Assisted living hasn’t been a major focus of healthcare reform and how it fits into the nation’s healthcare system, but industry stakeholders say that doesn’t mean it won’t be impacted.
Healthcare reform is poised to make a splash in the assisted living world for a number of reasons, including more acute care knowledge of what assisted living is, growing emphasis on a managed continuum of care, and the huge opportunities inherent in the burgeoning post-acute care market.
1. More care providers will learn about assisted living’s capabilities
One possible reason for the slowness to include assisted living in the post-acute care conversation: Many hospitals are unaware of what the industry is capable of providing, operators agree.
“Hospitals don’t always understand the real value of services that can be provided in assisted living,” says Shirley Paulk, R.N., senior vice president of marketing at The Arbor Company, which has a transitional living program through a network of hospitals and rehabilitation and home health providers. “They think we’re more of a social model.”
2. Care levels keep rising across the senior living spectrum
While most assisted living communities do still have a strong social component, they increasingly house residents with complex medical needs, says Ben Malakoff, director of product management at MDI Achieve.
“The people that used to be in skilled nursing are now in assisted living; people who used to be in assisted living are now in independent living,” he says. “Acuity levels have really risen across the continuum, and assisted living needs to care for people who are much sicker and have more issues than they used to.”
Using sophisticated technology-fueled platforms is helping operators provide that care, whether it’s a medication administration system, electronic health records, or sensor-based monitoring for what Malakoff calls “a more hands-on approach than in the past.”
3. There will be greater emphasis on the healthcare continuum
From hospitals to healthcare REITs, companies are considering strategies to participate in a continuum of care. Healthcare is moving quickly toward care networks, says Michael Murphy, managing principal at healthcare consulting firm Durango Health Partners, LLC.
“There’s a lot of action around the country in terms of looking at, ‘Where do my patients come from?’ and ‘What capabilities for the future do I need to be successful?'” says Murphy. “What may have gotten you success in the past as assisted living won’t necessarily get you success in the future because of dramatic changes with healthcare reform.”
Healthcare REITs including HCP are positioning their portfolios to take advantage of healthcare reform.
“We think we have opportunities across all of the property types because one of the things about healthcare reform is its focus on the continuum of care, which really makes you think about the flow of your assets as the patient is involved in them,” Lauralee Martin, CEO, president, and director of HCP said during an earnings call, adding that the REIT is talking with its partners about what investments they need to reposition their portfolios to remain “premier providers.”
4. Hospitals Are Entering the Continuing Care Conversation
Healthcare reform focuses on clinically integrated networks and value-based care, says Jeff Garber, vice president of strategic initiative at Mary Free Bed Rehabilitation Hospital. “It’s about getting the best value,” he says.
Mary Free Bed has applied for a federal innovations grant to become a “continuing care” hospital using a bundled payment model that incentivizes caring for patients across the continuum, from skilled nursing facilities to rehabilitation hospitals or even assisted living—wherever patients can receive the best quality of care for the best price.
5. Providers have growing incentive to capture post-acute care revenue
The planned Brookdale-Emeritus merger positions the combined company to capture a portion of the emerging market, particularly for the $4.5 billion of healthcare spending its own residents generate each year.
“This platform gives us an enhanced and leverage deposition to take advantage of those evolutionary trends,” said Brookdale CEO Andy Smith at a recent healthcare conference. “We have an opportunity to be a partner [with other players in the space] and also opportunity to capture a lot of that spend on our own. The size and scale [via the merger] really supercharges this opportunity.”
There’s definitely a managed care rationale in the merger, agrees Dan Bernstein, an analyst with Stifel Nicolaus.
“In a post-acute healthcare reform environment, maybe several years down the road, they’ll probably be in a position to capture market share of post-acute care patients,” he says. Medicare fee-for-service spending on post-acute care totaled $62 billion in 2012, according to the Medicare Payment Advisory Commission, and is likely to keep growing.
Medicare doesn’t currently pay for assisted living care, which is primarily a private-pay industry with some states allowing for Medicaid waivers. But Medicare Advantage beneficiaries in managed care organizations may increasingly choose an assisted living setting over skilled nursing, Garber says, if those communities can create quality outcomes and have credibility.
“Whether it’s a skilled nursing facility, hospital, or assisted living community, everyone has to come tighter today with healthcare reform and collaborate,” he says. “We need to take best practices and assist with putting patients in lower-cost settings. Assisted living is one of the lowest costs.”
Written by Alyssa Gerace