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TRANSCRIPT
New pressures are forcing hospitals and post-acute care facilities to better work together — WILL THEY DO IT?
Opportunities For Post-Acute Partnership
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2. EXECUTIVE SUMMARY
3. BACKGROUND INTRODUCTION
4. SURVEY RESULTS: OPPORTUNITIES
6. SURVEY RESULTS: CHALLENGES
9. SURVEY RESULTS: SOLUTIONS
12. CONCLUSION AND SURVEY METHODOLOGY
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More than ever, hospitals and post-acute providers are financially incentivized to work together to treat patients across the entire care continuum.
Although the movement toward a value-based reimbursement system is not new, as a result of a myriad of recent reforms — including the Skilled Nursing Facility (SNF) Value-Based Purchasing Program, the SNF Patient-Driven Payment Model and a new Patient-Driven Groupings Model for Home Health — many organizations must now make difficult strategic choices regarding the future of their operations and figure out how acute and post-acute care (PAC) providers can work together more effectively.
Against this backdrop, we conducted a survey of health care executives to determine how California hospital systems and PAC providers are approaching the transitions from acute to post-acute care and managing the financial incentives to work together to achieve better outcomes for patients.
The findings reveal that while many hospitals and PACs think it is important to develop a strategy for working together, a majority still don’t have any concrete plans to do so. For those that do, there is a divergence of opinion as to the strategies, challenges and potential relationships between the two groups — suggesting that while both sides seem to be awakening to the gravity of their current predicament, there remains a strong sense of reserve, if not hesitancy, when it comes to current and future decision-making.
EXECUTIVE SUMMARY
SOME OF OUR KEY FINDINGS
Agreement that there are potential advantages in partnership:
Both hospitals and PAC providers agree that a decrease in readmissions, an ability to improve quality metrics outcomes, a reduction in inpatient length of stay and an improved patient experience are the key advantages to working together.
Diverse range of opinion on potential partnership structure:
Both hospitals and PAC providers agree that potential partnership would be strategically useful; however, there is disagreement on the best way to structure the relationship. Hospitals show a preference for a more formal relationship, while PAC providers are more interested in less structured arrangements like preferred provider networks.
Disagreement in top challenges for collaboration:
While nearly 40% of hospital executives saw both cost and patient care at PAC facilities as the biggest obstacles to working together, PAC providers were more concerned about communication and interoperability challenges (with 49% and 43% of PAC executives choosing those as top challenges, respectively). Both PAC providers and hospitals also saw legal constraints as significant challenges, with 30% of hospital executives saying as much, along with 20% of PAC executives.
More details on these and other issues related to the evolving relationship between PAC providers and hospitals can be found below.
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BACKGROUND INTRODUCTION
In the past when patients left the hospital, doctors and nurses said their goodbyes, processed the discharge papers — and that was largely that. They’d done their job, after all, and they had other patients to worry about. The outgoing patient was no longer the hospital’s responsibility.
That approach to care began to change following the passage of the Affordable Care Act earlier this decade, when a slew of federal regulations — like the Hospital Readmissions Reduction Program, the Medicare Access and CHIP Reauthorization Act of 2015 and the Medicare Bundled Payments for Care Improvement Initiative — introduced penalties for hospitals whose patients are readmitted or otherwise experience poor outcomes.
Simultaneously, a variety of other market pressures (e.g., decreasing payments for inpatient care) and an aging demographic have continued to drive up the use of PAC providers — including SNFs, in-patient rehab facilities, long-term acute care hospitals, home health agencies and home or facility-based hospice and palliative care services. In 2013 alone, nearly 8 million inpatient stays were discharged to such facilities, accounting for over a fifth of all hospital discharges that year. And from 2001 to 2013, Medicare spending on these facilities more than doubled, increasing from $29 billion to $59 billion.
Nevertheless, these shifts in the health care landscape, designed to implement value-based payment models that cover the continuum of patient care, have yet to result in effective coordination between hospitals and PAC providers. On the whole, post-acute care remains fragmented from the rest of the health care system — leading to, for instance, 22.8% of SNF patients ending up back at the hospital within 30 days. Lack of coordination could mean the loss of millions — if not billions — for hospitals and PAC providers alike, not to mention adverse consequences for their patients’ health.
Today, these tensions are reaching a tipping point.
As of October 1, 2018, for the first time SNFs face financial risk for hospital readmissions and poor patient outcomes under the SNF Value-Based Purchasing Program. Starting October 1, 2019, SNFs will also be subject to an entirely new reimbursement system for services provided to Medicare Part A beneficiaries under an initiative known as the SNF Patient-Driven Payment Model. The changes are not likely to be limited to just SNF providers — as soon as January 1, 2020, the Centers for Medicare & Medicaid Services (CMS) plans to implement a new Patient-Driven Groupings Model for Home Health, which represents a significant step by CMS to develop a unified post-acute payment system by FY 2024 or even sooner. Not only are these reforms having an impact for Medicare and Medicaid patients, but increasingly commercial payors are looking to duplicate CMS’ value-based initiatives by including strict readmissions penalties (often with harsher penalties than those found in the CMS Hospital Readmissions Reduction Program) and shifting providers to episode or risk-based payment models.
These changes are significant for PAC providers, but when considered in combination with existing readmission penalties for hospitals, they create a tremendous incentive for hospitals and PAC providers to partner to improve patient quality and efficiency metrics. More than ever, hospitals and PAC providers must work together to pave a path forward. The question is: Will they do it?
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In your opinion, what are the top advantages to hospitals and PAC providers working together?
Hospital/health care system Post-acute care (PAC) provider
While there is general agreement that partnerships offer benefits, there is a difference of opinion when each group is asked about the top advantages to hospitals and PAC providers working together. PAC providers tend to see more benefit in improved patient experience (60% vs. 34%) and decreased readmissions to the emergency room (51% vs. 40%), while hospitals look forward to improving quality metrics outcomes (38% vs. 26%) and reducing inpatient length of stay (32% vs. 23%).
In markets where there are not enough beds available on the post-acute side, hospitals struggle to place their patients. PAC providers in these markets see the effect capacity has on the patient experience. Hospitals have been prioritizing improving readmission rates for longer, and they see strengthening relationships with PAC providers as inevitable — even if they’re less sure about the advantages of those relationships.
Seizing these advantages, of course, will require PAC providers and hospitals to find effective working relationships. However, there are several different forms these relationships can take, and the two groups aren’t necessarily on the same page with respect to the preferred arrangements.
Decreased readmissions to the emergency department or hospital
Ability to improve quality metrics outcomes
Reduction in inpatient length of stay
Improved patient experience
Improved triage of patients to home versus facility
Reduction in post-acute length of stay
Shared vision and philosophy
Increased resources
Boost in reimbursement and incentives
Data sharing between facilities
Better-aligned geographic coverage and scale
I do not know
Other
10
10
0
0
20
20
30
30
40
40
50
50
60
60
40%51%
38%26%
32%23%
34%60%
18%17%
17%20%
12%17%
20%26%
6%3%
6%9%
7%11%
10%3%
5%3%
SURVEY RESULTS: OPPORTUNITIES
QUESTION 1
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Based on your experiences and observations, which types of relationships are most preferable for hospitals and PAC providers?
Partnerships are the most preferable relationship according to 49% of hospital executives (only 37% of PAC providers agreed). On the other hand, most PAC providers — 49% of them, compared to 34% of hospital executives — prefer designated “preferred” or “recommended” PAC provider networks. Only 13% of hospital executives and 11% of PAC providers thought acquisitions to be the most preferable type of relationship.
History buttresses these findings: For years, hospitals bought PAC facilities but ultimately struggled to run them successfully. Hospitals ended up burdening these facilities with their own cost structure (e.g., labor costs) and faced additional regulatory barriers that came with an acquisition of a licensed facility. It’s no surprise that both sides don’t see acquisitions as a viable working relationship.
And yet hospitals still prefer a partnership relationship with PAC providers. In part, this is driven by control: Hospitals often seek control in any partnership with PAC providers. But it also has to do with the cost of hospital labor and operations. By partnering with PAC providers, hospitals need not burden the PAC providers with hospital cost structures and avoid the complexities of compliance with the regulatory requirements unique to PAC providers.
10
0
20
30
40
50
60
13%11%
49%
37%
Hospital/health care system Post-acute care (PAC) provider
Acquisit
ions
Partners
hips
Des
ignate
d “pref
erred
”
or “rec
ommended
”
PAC provid
ers
Contractu
al affi
liatio
nsOther
SURVEY RESULTS: OPPORTUNITIES
QUESTION 2
32%
37%
5%3%
34%
49%
Conversely, PAC providers prefer a relationship with their referral sources that allows for continued independence over operations and finances.
According to one PAC executive, this lopsided partnership dynamic is also the result of unaligned incentives. “Really, the biggest benefits that SNFs have in these partnerships is in being proactive in performing from a quality perspective and demonstrating our metrics that will help hospitals achieve those [value-based] incentives. Unfortunately, we don’t get that incentive — we just get to become a preferred payment provider.”
Of note, too, are contractual affiliations, which our data shows to be something of a middle ground between partnerships and designated “preferred” PAC provider networks: 32% of hospital executives said such affiliations were most preferable, while 37% of PAC providers said as much. Affiliations can be structured with varying degrees of control and independence, but do allow for collaboration, co-branding and agreed-upon economic incentives. There is no standard form of affiliation or affiliation agreement — if you’ve seen one affiliation, you’ve seen one affiliation. The flexibility to structure affiliation terms and the lack of recognized “standard terms” often makes them difficult to execute.
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Hospital executives: In your opinion, what are the top challenges for hospitals and PAC providers working together?
Costs
Patients receiving high-quality care in PAC
Information and data sharing and interoperability challenges
Communication complexities
Legal constraints
Patients getting relevant treatment in PAC for specific diagnosis
Lack of understanding regarding payment
Increase in paperwork
I do not know
Other
5
5
0
0
10
10
15
15
20
20
25
25
30
30
35
35
40
40
39%
37%
33%
30%
30%
27%
18%
11%
7%
2%
SURVEY RESULTS: CHALLENGES
QUESTION 3
When it comes to working together with PAC providers, hospital executives viewed the top challenges as costs (39%) and patients receiving high-quality care from PAC providers (37%). This makes sense, given the financial penalties hospitals face for readmissions and the fact that patients who go to PAC facilities often end up back in the hospital — for instance, nearly a fourth of patients at SNFs are readmitted to hospitals within 30 days.
For many executives — on both sides of the equation — the biggest roadblock for PAC facilities providing high-quality care (and, consequently, reducing readmissions) comes down to a lack of high-quality nurses. “The biggest thing in 2018 is staffing — nursing staffing, CNA staffing — it’s a common issue in the industry and has a correlation with readmission,” says an executive who oversees dozens of PAC facilities.
Some of this comes down to what another PAC executive calls “archaic regulations” wherein “if you’ve had a $10,000 fine in a facility, you can’t have any CNA training programs.” But training skilled nurses also requires collaboration with hospitals.
“We spent a lot of time talking with nurse practitioners and developed a prioritized list of topics,” one hospital executive says. “Then we hired a nurse educator to elevate the level of nursing at our partner facilities.”
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PAC providers: In your opinion, what are the top challenges for hospitals and PAC providers working together?
Meanwhile, PAC executives said the biggest challenges in working with hospitals are communication-related: 49% cited communication complexities as a top challenge, followed by information data sharing and interoperability challenges at 43%.
There are at least two potential explanations for this. First, the funding for interoperability provided by the Affordable Care Act never hit the post-acute sector — and PAC providers often don’t have access to capital to adopt electronic platforms on their own. Second, PAC providers are feeling the pressure from the Improving Medicare Post-Acute Care Transformation Act, which requires them to report standardized patient assessment data. Getting this data has always been a frustration for PAC providers, who tend to be unsure about whether they’ve received all the necessary patient information from hospitals in the first place.
Among other consequences, this patient information drives the informed consent process that PAC providers must follow to abide by licensing requirements. For instance, they can’t simply round up prescription drugs from the hospitals for their patients; they must order them via the informed consent process once the patient arrives at their facility. Not having complete information has historically stymied the flow of care.
Of course, these issues tie into costs, which 40% of PAC providers also say is a top challenge. As financial penalties for readmissions and patient outcomes begin to impact PAC facilities, their ability to deliver high-quality care will depend on effective communication with hospitals.
One PAC executive sums it up this way: “Our acuity has gone up. We’re getting sicker and sicker patients. Now, we’re going to have our own hospital readmission penalization.”
Other
I do not know
Lack of understanding regarding payment
Patients receiving hospital care that is medically necessary
Patients receiving high-quality care in hospitals
Legal constraints
Increase in paperwork
Shortage of skilled clinicians
Costs
Information and data sharing and interoperability challenges
Comm
unication complexities
10
0
20
30
40
50 49%
43%
40%
29%
23%
20%
17%17%
9%
6%
3%
SURVEY RESULTS: CHALLENGES
QUESTION 4
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Which of the following pose the greatest challenge(s) for both hospitals and PACs in developing networks?
Value-added payment models/bundles
Technology and information data sharing
Legal/regulatory requirements/constraints
Skills of staff (e.g., nurses, therapists)
Communication between patients, families
and providers
Coordination between entities/facilities
Quality standardization
Capacity or availability of PAC providers
Other
5
5
0
0
10
10
15
15
20
20
25
25
30
30
35
35
40
40
45
45
50
50
23%23%
34%46%
42%
39%20%
24%37%
37%
30%20%
22%14%
1%0%
42%
29%
SURVEY RESULTS: CHALLENGES
QUESTION 5
Hospital/health care system Post-acute care (PAC) provider
Diverging opinions on challenges carry over when hospitals and PAC providers consider developing networks. Hospitals are much more concerned about the skills of staff (39% vs. 20%) and quality standards (30% vs. 20%), while PAC providers worry more about technology and data sharing (46% vs. 34%) and communication between patients, families and providers (37% vs. 24%).
Significantly, hospitals are also more concerned about legal/regulatory constraints (42% vs. 29%) than are PAC providers. The disparity most likely reflects the fact that many hospitals simply have more experience developing joint ventures and networks (than do many PAC providers) and therefore are more familiar with associated legal constraints such as compliance with applicable fraud and abuse laws.
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Please identify whether your hospital is currently working or has plans to work with any PAC providers on any of the strategies listed below.
What are the two groups’ current and future strategies when it comes to seizing the new opportunities afforded by working together? According to our findings, hospitals and PAC providers aren’t exactly sure, but both recognize that they are on the threshold of creating working, synergistic relationships.
SURVEY RESULTS: SOLUTIONS
QUESTION 6
Developing one or more PAC facilities (or continuing to operate legacy facilities)
Acquiring a PAC facility or multi-site PAC organization
Pursuing a joint venture with one or more PAC providers
Merging with or acquiring another acute provider that operates PAC entities
Developing a preferred or recommended network of PAC providers
5
5
0
0
10
10
15
15
20
20
25
25
30
30
25%22%
17%18%
23%22%
17%20%
19%18%
Current strategy Future strategy
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Please identify whether your organization is currently working or has plans to work with either hospitals/health care systems or any PAC providers on any of the strategies listed below.
SURVEY RESULTS: SOLUTIONS
QUESTION 7
While joint ventures, for instance, look to be a promising option for hospitals in the future — 20% are thinking of such ventures in their future strategies, while only 17% said they were currently — most remain, for now, in the conceptual stage.
And PAC providers, likely for the same reasons, will pursue fewer joint ventures going forward than they are at present (22% vs. 19%). In the future, PAC providers (24%) are looking to develop more facilities of their own or continue to operate legacy facilities.
What remains relatively stable among both hospital and PAC executives is the development or participation in preferred networks: 21% of PAC providers said this is part of both their current and future strategies, while 23% of hospital executives said it is part of their current strategy and 22% said it is part of their future planning.
Developing one or more PAC facilities (or continuing to operate legacy facilities)
Acquiring a PAC facility or multi-site PAC organization
Pursuing a joint venture with one or more PAC providers
Merging with or acquiring another acute provider that operates PAC entities
Developing a preferred or recommended network of PAC providers
5
5
0
0
10
10
15
15
20
20
25
25
30
30
19%24%
21%21%
22%
19%18%
Current strategy Future strategy
One hospital executive has already put certain initiatives in place with his preferred network of PAC facilities. “What we did was identify the SNFs that are geographically close to us and that are responsible for admitting about half of our readmissions. We engaged with them to design a system that really creates an extra layer of support for the patient.”
The executive went on to say, “People who get paid for doing things are going to focus on doing those things. Many PAC providers aren’t necessarily focused on the full patient — they’re more focused on getting the referral and getting revenue. Our program was created out of that. It’s focused on patients getting attention from PAC facilities and we as a hospital holding them accountable.”
19%
19%18%
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To what extent do you agree that each of these features will resolve some of the existing health care challenges?
Looking forward, most PAC providers and hospitals believe several systemic changes will begin to resolve some of their current challenges — be it replacing existing payment models, providing value-based incentives or standardizing patient assessment data.
These changes should also serve as the catalyst for better communication between the two groups. Standardizing patient assessment data will obviously help — particularly for any technologically challenged PAC facilities — but so too will value-based incentives. PAC providers, who are newer to these incentives, should take notice of the potential impact on patient volume. As the full impact of value-based incentives is realized, including negative economic outcomes caused by readmissions, PAC providers and hospitals should ultimately be able to produce a framework to better align with one another on strengthening care transitions.
One PAC executive describes the transformations currently underway at his facilities. “It’s changed dramatically. We’re very transparent — we look at what causes hospitals heartache, financial penalties. We’re trying to work on length of stay and to show them our data. Then we can compare notes.”
SURVEY RESULTS: SOLUTIONS
QUESTION 8
Hospital/health care system Post-acute care (PAC) provider
Strongly agree
Replace Existing Payment Model
Somewhat agree
Neutral Somewhat disagree
Strongly disagree
10
0
20
30
40
50
Strongly agree
Provide Value-Based Incentives
Somewhat agree
Neutral Somewhat disagree
Strongly disagree
10
0
20
30
40
50
Strongly agree
Standardize Patient Assessment Data
Somewhat agree
Neutral Somewhat disagree
Strongly disagree
10
0
20
30
40
50
26%
24%
30%
11%
26%
20%
27%
35%
32%
37%
31%
43%
30%
24%
33%
31%
29%
17%
13%
13%
2%
9%
6%
17%
4%
2%
2%
11%
9%
3%
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To better understand the state of post-acute care strategies by providers, we surveyed almost 120 California hospital and PAC provider executives in 2018. The executives surveyed included relevant C-suite executives, including CEOs, CFOs, COOs, CNOs, strategy and growth officers, quality of care or clinical integration officers, and executives in the legal and risk management departments. In addition to the survey results themselves, we followed up with interviews of three hospital and three PAC provider executives to hear about their post-acute strategies, challenges and concerns.
Our findings reveal that the relationships between hospitals and PAC providers are still in early innings — as evidenced by the array of (often diverging) challenges, opportunities and solutions now under consideration by both groups. And yet we shouldn’t let this lack of present engagement blind us from what is truly a significant inflection point for hospitals and PAC providers. Gone are the days when the two rarely gave thought to one another or improving their relationships. Due to new and impending federal regulations, the groups’ incentives are now more firmly aligned.
The road toward a more perfect union won’t be without its obstacles, but we expect hospitals and PAC providers to get there. To survive in the health care system of the future, they won’t have any other choice.
SURVEY METHODOLOGYCONCLUSION
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