4 Reasons Senior Living And ACOs Don’t Get Along

Health care partnerships may be the wave of the future, but for senior living providers and Accountable Care Organizations (ACOs), something’s got to give.

Over the past few years, the industry has seen the rise and fall of ACO models, championed by the Centers for Medicare & Medicaid Services (CMS). Senior living providers, however, have been largely left out of the mix, standing on the sidelines looking into the unknown.

“How skilled nursing providers fit in with ACOs is still somewhat unknown — there’s a lot of uncertainty, which requires more investment up front on the part of the [senior living] provider and hospitals,” says Dan Lindberg, analyst with Direct Supply Aptura, a senior living development services firm that offers planning, design and procurement. “The industry is still trying to feel out how this is going to unfold; they’re waiting for there to be a success story.”


Few senior living providers have paved the way for others to become an integral part of the ACO fold. Many have developed informal relationships with hospitals and health systems; however, when it comes to solidifying a formalized ACO partnership, providers are seemingly left in the dust.

“We’ve had many conversations with hospitals that are ACO providers that have said, ‘We want to partner with you, we want to really get into this,’” says John Spooner, CEO of Greystone Communities. “And then, after all those conversations, we’ve had very little come from them. I can think of two specific cases in which we went to a written agreement and the time came [to sign it], and the ACO provider just said, ‘We’re not ready yet — we’ll call you.’”

Like other senior living organizations, Greystone is eager to work with ACOs and believes doing so is an important market-share strategy, Spooner says.


However, the majority — 78% — of industry organizations are not participating in an ACO, according to a recent Lancaster Pollard survey of nearly 250 providers. Only 9% reported participating in an ACO for more than a year, while 12% reporting participating in an ACO for less than a year.

The reasons for the low participation rates vary, from ACOs not being in their service area to providers not being asked to partner or declining to partner.

But some experts point to other barriers keeping senior living providers from joining an ACO network. And despite the benefits that these formal networks provide, the hurdles are often greater than the advantages.

Recommended SHN+ Exclusives

Here are four reasons why there is a “great divide” between senior living providers and ACOs.

1. No Universal Quality Metrics

Reduce hospital readmissions. Improve and coordinate care. Cut costs. That’s the name of the game for ACOs.

And while senior living providers have begun to track — and reduce — hospital readmissions, there are no universal standards or measures of success in the industry, making it hard for health systems to evaluate providers across the board.

“There are no universally accepted or defined quality metrics for these senior living environments — most of the quality data is really customer satisfaction-driven, not health care-driven,” says Brett Frankenberg, founder of The Institute for Quality in Senior Living and
program director at RehabCare, which provides rehab services to more than 2,000 hospitals and long-term care facilities nationwide. “As we know, health care loves analytics, and that’s the biggest problem [for senior living providers].”

Another important component for senior living providers is having specialized therapies or rehabilitation programs that cater to residents’ (and discharged patients’) health care needs in order to prevent avoidable hospital readmissions.

“Quality is king in this new regulatory environment,” Lindberg says. “Hospitals don’t want patients rehospitalized following discharge to skilled nursing facilities or post-acute providers. That’s a major hurdle — they’re going to make sure that [senior living providers] have a rehab program that’s going to keep patients from being re-hospitalized.”

2. Lack of Education

Both senior living providers and ACOs lack the proper education to truly benefit from a partnership with one another, experts say.

On one hand, skilled nursing communities still have a reputation of being “nursing homes” that are ill-equipped to deal with modern-day health care challenges.

“There’s some education with the hospitals that needs to take place that many of the skilled nursing facilities today aren’t what they were decades ago — there’s a lot more specialized care and rehab, and the environments are more home-like and appealing,” Lindberg says.

On the other hand, senior living providers lack an understanding of how ACOs operate and how to communicate the benefits of their service offerings. With little insight from CMS or any other governing body, senior living is left in the dark.

“There is definitely a lack of unifying, be it an organization or body of some kind that exists to not only serve as an educator for success stories but to establish key benchmark analytics,” Frankenberg says. “That’s one of the goals I have for the Institute [for Quality in Senior Living]. We really want to be the organization that works with ACOs to help them understand how to approach senior living operators, and conversely, have the senior living operators working with us to help them understand how they can best gather data and communicate that data back to the [ACO] providers.”

3. Not Enough Incentives

When an ACO succeeds both in delivering high-quality care and spending health care dollars more wisely, it shares in the savings it achieves for the Medicare program.

For senior living providers, being part of the system also means gaining sought-after referrals from the health care partners.

However, some experts argue that referrals from ACOs aren’t enough for senior living providers to put skin in the game.

“The skilled nursing facility might not be convinced that incentives are above and beyond the referrals they’re already getting,” Lindberg says.

4. Alternatives Are Easier

When it comes to forming partnerships, some senior living providers have found that informal networks are often easier to manage than formal ones, like ACOs.

Many operators have already established working relationships with area physicians, home health care agencies, hospitals and other health care providers, without bearing the burden of the “ACO” name.

“They might not have the formalized agreement in which they’re sharing in the Medicare savings, but there are relationships out there between hospitals and [senior living] providers,” Lindberg says. “They’re based on quality and trust.”

Alternatively, there are other more formalized networks that are more easily accessible to senior living operators than ACOs. Two of these include the Program of All-Inclusive Care for the Elderly (PACE) and managed care organizations (MCOs).

“Managed care is more accessible to the average long-term care provider,” says Brent Holman-Gomez, senior vice president at debt and equity financing firm Cambridge Realty Capital, which owns eight assisted living properties, all of which have residents that are in managed care or PACE programs.

“PACE is more relationship-focused,” he adds. “Some of the PACE organizations are part of a bigger health care network that already has a nursing home as a partner, so you have to build a relationship with them to [earn referrals]. These two options are good alternatives [to ACOs].”

However, all three programs — MCOs, PACE and ACOs — each have their place in the health care continuum and can coexist, Holman-Gomez says.

The most important part of this evolving health care landscape is to become involved in a network or partnership, whether formal or informal, to begin coordinating care.

“No matter who you talk to in health care, overall we are moving away from a fee-for-service structure where the government is paying for one day’s worth of care and one minute’s worth of rehab, and are moving toward a qualitative payment structure,” Holman-Gomez says. “All of these programs are looking at the resident’s overall health as opposed to where they’re staying for one day.”

But when it comes to ACOs, senior living providers are still facing unknown territory and must overcome the barriers to partnerships in order to become a larger piece in the health care puzzle. And something has to change.

“Everybody’s still feeling around in the dark. I don’t think there are enough validated success stories to point to a model or key metric that’s going to drive that change,” Frankenberg says. “It’s something that’s going to happen organically, but there needs to be someone who takes a leadership role.”

Photo credit: Greystone Communities

Written by Emily Study