheer number of the aging population. Believe me, I’m all for reinvention here – but there is a need for this type of care by companies whose bottom line is not stockholders.
“The End of Skilled Nursing as We Know It” Excellent
IMCO this can’t be to soon.
The number of regulations is growing because they are needed.
You make some great points about the terrible regulatory process. Fundamental to the problem is the idea that more regulations make people behave better. There is no better place to prove that is not true than the skilled nursing component of post acute care. In spite of all the regulations there are still some terrible buildings. The crushing regulations do at least three really bad things:
1. They increase cost with no resident benefit.
2. They take people away for doing actual patient care.
3. The regulations not only become the minimum standard but also become the maximum standard.
Steve
A couple of more things on regulations:
1. I think it is hard to make the case that more regulations will make the industry better. What is needed is a new way of looking at things . . . think person centered care.
2. We have regulations on regulations and they have increased costs and we still have some pretty terrible nursing homes suggesting that regulations just don’t work like the regulators think they will.
3. Regulations and reimbursement have become a big cat and mouse game of I am gonna get you from all sides. This is mostly the governments fault because it is the system the designed and perpetuate.
I have several issues with the underlying assumptions of the numerous predictions flying around:
1. Low readmission rates – The assumption seems to be that low readmission rates equates to quality care. Low rates may equate to less reimbursement penalties (the real driver) but “quality care” involves so much more than just the causes of readmits.
2. SNFs are unpleasant places – This seems to be accepted as a given. Well, so are hospitals. Just like nursing homes, people don’t willingly “choose” to go there. They go out of necessity. Are hospital admits down also? Is it because hospitals are “unpleasant”? Or is it because there are different treatment modalities and therefore less need for 24-hour medical supervision?
3. Home care is substantially less expensive than nursing homes – So is home surgery – less expensive than hospital surgery. What nursing homes provide is usually much different than what home care can provide. We currently have no one in any of the beds for which we are responsible who could reasonably be cared for at home with less than full-time support. And full-time support is not cheaper than our care center.
4. Medicaid AL services will increase because the cost is less – I am old enough to remember when DRGs came to hospitals and when skilled nursing admissions from hospitals became more acute “because it saved money”. Now we want to push the skilled to AL “to save money”. What we successfully do is: (a) increase the acuity level for each type of service (in the name of “savings”); (2) increase the amount of regulations (which increases costs) because the acuity level is higher; (3) look for the next level down to push the patient so that we can “save”. Sometimes the required care simply costs.
I have seen numerous changes over many years. What hasn’t changed is: the beginning of the medical journey usually is the hospital: the “system” always agonizes over the cost of care; the “solutions” usually cause the most pain (and regulation) to the other members of the medical care system; the “coordinators” of a new system usually remain the hospitals.
Why have many hospitals pulled back from a trend some years ago of acquiring nursing homes? They are anxious to acquire rehab – that’s where the dollars are (today). What happens when reimbursement changes because rehab “costs too much”?
Every push from one medical service to another in order to “save” has eventually resulted in an increase in utilization of the “less expensive” service until the gross dollar volume becomes noticeable. Then the cycle begins again – pushing to another service to “lower costs”. Where does it finally end?
I agree that AL waiver programs which accept Medicaid reimbursement are the wave of the future. However, the appropriate placement there is for a person who does not require the skill level that a licensed nurse, particularly an RN can provide on a 24 hour basis. We still have many fragile elders and other disabled persons who cannot do without licensed nursing staff to monitor and assess their changing medical conditions and intervene when indicated. I worked as an RN for 10 years, some of which was spent in SNFs and most of the rest in home care. I now have a relative in a good AL home. There is very very little nursing available and what is available requires my own oversight on a very regular basis. The concept that people can get all the care they need at home is a flawed one. Home care has deteriorated since my day. The assessments done by RNs for my family member are shamefully inadequate. He was readmitted to the acute hospital 3 times in 4 months due to lack of supervision, failure to properly monitor and assess by the home care RN and LVN, and poor or nonexistent follow up after hospitalization. We’re all hoping home care will take the place, for some, of the SNF but we have a long way to go.
Dave you raise some good points. Here are my thoughts for what they are worth:
1. Low readmission rates – The assumption seems to be that low readmission rates equates to quality care. Low rates may equate to less reimbursement penalties (the real driver) but “quality care” involves so much more than just the causes of readmits.
You are absolutely right that money is the primary driver for readmission prevention and in the effort the resident is not a major consideration. And certainly quality of care is much much more.
2. SNFs are unpleasant places – This seems to be accepted as a given. Well, so are hospitals. Just like nursing homes, people don’t willingly “choose” to go there. They go out of necessity. Are hospital admits down also? Is it because hospitals are “unpleasant”? Or is it because there are different treatment modalities and therefore less need for 24-hour medical supervision?
The big difference between hospitals and all others is that in each of the “all others” there are for many people alternatives. The bottom line still remains that there are a lot of skilled nursing buildings that are a lot less pleasant than even hospitals.
3. Home care is substantially less expensive than nursing homes – So is home surgery – less expensive than hospital surgery. What nursing homes provide is usually much different than what home care can provide. We currently have no one in any of the beds for which we are responsible who could reasonably be cared for at home with less than full-time support. And full-time support is not cheaper than our care center.
No doubt that full time care is not cheaper, but most are not receiving full time care. The movement is driven by cost and individuals desire to stay home. I am not necessarily suggesting that individuals are better off at home, but I do think this is part of the reality.
4. Medicaid AL services will increase because the cost is less – I am old enough to remember when DRGs came to hospitals and when skilled nursing admissions from hospitals became more acute “because it saved money”. Now we want to push the skilled to AL “to save money”. What we successfully do is: (a) increase the acuity level for each type of service (in the name of “savings”); (2) increase the amount of regulations (which increases costs) because the acuity level is higher; (3) look for the next level down to push the patient so that we can “save”. Sometimes the required care simply costs.
I agree 100% with all of this.
I have seen numerous changes over many years. What hasn’t changed is: the beginning of the medical journey usually is the hospital: the “system” always agonizes over the cost of care; the “solutions” usually cause the most pain (and regulation) to the other members of the medical care system; the “coordinators” of a new system usually remain the hospitals.
Agree
Why have many hospitals pulled back from a trend some years ago of acquiring nursing homes? They are anxious to acquire rehab – that’s where the dollars are (today). What happens when reimbursement changes because rehab “costs too much”?
Every push from one medical service to another in order to “save” has eventually resulted in an increase in utilization of the “less expensive” service until the gross dollar volume becomes noticeable. Then the cycle begins again – pushing to another service to “lower costs”. Where does it finally end?
Greats points and questions. I kind of think it will end when hospitals become ultimately responsible to pay for acute and post acute care (accompanied by standards of care) on a capitulated basis. They will then have incentives that are more closely aligned with the best interests of the individuals being cared for.
I agree with most of what you say. I would add though that there are some medical model assisted living communities that provide pretty significant amounts of nursing care. I am not sure this can actually be done under the waiver system as it exists today, at least in most states.
Steve
As of 2014 we transitioned our CCRC SNF to a new model high acuity Assisted Living for many of the reasons posted. Still going through some growing pains, but as an SNF we could not compete with the acuity and service level needed, we were less than 50% full. In first 3 months of new AL model, all private pay high acuity, we are 100% full.
Are there others doing this, if so who/contacts?
Thanks
As a potential consumer, I just wonder what happens to frail elders who need the kind of custodial care now provided in nursing homes. Many of us Boomers do not have spouses and children to provide and monitor care at home. What happens to us if we develop dementia or other conditions that don’t require skilled nursing but that leave us unable to fend for ourselves?
Barbara great question and one of the significant challenges our country is facing. There will always be nursing homes, the won’t all go away. If you have enough money there will be lots of options. If no money it will likely mean medicaid paid for skilled nursing or possibly wavier funded assisted living.
I work as a chaplain in a Twin Cities Nursing Home, ie Care Center, that has nearly 100 years of history. The population we serve is diverse, mostly people who have outlived family, had no children, lived without great family support. We create a community that is vital and supportive, recreating family ties among residents, sort of like adopted informal relationships that help people feel connected. Many who have lived in poverty and on the street feel safe and cared for. This may be unusual, but I see boomers who will outlive their money, will have chronic illnesses, will not have all of the options of hotel style living in senior mansions built for the moderately wealthy in suburbs.
Regulations have been around for decades and people will need care. I wonder if we will have the caregivers to provide the personal care and help for boomers, no matter what kind of building or image we create for seniors. As the sense of mission rooted in faith traditions weakens and the mission to care for frail elders is based on some capitalist values of making money, we will be moving into the wilderness of unknown quality outcomes. With the growing obesity, elders will be more difficult to care for and care givers may have difficulty performing cares.
The challenges are increasing. The needs will grow. In rural communities we may see less geographically appropriate access to adequate care. None of these issues is new, but they may grow more challenging.
To my friends in senior communities in Arizona, be kind to the illegal immigrants and their children. They may be the only people available to care for you when you are f rail. In Minnesota, if we didn’t have the new immigrants to work, our seniors would be without help. Elders need to recognize that their future is in the hands of those who may be different, with a different accent, a different religion, a different nationality.
On this 4th of July, we can be thankful people still want to come here and work and improve their lives. We Boomers are not the center of the world, but we are the ones who are the most educated and who had the best chances to be educated and to grow into the middle class. I see families of boomers scattered, busy, out of touch, at odds. If this is your family it is time to take account of what is really important and what is less so. There is nothing more sad than an elder whose children never speak to them, who have no desire to do so. The cost of care explodes when broken families splinter and argue and fight over the meager remains of an estate. I’ve seen children not want parents to get care because they don’t want the money spent. Yet they are incapable of providing the care themselves.
I’m hoping somehow there will be available the care I need when that day comes. I’m not so sure what it will look like. Maybe I’ll do like my mother and avoid doctors and medical care when sick until it’s too late and then the short term goal is hospice care, 2 weeks max, no more, no less.
It was cheaper that way.
Happy Birthday America…
Tremendous reading this AM thanks to all! As a LNHA and CNA in 4 states working for/in both for-profit stand-alone (medical model) and CCRC healthcare centers I’ve seen both worlds take the proverbial “hit”. I agree, regulations, admissions, and reimbursement (timely) challenges exist in both care settings, and will continue to be the thresholds.
One alternative to sub-acute care is HCBS = PACE = Programs of All-Inclusive Care for the Elderly; available in all 50 states (not currently statewide). I moved from SN to PACE 2013. In 2012 the AHCA stated “PACE Organizations (PO) is the best steward of both federal and state monies.” PACE becomes the PCP/Medicare/Medicaid Providers; hence an ACO. PO enjoys an overt relationship with CMS, monthly and during our annual re-certification survey. As a PO, we provide adult day and wellness services to approx 130 individuals qday 55 and older (up to 101) and to those with physical and cognitive limitations 5 days qweek from 8A to 5P. We service 5 counties/39 zip codes by providing transportation to and from their homes, PT, OT, ST, RT and a continuum of leisure internal/external activities with breakfast and lunch. Our medical clinic is staffed by our Medical Director 3 Nurse Practitioners, 1 RN, 1 LPN, 3 CNA II and 2 schedulers for specialty appointments. Our day/wellness center is operated by RN Wellness Coaches, MSW, and family partners/POA that collaborate on each participant (term used for clients) to ensure individualized LIFE Plans are developed, implemented, and followed. PO’s are community-based programs partnering with able and willing family caregivers (when appropriate) to ensure aging in place, safety and dignity. PO’s provided home care C.N.A and/or companions to families and/or participants based upon medical necessity. PO’s are capitated reimbursement program and is estimated to save state Medicaid programs approximately 17-20K per LTC resident per month…huge! PO partner with Skilled Nursing Communities and Assisted Livings for short and long term care needs (.i.e. respite, IV therapy, wound care and permanent placement). At the time a PACE participant is admitted the PO Medical Director/NP/RN/MSW follow their care and attend Care Plan meeting with families and SN/AL team-members. http://www.paceonline.org/
Happy Monday readers and please except my apologies for “flawed data” from the above 06/06/2014 response. The savings of 17-20K to state Medicaid Programs is annually per resident vs. monthly. This approximation would also include the many variables in place to determine an individual’s LTC and/or Community Medicaid benefits.
In response to Steve K : ” a high acuity assisted living” is simply an actual nursing home that serves private pay only and skirts the regulations of a SNF by claiming to be an ALF. Agree or disagree?