Senior living providers must expand outside the bricks and mortar and create a full care continuum if they want to be successful, long-term, in a changing healthcare system that’s substantially shifting where care is provided.
Entitlement reform is poised to have a huge impact on post-acute providers, including those in senior living, agreed Scott Gottlieb, MD, a resident fellow at the American Enterprise Institute, and Gov. Howard Dean, MD, former presidential candidate and DNC chairman, both panelists of the National Investment Center (NIC) for the Seniors Housing & Care Industry’s 2013 Annual Conference.
Programs introduced in the Affordable Care Act are testing bundled payment and managed care systems as opposed to the current fee-for-service payment model.
“I think we need to get rid of fee-for-service medicine,” Dean said. “Every incentive in the medical system right now is when people are really sick. If you paid by the patient, the whole system would be about taking care of problems early.”
That would directly affect the long-term care environment, panel moderator Dan Mendelson, founder and CEO of Avalere Health, LLC, pointed out, as its revenue stream comes from a fee-for-service model that the nation’s healthcare system is going down the path of abolishing.
The biggest piece of advice Gottlieb had for post-acute care providers in light of entitlement reforms: offer a continuum of care.
“Have a suite of options,” he said.
“We have to understand that institutional care is going to be reduced,” Dean said. “We have to get into home care; we have to get into hospice care; we have to get into assisted living. We need some federal changes.”
Those changes, he said, need to occur in what care settings federal programs cover.
“We need some of the programs that will only pay for beds [in a hospital or nursing home] be willing to pay for other things,” said Dean.
Hospice is an “enormous” growth area that senior living providers should figure out how to harness, Dean and Gottlieb agreed.
“I think hospice is going to grow very rapidly, not because it makes money—although it does—but because it is time to turn the dying process back to the families and the patient,” Dean said, calling the industry the “wild, wild west.”
Between 2005 and 2011, Medicare spending on hospice care for residents in nursing homes skyrocketed 70%, according to a 2011 annual report from the Department of Health and Human Services, and the industry has drawn increased scrutiny as a federal fraud task force has cracked down on some hospice providers accused of defrauding Medicare.
“It could get hurt in Washington, because of the perception it’s been gamed,” Gottlieb said.
But despite a potential “rough patch,” Dean said, there’s plenty of room in private pay hospice.
Dean also said he sees opportunities for companies in “high end care,” and he predicts some large companies will get into the retirement home business, even though its penetration rate is a “relatively limited portion of the population.”
Even though there’s a movement toward shifting patients downstream, institutional facilities will be far from obsolete as there will always be people who need them. Federal payment structures often force people into bricks and mortar options as Medicaid is less available for home care, he added.
“The growth strategy has to be to expand services to encompass the full spectrum,” Dean said. “It’s not just going to be bricks and mortar; you have to offer a different range of services.”
The companies who get that balance right are going to be the ones who make “plenty of money,” he said, and the companies that don’t are going to be the ones who get absorbed into someone else.
Additional benefits of ancillary services can be found it the marketing proposition it contains, allowing providers to extend into the community and potentially “convert” home care patients as they transition into bricks and mortar.
“If you’re admitting someone at the lowest level—home care—you’ve got that patient in your system,” Dean said.
Written by Alyssa Gerace