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.
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."
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.
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.
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.
McKnight's reports about a study in The Journal of the American Medical Associationdocuments 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.
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.
“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?
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*:
"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
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.
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."
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:
*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.")