CaringForward

PPS eBook “The Sky Isn’t Falling” Says SNFs Are Thriving Even With Medicare Cuts

Patient Placement Systems (PPS) announced the publication of “The Sky Isn’t Falling,” a provocative analysis of how many top skilled nursing facility (SNF) providers have thrived since 11.1 percent Medicare cuts took effect in October 2011.

Click here to learn more and download ...

Wednesday Roundup: CMS Launches Bundled Payment Program; LeadingAge Calls to Fight Medicare Cuts

Mid-week roundup of news and views in post-acute care and LTC:

• Last week, CMS announced that more than 500 providers are on board to test four new models for payment bundling in 2013. Under the Bundled Payments for Care Improvement (BPCI) initiative, participants will have 48 care episodes to choose from. 
• LeadingAge issues a call to action to prevent looming automatic Medicare cuts from sequestration, reminding us that the cuts would trim $11 billion in Medicare spending, $18 million in Section 202 housing funding and $86.7 million from the Administration on Aging
• Jacqueline Vance, the "Real Nurse Jackie" over at McKnight's, offers a thoughtful clinical perspective about what "meaningful flow of information" means for reducing unnecessary patient transitions, and shares a vision of a day when secure patient records are available in accessible systems the same way our financial account information is today.
• An older link but interesting analysis of the top five healthcare IT trends for 2013, including the rapid adoption of tablets for more and more healthcare applications

Data Doesn't Confirm that Quality Programs Reduce Readmissions: A Second Look at the Data

A few days ago we linked to a McKnight's post about how hospitals and post-acute providers were collaborating to reduce readmissions. The numbers seemed rosy: The "14 communities [studied] saw a 5.7% mean reduction in readmissions within 30 days of discharge per 1,000 Medicare beneficiaries."

Alas, those sneaky numbers. When we posted this to our LinkedIn groups, reader Don Ridenour, the owner of Always Best Care in Indiana, commented challenging McKnight's interpretation of the original study from the The Journal of the American Medical Association. 

And he's right. 

Here's the conclusion from the abstract posted on JAMA:

Among Medicare beneficiaries in intervention communities, compared with those in uninvolved communities, all-cause 30-day rehospitalization and all-cause hospitalization declined. However, there was no change in the rate of all-cause 30-day rehospitalizations as a percentage of hospital discharges.

Emphasis added. If I'm reading this correctly, the study did not indicate any statistical improvement in readmission rates for the communities analyzed. Readmissions declined at the same rate that discharges declined, an expected result that nullifies the statistical significance of the overall 6 percent drop in readmissions.

Again, I welcome any corrections, but I interpret the results this way: Let's say in one month-long sample a hospital discharged 100 patients, and 20 were readmitted within 30 days. That's a 20 percent readmission rate.

Let's say we then study a different month a year later, after the hospital has participated in quality improvement initiatives. In that month, the hospital discharged 80 patients, and 16 were readmitted within 30 days.

One accurate but misleading conclusion? Readmissions declined 20 percent in the second month studied, from 20 readmissions in the first month to 16 in the second.

But the most important variable is the decline in overall patient discharges. The percentage of total patients discharged who were readmitted within 30 days remained constant at 20 percent (20/100 and 16/80), reflecting no statistical improvement in readmission rates.

We can cut McKnight's some slack for reporting the more positive angle, as did many, many other industry observers and media outlets. 

And we can see how editors might have focused on the positive numbers. The Colorado Foundation for Medical Care, the quality improvement organization that coordinated the study, issued a press release and media fact sheet that emphasized the overall reductions in readmissions, without mentioning the constant in readmission percentage.

We understand why healthcare observers and participants want to focus on the positive potential of quality initiatives and improved patient outcomes through provider collaboration. We believe that these efforts ultimately will lead to improved care and clinical outcomes, and reduce hospital readmissions. But the numbers in this widely circulated study just don't support that conclusion yet.

One other twist to consider: The quality efforts could also be contributing to an overall decrease in hospital admissions, which would be a net positive outcome that others have observed in considering how CMS and the industry should measure progress. But there's still no analysis to support that correlation.

Just the anecdotal information about how these quality improvement organizations have operated and the results they have seen should prove instructive and valuable to other healthcare systems and providers. But we'd all be wise to consider research like this cautiously and thoughtfully, so we can learn and apply the correct lessons that will best benefit both patient care and provider reimbursements.

Are SNF Providers "Heartless Bottom Feeders"? We didn't think so, either.

A bold headline from John O'Conner over at McKnight's: "More evidence that long-term care operators are not simply heartless bottom feeders." He notes the extensive reader interest in recent stories about big clinical issues affecting long-term and senior care, including the flu epidemic, norovirus and aspirin issues for elderly users. We have long observed that the top performing SNF providers focus relentlessly on both clinical care and business performance. Sustained financial success depends on exceptional clinical care, which drives patient experience and satisfaction and builds the quality reputation SNFs depend on to maintain census. And consistent quality care depends on financial health to maintain high caregiver-to-patient ratios, invest in clinical systems and resources, and keep facilities modern and comfortable for patients and residents.

How Skilled Care Providers are Reducing Readmissions

McKnight's reports about a study in The Journal of the American Medical Association documents how post-acute providers are successfully reducing hospital readmissions by communicating and collaborating more closely with hospitals and other healthcare providers. The research, funded by CMS, studied 14 communities where hospitals collaborated with post-acute providers to improve care transitions, with a 5.7% drop in readmissions withing 30 days. It also noted benefits from nursing homes applying the Interventions to Reduce Acute Care Transfers (INTERACT) model.

This coincides with another study by Columbia University Medical Center (also published in The Journal of the American Medical Association) that "long-term care providers have to treat patients holistically rather than zero in on a specific illness," because Medicare rehospitalizations were so frequently caused conditions different from the original admission.

“Strategies that are specific to particular diseases or periods may only address a fraction of patients at risk for rehospitalization," the study concluded.

 

Friday Roundup: Thoughts on OIG Therapy Overpayment Report, 2012 M&A Activity Up in LTC, Senior Care Jobs Grow

Some news and views of interest this Friday morning:

• At McKnight's, At McKnight's, Shelly Mesure digs deeper into the recent OIG report of $1.5 billion in Medicare overpayments attributed to incorrect therapy utilization and reporting by providers. She questions OIG's approach, saying it's a mistake to consider coding and documentation errors with fraud all in a single category, which then suggests a misguided single solution to a more complex issue. (We have looked at similar OIG perspectives about the skilled nursing industry several times in the past.)
• Long-term care industry mergers and acquisitions increase in 2012, but the deal size and total spending declines 44 percent.
• States taking steps under healthcare reform to make Medicaid enrollment easier.  
• Senior Care Employment Index shows substantial, steady growth in senior caregiver and clinical jobs, driven largely by accelerated growth in home care agencies

Has the Tablet Revolution Finally Arrived for Post-Acute Care? SNFs Embrace Mobile Strategies and Devices

We are seeing a trend in the long-term care industry towards the use of mobile devices as a tool to manage patient care. Many providers are seeking alternatives to the traditional manual processes involved with capturing and accessing patient data.

A recent McKnight’s article, Quality Care at Hand, discusses the benefits that tablet solutions offer providers in the long-term care industry. “For us, it's important to leverage technology that allows us to do our jobs more accurately and efficiently. Handheld devices have allowed us to stay on top of our day-to-day responsibilities, while keeping resident care our number one priority,” said Edgewater Director of Nursing Angela Holman. http://www.mcknights.com/quality-care-at-hand/article/220757/

Over the past several months, we have worked to gather feedback from our current customers’ about their plans to use mobile devices within their organization. In a large percentage of the clients we spoke with, there is a strong interest in equipping their users with tablets to improve response and turnaround times. As a partner that strives to deliver, PPS is committed to providing innovative solutions for long-term care providers to achieve improvements in performance and productivity.

In an upcoming release, PPS will enable the use of our Web-based Referral Management System (RMS) with tablet devices to empower liaisons in the field with access to unique performance tools for marketing, census management and admissions. By connecting online to RMS via a tablet device, providers may enter referral information/documentation online, begin the assessment and approval process, check bed availability and more!  

Post a comment to share your thoughts about your plans for adopting tablets or other mobile devices.

Hospital Readmission Roundup: Penalties Start Oct. 1, Perspectives and Considerations for SNFs

Lot's of news and analysis this week about Medicare reimbursement penalties for patient readmissions and the implications for SNFs and hospitals.

• Starting Oct. 1, about 2,000 hospitals will face tiered reimbursement penalties for readmitting too many patients with heart attacks, pneumonia and chronic heart failure. As a reminder of the challenge, we see that the best hospitals readmit 19 percent to 20 percent of heart failure patients within 30 days. As the McKnight's article observes, strong collaborative relationships and communication between SNFs and hospitals are more important than ever.
• Also, here is some solid analysis regarding variables that can unfairly skew readmission rates—lower income and minority populations, for example, tend to readmit at higher than average rates. Many question whether hospitals serving the neediest populations might face the greatest penalties. As the linked article notes, dual-eligible Medicaid/Medicare patients reflect the income disparity, with dual-eligibles readmitting at 23.8 percent compared to 17.3 percent of non-dual eligibles. (This is a key reason we enabled tracking of dual-eligible patients in our Referral Management System for SNF census building and admissions management.)
• Finally, an nice article about how the Advancing Excellence in America's Nursing Homes campaign works to reduce hospital readmissions. Click here to learn more about the mission and results of this organization.

Medicare Reimbursements for SNFs: "It was the best of times, it was the worst of times . . ."

Last week brought good reimbursement news for SNFs after what seemed like years of Medicare bummers: The federal government raises Medicare payments by 1.8 percent in fiscal year 2013. 

Even AHCA praised CMS for the news:

“After years of reimbursement volatility, today’s update to Medicare payments is welcome news to skilled nursing providers. AHCA appreciates CMS’ balanced approach to this year’s Medicare payment system after recognizing the many rounds of government reductions the profession has already endured. Stable Medicare funding will help ensure America’s seniors continue to have access to high quality, post-acute care.”

Rejoice! The tides have turned! After the dreaded Oct. 1, 2011, cuts of 11.1% (sorta), and declining state revenues and reimbursement uncertainty, SNFs finally get some good news. Right?

And then the buzz kill.

This analysis from Avalere Health says brace for $65 billion in cumulative Medicare cuts over the next 10 years. There are two main reasons: New rules that reduce the amount Medicare reimburses for bad debt (such as unpaid deductibles and copays), and the "sequestration" cuts (fixed cuts that were part of the congressional budget compromise), which include a 2 percent Medicare reduction.

But wait again, hope returns! The White House has 30 days to submit it's plan for the sequestration cuts to Congress, which opens some hope for a plan that might minimize the effect of cuts on skilled nursing facilities. 

The lesson from this churning cycle of hope and despair? SNFs must keep focusing on the basics, despite the highs and lows of Medicare reimbursements. Focus on building quality census. Increase your Medicare census (no matter what, higher Medicare census still means more revenue). Maximize margins to invest in your mission of quality patient care and life experience.

Medicare cuts don't mean the sky is falling. Far from it, in fact; many providers are thriving. Instead of being paralyzed with panic over the things they can't control (moving reimbursement targets), SNFs must continue to take charge of the things that they do control (working faster and smarter to build and maintain quality census).

The Sky is Not Falling for SNFs: Providers Thrive Even After 11.1% Medicare Cuts (Analysis Part 2)

We recently looked at how the 11.1 percent Medicare cuts from October 2011 affected top-3 U.S. SNF provider Kindred Healthcare. The short answer—probably not in the ways, or nearly to the extent, that you've read about in the press.

But what about other major providers? At least among big public SNF companies, the sky seems securely in place. Although all providers cite the challenges posed by the Medicare cuts, have most reported positive financial results and outlooks, some quite remarkable. Let's look at a few other financial filings for public SNF companies*:

Ensign Group (103 SNFs, based in Mission Viejo, California): Ensign opened its 2011 report citing the "unprecedented 11.1% reduction in Medicare rates to skilled nursing facilities," but that was in reference to its "better-than-expected operating results."

"The fourth quarter marked the most daunting challenge to Ensign's facility-centric leadership structure and operating model to date, and perhaps the best test of our flexibility, responsiveness and resilience that we will ever experience," said Ensign CEO Christopher Christensen. 

Even with the calculated actual Medicare rate cut impact of 14% for Ensign (much higher than many SNFs likely encountered), facilities performed well. Christensen cited the fundamentals—improving census and skilled mix. "Our facilities were able to make up much of the loss in the form of increased skilled days, as our skilled mix continues to shift higher," he said. We'll say it again—the same things that made business sense for SNFs on Sept. 30, 2011 made sense on Oct. 1, 2011.

The strategy and performance has carried over into 2012, with Ensign reporting record financials in Q1 2012.

By the numbers for 2011:

• 2011 consolidated revenues up 16.7% to $758.3 million
• 2011 net income climbed 17.6% to $47.7 million
• Bullish on growth, acquiring six new SNFs in Q4

For Q1 2012:

• Record revenues of $202.2 million, up 10.5%
• Record EBITDA of $30.3 million, up 5.4% over Q4 2011 and an increase of 19.1% over Q4 2011
• Facility census was up 4.4% over Q1 2011 and by 1.7 percent over Q4 2011, too 83.6%, with Medicare days increasing by 3.6% over Q1 2011

National Healthcare Corporation (NHC, 75 SNFs, based in Murfreesboro, Tennessee): NHC seems to say only the minimum with its financial reporting, providing less management perspective than most of the other public SNFs. So we'll jump right to the numbers:

2011:

• Net income to shareholders up 25.8% to $55.4 million from $44 in 2010
• Annual operating revenues up 7.3% to $773 million from $723 million
• Q4 2011 0perating revenues increased 0.5% to $192 million over Q4 2010, with net income for shareholders increasing by 12.2% (adjusted to exclude a one-time asset recovery gain from Q4 2010)

Advocat/Diversicare (Est. 50 SNFs, based in Franklin, Tennessee): Advocat reports some interesting performance numbers, with its Medicare reimbursement rate increasing 11.9%, even with the 11.1% cuts effective October 1. That supports our analysis from last year that some providers could see average rates increase depending on case mix. "This rate increase is a direct reflection of our efforts to deliver high quality skilled nursing and rehabilitation services," said Advocat CEO Kelly Gill.

Some of the other numbers bear out strong top line growth for the company:

• Revenues increased 8.5% over 2010, from $290 million to $314.7 million
• Skilled census (Medicare and managed care) up 11.9% to 16.3% of total census
• Medicare Part B revenues up $2.1 million

 Q4 2011 Highlights:

• Overall census up 17% over Q4 2010
• Revenue increased 3% over Q4 2010, to $77.8 million compared to $75.5 million

For Q1 2012, revenues were almost identical to Q1 2011, despite the Medicare cuts—$77.1 million.

Even with healthy revenue measures, Advocat reported modest net losses in Q4 2011 and Q1 2012. Interestingly, CEO Gill cites several reasons for the losses, primarily related to strategic growth investments in facility remodeling, marketing and sales, and EHR implementation. Gill does not identify Medicare rate cuts as a reason for the losses.

Skilled Healthcare Group (74 SNFs, based in Foothill Ranch, California): Chairman and CEO Boyd Hendrickson commended his company's ability to "focus on high quality patient care while navigating through dramatic changes to Medicare," noting that Q4 performance remained strong and that the company has "been able to see results from our mitigation efforts more rapidly than we expected."

This positive performance reflected the following:

• Revenue up 6% in 2011 to $869.7 million from $820.2 in 2010
• Adjusted EBITDA up 8.1% to $131.3 million from $121.5 million
• Skilled mix up 0.5% to 23.2 percent 

Skilled Healthcare Group did report overall losses, but similarly to Kindred, those losses were due to a one-time charge for impaired assets of about $270 million. 

So what does all this mean? Clearly, many major SNF providers are thriving, not just surviving, in the face of 11.1% Medicare cuts. Other nursing homes can emerge from self-imposed retreat from strategic projects and investments and start to reconsider the things they may have put on hold in September 2011. We close with links to the five recommendations from the "11.1% Survival Guide for SNFs," perhaps more relevant now than when we first posted them back in October 2011:

• Arm Yourself with the Right Tools for Battle: Outmaneuver Your Competitors While They Stand Still
• Know Your Situation and Surroundings: Capture Business Intelligence to Support Smarter—And Bolder—Strategies
• Master the Mix: Optimize Your Payer Mix—It’s More Important Than Ever
• Replenish Your Resources: Focus on Generating Revenue to Overcome Reimbursement Cuts
• Choose Fight Over Flight: Stay On Course with Sound Strategies, Especially for Sales and Marketing

 

*We note here that our part 1 analysis of Kindred required considerable research to dig up and sort out the details of its 2011 financial filings. For this follow up post, we give a hat tip to the group "Families for Better Care," which recently published a summary of 2011 and Q4 2011 financial results for large public SNF companies, which we used as a starting point. We also thank the group for giving us an idea for a follow up post—Can profitable SNFs provide top quality care? (Spoiler: Our answer is "Yes.")

Tuesday Links: Improving Care for Dual Eligibles Could Lower Rehospitalizations, Considerations When Transitioning to an eMAR system, and more

Here are some recent items of interest for skilled nursing facilities:

• A recent article in McKnight's reports that research has found that more focused treatment of common illnesses among dually eligible Medicare and Medicaid beneficiaries could cut costs and lower hospital readmissions.  
• According to a recent McKnight's article, Medicare panel seeks enhanced payments eligibility for the PACE program
• Patricia Sheehan with Long-Term Living published an interesting article that discusses key considerations when transitioning to an eMAR system.
• Pamela Tabat's recent article in Long-Term Living discusses the LTPAC HIT Summitt roadmap for 2012-2014.