Pick Me! Hospitals & Senior Care Providers Partnering for Coordinated Care

The effects of healthcare reform will become increasingly apparent in 2012, and senior care providers may find themselves—and their marketing strategies—particularly impacted by Accountable Care Organizations (ACOs) as they line up to partner with hospitals and other healthcare providers.

ACOs are groups of doctors, hospitals, and other healthcare providers that work together to give coordinated care to their Medicare patients to improve care quality, ensure best outcomes, and thereby reduce Medicare costs.

Although some aspects of healthcare reform, such as expanded Medicaid eligibility, won’t kick in until 2014, providers are gearing up for a playing field that’s going to get larger, and looking for ways to reduce costs.


“Providers of all types are being more strategic of who they choose to serve under what type of model,” said Dr. Russ Richmond, the CEO of Objective Health, a McKinsey Solution for Healthcare Providers. “They’ll be focusing on how they can have sustainable enterprises on what’s probably likely to be, on average, a lower reimbursement level.”

What’s happening is that providers along the continuum of care—and that includes senior care—will seek to coordinate and integrate for best outcomes, and senior living providers may find hospitals to be a valuable referral base.

“With a lot of that care, the focus is shifted from procedure based fee-for-service care to outcome measurements,” Richmond says. “There’s a shifting in mindsets around how the formula is going to be measured, how you want to integrate or pair up.”


This is significant, as currently, healthcare providers generally make money based off of volume of care, not care quality. Conversely, ACOs offer incentives to avoid hospital readmissions by penalizing high rehospitalization rates through reduced reimbursements. Research from 2009 shows that 20% of Medicare patients end up being readmitted to hospitals within 30 days of being discharged, at a cost of billions of dollars to the benefits program ($17.4 billion in 2009, to be exact).

Richmond says he’s seeing some interesting technology and focus coming up around the transition between the hospital setting and getting into the right post-acute setting, such as skilled nursing, longer-term acute care, or assisted living environments.

“If you accept that one of the goals is cost-management, and that hospitals are one of the most expensive [environments], I think we’re gonna see in the next few years a tremendous focus on improving that focus from discharge into the right level of care,” he told SHN. “Once these organizations are partnered in terms of their care, you’re going to see real focus on getting folks to the right level of care.”

Basically, partnerships between hospitals and post-acute care providers are going to spring up, and it’s likely that large, multi-organization partnerships will dominate the scene. Richmond says he wouldn’t be surprised to see more M&A activity in that space, as there will be “more risk and more reward.”

For senior living facilities, outcomes will be crucial.

“From a hospital’s point of view, the most important criteria are outcomes measured from that organization and their record in terms of those organizations helping minimize bouncebacks into the hospital,” Richmond says. “One thing acute care providers are looking at is more evidence around who in the community is able to take patients when they’re ready to discharge, and partner with the hospital to make sure that the discharge instructions and the right transitions are made so that the patients aren’t readmitted within 30 days or more.”

Where they end up sending their patients is going to be “quite strategic,” he continues.

Despite the business opportunity for healthcare providers, not everyone is keen on the idea of participating in the Medicare Shared Savings Program, according to a poll conducted by an audit, tax and advisory firm along with a healthcare legal firm, Epstein Becker Green, and consulting firm JHD Group.

“Our survey findings indicate that healthcare leaders are still trying to get their hands around the opportunity and the risks associated with these programs,” Ed Giniat, partner and sector leader for KPMG Healthcare and Pharmaceuticals, said in a statement. “Clearly, the priority for executives is to rapidly increase their knowledge about payment model reform and to accelerate their organizations movement toward new business models.”

Many survey respondents indicated that they didn’t fully understand the ACO program and their financial implications, even after the Centers for Medicaid and Medicare posted final rules. Following the publication of the final rules, 57% of hospital and health system respondents still didn’t know how the rules would affect them, and half said they don’t know if their organization will participate in the program.

Ultimately, says Richmond, hospitals are going to look to partner with the facilities that are optimal for them, and their set of criteria for which facility to choose may differ from those that consumers may use.

“It’s undoubtedly true that a more integrated environment where there’s more risk sharing across the continuum, that there’s much more skin in the game for the hospital about where these patients go,” he says. “That harsh lens of performance in those markets shows a high degree of variability on some of those metrics, in every market, and I wouldn’t be surprised if everyone’s rushing to the same dance partner in these markets.”

Written by Alyssa Gerace