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Remember the Late 1990s? Change is on the Way Again for Skilled Nursing

Back in the late 90’s, there was a new big thing coming.  It was going to change the way the industry was getting paid.  Remember?  Organizations were up in arms about moving away from the payment model that was in place that paid you what you said your costs were – pretty much no questions asked.  And if you spent more than you were reimbursed, CMS looked at your payment requests and adjusted them annually. Sweet deal, right?  Well, along came PPS – the Prospective Payment System that put an end to that and began using the MDS as the vehicle to determine payment.

So here we are about 20 years later and we are faced with industry payment and reimbursement changes again.  These are moving at a speed that has not been seen before in our industry.  The talk around the industry is that organizations that are doing well should be very successful moving forward.  Those that are willing to make the changes they need to make to keep up with the industry will be successful, too.  However, those that continue to be status quo with how they operate today will fail.  Couple this information with the belief that one star facilities will be all but extinct, and there are a lot of facilities at risk.

Current guidance on what providers should be looking at

Strategic Pruning

Update old buildings now, sell weaker performers, plan for acquisitions you want to be involved in even if in the future, and concentrate your holdings geographically.

Provide quality care

Strive to be the best in class performer in your market – things to concentrate on include lower readmission rates, lengths of stay, staff turnover, high clinical skills and outcomes, and your Five Star rating.

Gather, understand and act on performance data points

What is the “total cost of care” that you provide? As hospitals are looking to partner with organizations that provide high quality, they also want to know in a risk share environment what the costs will be.

Invest downstream

Spread your wings. Own or closely link/partner with home health, assisted living, outpatient care, and other non-acute operators as risk sharing becomes more commonplace such as ACOs.  Companies should invest in EMRs to obtain better predictive analytics and identify opportunities for better care coordination.  This investment will also help with other alliances and payment models since data is becoming integral to our processes.

Be tomorrow’s hospital

Take advantage now of CMS’ statement that they will increase reimbursement for taking higher acuity residents.  This will require SNFs to raise their complex and chronic care competencies.  This will be especially true if rehabilitation services that are traditionally and currently provided by SNFs are provided in assisted living or home settings as experts predict will occur.


Turnover was mentioned above in the section about providing quality care.  This is the key to all of these changes.  Getting turnover under control must be achieved in order to achieve repeatable results, which is the ultimate goal.  What are you doing to address this age old issue?  Look at the reasons your staff call off, your response to it and how often you are replacing staff.  We all know the cost of replacing one staff member – somewhere between $2,500 and $5,000.  It’s going to start costing you more in terms of your data analytics and your ability to become the leader in your market with whom organizations want to partner.  While the problem is one for the ages, how we solve it needs to be revisited.

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