Senior living companies — and other providers serving older adults — must raise their games to succeed within a new health care paradigm, as payers and consumers demand a more integrated continuum.
“We all have to compete, and we all have to play harder,” Dwight Brown, CEO of Homebase Medical, said last week at Aging Media Network’s CONTINUUM event in Arlington, Virginia.
“Playing harder” is imperative, given the backdrop of expanding and ambitious insurance companies, and more sophisticated and demanding consumers.
“If you can find a way to provide a better return for your payer, you can help the health system take risk and drive outcomes and create upside margin for everybody in that, while providing a better consumer experience, that’s what we’re looking for,” said Matt Nyquist, chief population health officer at Lifespark, which acquired Tealwood Senior Living last year.
These sentiments are shared by Michael Bailey, CEO of American Health Partners.
“We’ve got to be able to serve where the patient wants to be served and create a mechanism that is going to improve their health and their longevity and happiness as long as they’re with us,” he said.
‘Be the Answer’
For years, the U.S. health care system has been shifting from fee-for-service toward more value-based reimbursement models, in which payers and providers are incentivized to keep costs low by more effectively managing population health.
Major insurance companies have driven this trend by taking ownership of senior care provider companies, particularly in home health. Last year, Humana (NYSE: HUM) completed its acquisition of Kindred at Home. Earlier this year, UnitedHealth Group’s (NYSE: UHG) Optum arm acquired LHC Group (Nasdaq: LHCG) for $5.4 billion. Such moves have fed speculation that insurers might acquire a senior living provider in the future.
“I see payers really interested in … places that they can go manage care in a better way for members,” Nyquist said. “I see a big shift to trying to get to value-based care, higher performance level, more economical performance, eliminating low-value care. And I think they’re going to continue to invest in places that they can do that.”
Nyquist has an insider’s perspective on the world of big insurance, as he previously was chief product officer and chief information officer for the Center for Digital Health with UnitedHealth Group/Optum. He oversaw Optum’s technology division, which held $2 billion in population health business.
Now, he is leading the design, development and management of Lifespark’s global risk product and market expansion. The St. Louis Park, Minnesota-based company’s flagship offering is known as Lifespark Complete, which brings together care advising and coordination with 24-hour access to services for older adults, available through various at-risk arrangements with insurance plans.
“We’ve pushed all our chips in as an organization on holistic, value-based care … through partnerships and creating a structure and a contracting process that shares risk across all groups,” Nyquist said.
Through its acquisition of Tealwood last year, Lifespark has learned firsthand how to integrate private-pay senior living communities into this ecosystem — although, moving forward, the company is not likely to acquire another senior living platform outright.
“What we learned is there was value to the buildings and there was value in referrals, and what we’re doing now is actively taking that model that we built internally, and we’re finding partners to go do it and applying that value proposition,” he said, adding that Lifespark now is in the process of joining with about 60 new partners.
The senior care market is going to “shift” as a result of the moves made by huge insurance companies, Nyquist said, with referral streams affected as payers and providers come together. He also sees opportunities. That’s because large acquisitions are difficult, with challenges in maintaining culture across a combined organization.
“Holding relationships with your members is always the key to ward off that uncertainty that comes in the market,” he said.
Homebase Medical’s Brown likewise has a history with a large insurance company, having been VP of Sales with Anthem’s CareMore Health. And Homebase Medical is part of The SCAN Group, which offers one of the largest Medicare Advantage plans in the country, serving more than 270,000 members in California. Last year, SCAN introduced a Medicare Advantage plan designed specifically for senior living residents.
Insurance companies will create referral streams into senior care providers that they acquire, but high-quality providers in the sector should not be too fearful, Brown said.
“If you provide value, they’re not going to cut you out,” he said. “Everybody has mentioned the the the staffing problem and the resource problem; if you have resources, and you provide value for them, they’re not going to be able to say, ‘Oh, forget it, you know what, we’re going to switch over to our internally owned organization.’”
American Health Partners’ Bailey also has past experience with big insurance, including as a founder of Windsor Health Group, which became a national leader in the Medicare Advantage space.
Bailey is still in the insurance business, as American Health Partners counts an Institutional Special Needs Plan (ISNP) among its seven divisions. The Franklin, Tennessee-based company also operates 29 skilled nursing and rehabilitation centers, acute care psychiatric hospitals for older adults, and provides home health and hospice, among other lines of business.
Major insurers’ recent dealmaking is an effort to gain more control over what happens at the bedside, which is “very difficult” for them, Bailey said.
He believes post-acute and senior care provider companies need to “get on that wave” and “be the answer” for insurance companies — not as acquisition targets, but as partners.
“We as a sector, post-acute care — my world — we’ve got to be innovative and think ahead in how we’re going to do that,” he said.
The path forward
As for how senior living and care providers can do what Bailey proposed, he and his fellow panelists offered several ideas.
American Health Partners, Lifespark and Homebase Medical all have similar models in place to provide more timely, personalized and coordinated services. Posed with the hypothetical situation of an 86-year-old Medicare Advantage member displaying signs of weakness and confusion and at risk of going to the hospital, they all described being able to connect that person with a quick, well-informed assessment.
They spoke of having clinicians with the right level of expertise available, and the importance of building familiarity so that the older adult, their family or care team members know who to call.
“It’s really hard when you’re in a reactive situation, and you don’t have a relationship,” Nyquist said. “So we spend a lot of time talking about knowing that member holistically and being in a position with the trust to be the first call, and have a relationship with the family where we could help really drive the appropriate level of care.”
Moving forward, putting more mechanisms in place to care for people in their preferred setting — whether a single-family home, an assisted living apartment, a skilled nursing center, or elsewhere — is also crucial.
About 60% of seniors express a desire to die at home, but 60% to 65% die in hospitals, Brown noted.
“So, we’re providing care where they don’t want it,” he said.
But the shift to more robust home-based care also needs to be “measured and appropriate” given current capabilities, he emphasized. Telehealth, for example, offers great promise in enabling more home-based care, but that promise has yet to be fully realized.
“I think of telehealth as the microwave cooking of health care,” Brown said. “ … I promise you nobody here asked for a microwaved Thanksgiving dinner. It [is] the option you do when nothing else works.”
Acceptance rates for telehealth visits are “terrible,” he noted, with no-show rates about double those of in-person home visits for Homebase Medical.
Lack of interoperability is another major tech-related impediment to more integrated care, and one that is difficult to surmount. But at the least, providers must leverage technology to gather data that proves their value to payers. And companies like Lifespark are making moves to innovate in the tech arena. Lifespark is developing a more robust electronic health record — a “life record” — that includes more personalized lifestyle information to help drive customized wellness plans for older adults.
Concentrating on wellness is another key principle for senior living and care providers, as such initiatives help keep people out of the hospital and prevent other costly medical interventions. These are critical goals to achieve in partnering with payers in value-based care models.
Nyquist previously led the health business of athletic club company Life Time Fitness. Life Time has excelled at creating wellness destinations that attracted consumers of all ages, and is now pushing this concept even further by creating more extensive athletic resorts, he explained.
“I think some of those same strategies are going to hold true for senior communities,” he said. “I do believe there are large groups of seniors today who would be interested in a health and wellness lifestyle community, [a] social group that they participate in with like-minded people.”
Behavioral health is another area ripe for innovation and exploration, with more “time, resources, money” all flowing into this sector, Brown said.
The scope of older adults’ behavioral health needs is just being appreciated, and geri-psych is emerging as a key node in the continuum of care, Bailey said. American Health Partners sees increasing behavioral health needs among its residents in skilled care and senior living, with few good options for placing them in specialized centers.
There are roadblocks to address, including regulatory limitations in being able to provide both psychiatric and medical care in a geri-psych facility for older adults, Bailey said. But this is an area of “tremendous need,” he observed.
The biggest single roadblock to achieving a more integrated continuum remains payment, in Bailey’s view. Despite progress in new models, fee-for-service still dominates, and payment streams are compartmentalized for different types of care such as behavioral health or home health. Private-pay senior living remains largely outside the bounds of government-reimbursed value-based care models.
But options exist for driving toward more unified payment models, including Medicare Advantage plans. Even private-pay senior living providers are increasingly engaging with Medicare Advantage, including through specialized plans with benefits covering core services that their resident populations need.
And American Health Partners’ ISNP has been a “success story.”
“It’s really panned out nicely that these patients are living longer, they’re healthier, they’re happier — we’ve got many, many statistics about that, but that’s just one small element of what’s out there for the future,” Bailey said.