The Bottom Line: Ohio Living CFO Expects Medicare Advantage To Dominate Within Decade

Although the senior living industry is taking a cautious approach to embracing Medicare Advantage, Ohio Living CFO Bob Stillman believes that the program will lead to a seismic shift in care and payments.

“I don’t think there will be straight reimbursed Medicare a decade from now,” he told Senior Housing News.

Columbus-based Ohio Living operates 12 continuing care retirement communities in the Buckeye State, totaling over 3,000 units, and ranks 18th on the 2019 list of the largest nonprofit senior housing operators from LeadingAge and Ziegler. The CCRCs generate $183 million in revenue.


Additionally, Ohio Living operates a holdings division for its home health and hospice services, which is projected to generate $43 million in revenue division for its 2020 fiscal year, ending June 30. A third division, the Ohio Living Foundation, has over $80 million in net assets at an annual raise of $3 million per year.

Stillman has observed a significant increase in Medicare Advantage billing over the past year, and he sees it as a stronger performer as the industry becomes more accustomed to the service, as well as an opportunity to capture more revenue. While a significant number of Ohio Living residents and patients are enrolled in Medicare Advantage today, in the future they could be beneficiaries of the provider’s own plan. Ohio Living is part of The Perennial Consortium, an operator-owned MA network in partnership with Juniper Communities, Christian Living Communities (CLC) and AllyAlign Health that will launch in 2021.

The biggest challenge facing Ohio Living is reining in costs. The operator has made some tough decisions with its holdings division in order to make it profitable, and is looking at ways to curb labor costs while retaining staff.


The following interview was edited for length and clarity.

Would you say it’s true that senior living has gotten more operationally and financially complex over the last few years? And if so, how has that placed new demands on you as a CFO?

Bob Stillman: It continues to get more complex every day with the increasing federal, state and commercial carrier funding pressures, combined with the increased staffing challenges. The complexities just continue to mount.

I am devoting more and more time to the revenue cycle, specifically on admissions and authorizations with third-party carriers, Medicare Advantage plans and other commercial plans. It continues to be a growing area of our occupancy.

Ohio is a heavily penetrated Medicare Advantage state. I have spent a significant amount of time working with my other colleagues to re-engineer what I would call the admissions intake and authorizations process in an attempt to do a better job clearly identifying the appropriate carriers contract, ensuring that the patient is eligible for [MA] or some sort of coverage.

We have gone from a completely decentralized process to a 100% centralized process for both of our divisions at the corporate office.

The other thing that I have spent much more time on than I ever thought I was going to spend is the Medicaid eligibility process for our skilled nursing facilities. We have about 900 skilled nursing facility beds. And we have over 400 patients that have been identified as Medicaid [eligible], through the end of December. We have provided a significant amount of service for some of those patients over an extended period of time, where we haven’t been paid anything because of the challenges with the Medicaid eligibility process.

Over the last two years I have become very passionate about this and have led a concerted advocacy effort through LeadingAge Ohio in an effort to get the attention of the state and to hopefully work towards some meaningful administrative and regulatory changes. We’re hopeful that we can lead some change in this area.

When you started with Ohio Living, where was the company at and what were your main priorities?

When I started in April 2013, [Ohio Living CEO Larry Gumina] was 15 months into his role. The organization found itself in a siloed position within its two main divisions, and within sites in those divisions. In particular, the holdings division — home health, hospice care and other community based services — established its own finance department and they weren’t interacting collaboratively with the rest of the finance department. And that would ring true across the other sectors.

One of my first priorities was to support Larry as he was reengineering the structure of the organization to have it be more collaborative … One of my first things was reengineering the finance department [in a way] that essentially brought the finance people that were underneath the holdings division back under clearly under the wing of the CFO.

My other focus was the holdings division. As it grew, its focus was to be all things to everyone. Revenues were 60% related to home health and hospice and 40% adult day care, private duty and senior centers. That was generating a significant loss. We drilled down and targeted reengineering.

Now, 90% of the revenues are from home health and hospice. We went from $2 million in losses to generating a profit. That’s even with enduring several years of Medicare rate reductions in home health and hospice.

Have there been moments of particular challenge or change, and how did you work through or are working through those challenges/changes?

In addition to centralizing the financial operations, the other notable thing was Ohio Living never went through the disposition of a community. We sold one [last June] and it was challenging.

It was with a site that had challenges consistently for 20 years. But it was part of our nonprofit family and we’ve been operating it since 1947. And to actually develop a process where you took the emotion out of it, and to develop criteria for what I called site sustainability and assess that criteria over multiple years, all of a sudden, the picture becomes clearer as it relates to a decision making process.

To lead through that, work with my fellow officers on the board and get their endorsement was challenging and took some determined leadership. We tried to be very thoughtful about the whole process as we worked with the site. And we continue to help with the transition.

How are you thinking costs/expenses for 2020? Are there items on the balance sheet that are of concern, areas where you expect to make significant investments, or achieve any cost reductions?

[Our margins are] consistently under pressure. Our challenge is that we have a statewide footprint and [performance] varies. Some campuses are more fortunate in location and some are more challenging. We’re constantly faced with hiring [issues] and retention efforts. We’ve developed some great retention efforts and that’s hard to do with financial pressures. Some sites are under more pressure financially.

Labor costs are a priority. We’re restructuring our capital debt structure to smooth out our service. We’re going to do so again in May by refinancing a piece of debt. We’re looking at all expenses and trying to assess them critically.

Last [fiscal] year, through our first six months, we were way behind plan. [We] had workforce reduction which was projected to save us $2 million on an annual basis. We also eliminated the automatic match in our defined contribution plan, which had been growing and growing and was over $2 million in spending. That built in some automatic expense savings. Our intent is that, as we move forward operationally, we want to provide the match, and the challenge then becomes the profitability across the different sites.

How is the availability/cost of capital at the moment?

Currently, we’re in a fortunate position. We’re expanding our Westminster Thurber campus in Columbus by building a 56-unit independent living facility. With interest rates near historic lows, there is a lot of appetite for tax-exempt bond debt in senior living. Being a [well-]rated organization, we’ve heard the advice, and believe that there will be great interest in our bonds.

[Our bank partners] view us as a [good]-quality credit [risk] and will continue to support us. I am a bit concerned about what will happen with election season, so we’re actively refinancing now in hopes to close by end of June.

I do think a challenge for us as a nonprofit organization is that for profit [operators] can develop quicker and easier. Their access to capital is quicker. 

How is Ohio Living thinking about growth in the next 3-5 years?

[Mergers and acquisitions] are not a part of our strategic plan. What is is spending a considerable amount of time seeking affiliations with like-kind providers. That’s not only on the community side, but home health and hospice.

In my time here we have done affiliations where we stepped in as a sole member substitution into two different [faith-based] nonprofit entities that were operating skilled nursing and assisted living facilities. The idea was that collectively we could strengthen the organizations that were seeking that level of scale, but on an even larger scale. If the opportunity presents itself we’re very willing to explore those types of affiliations.

What we’re really looking for is scale and volume and talent in terms of the people that you add to the organization. We believe that there’s a lot of opportunity out there in the state of Ohio specifically to continue to be a leader in this area, and to support those types of affiliations.

You said earlier that Ohio Living is looking at Medicare Advantage to cover some senior living services. Are there any plans to expand in the MA space?

We won’t have any big control on increased penetration on MA. Looking forward, I don’t think there will be straight reimbursed Medicare a decade from now. The federal government will shunt that off to private carriers.

In our fiscal year 2020 budget, we budgeted straight Medicare Part A to be 15.4% of our skilled nursing facility bed occupancy and through the first six months, it’s 12.7%. That’s significant. On the flip side of that with Medicare Advantage, we’ve budgeted 6.8%, and it’s 9.3% through the first six months. As we’re [planning] our 2021 budget season right now, we’re continuing to budget for that increase shift.

Several of those Medicare Advantage plans pay at the Medicare rate. The challenge is identifying the correct contract because a carrier could facilitate 20 different contracts. You have to find the right one and then you have to make sure that you get an appropriate authorization for care. And you don’t have to do that with straight Medicare.

We have entered into a joint venture with a group called The Perennial Consortium. That group has plans to develop Medicare Advantage plans in Ohio, Colorado and Pennsylvania. But we’re starting with Ohio.

This is a bold move for Ohio Living. We’re looking to understand how an I-SNF plan works. We’re the closest to the patient. We can offer a care model and the [existing relationship]. Through that, the patient will receive more care. We have an opportunity here to participate in a new revenue stream.

How do you define a healthy margin in this business and ensure that you’re striking the right mission/margin balance?

I’m fortunate to work with [board] officers who are collaborative and concertedly try to balance mission and margin efforts.

We’re making the best decisions possible. We’re looking at the sustainability of the mission. If there is something that is more present that impairs sustainability that seems to be disconcerting, we then have to make a business decision.

We closed all of our adult day care centers, which was difficult. When you see something is creating a margin drain to the point of impairing the overall mission, we do what we can to have them stay sustainable.

The healthiest companies continue to challenge themselves.

On a personal note, did you ever envision yourself in the senior living industry back at the start of your career?

I was in public accounting for 23 years and I always thought that I would be in public accounting. I was aware of Ohio Living, and that they had some turnover in the CFO position over a four-year period.

A contact of mine suggested I interview for the job. They wanted 10-15 years experience at a multi-site facility, which I did not have. But I hit it off with Larry and he encouraged me to go through the search process. I never regretted it and my [past] experience prepared me well for this.

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