Skilled Nursing Environment Calls for Strategic Responses

While the skilled nursing sector faces challenging headwinds, it also offers a number of distinct opportunities which were outlined at the recent 2017 NIC Spring Investment Forum. Several educational sessions addressed market conditions and how operators can boost values by measuring outcomes and partnering with other health care providers.

Putting current trends in context, NIC Senior Principal Bill Kauffmann detailed the latest market data in a session titled, “Skilled Nursing Trends and Strategic Responses.” He gave an overview of data through the end of 2016 which showed that occupancy fell to 81.8% in the fourth quarter—a new low over the past five years.

Other notable findings include the fact that Medicaid represents 66.2% of patient days, comprising a significant and steady stream of residents and revenue. This could be an issue for operators moving forward if legislators tackle Medicaid reforms that could result in federal block grants and lower reimbursement levels.

Panelist Nancy Schwalm, chief business development officer at Vivage Senior Living, expressed overall optimism, noting: “For every challenging moment that we’re facing right now, there are tremendous opportunities.” She explained that deepening relationships between skilled nursing providers and hospitals is a new, and welcome, phenomenon.

But, she added, data is key. Panelist Derek Prince, president and CEO of HMG Service, agreed. He suggested that operators begin collecting data if they haven’t already started to do so, and to make sure the data is relevant to local health care partners and providers.

Another session, “Unlocking Value with Quality Metrics,” brought together a panel of experts to discuss the importance of quality measurement. Panelist Kim Estes, senior vice president, clinical services, Brookdale Living, said: “Everybody is collecting data. The question is what are they doing with it?”

Panelist Kim Barrows, president, KB Post-Acute Strategic Specialists, suggested, for example, that operators use internal metrics to help provide an additional perspective on low Five-Star Quality ratings. The score, from CMS, can take months or years to adjust even if the operator has made considerable strides toward quality improvement.

In assisted living, Brookdale uses its quality metrics to reduce the risk of litigation, improve internal processes and demonstrate worthiness to its own insurers. And while assisted living operators may not be subject to the Five-Star Quality rating system, they must still answer to their own customers.

The trend in skilled nursing is for more detailed data collection as required by CMS. Barrows highlighted the Medicare Spend per Beneficiary—a new measure being used by some providers that will likely become part of the Five-Star Quality rating.

Other notable metrics include: discharge data, length of stay by diagnosis, and employee turnover, among others. These quality metrics are sought by hospitals and payors when making educated decisions about partnerships, another reason why the validity of the provider’s data is so important, Barrows stressed.

In closing, session moderator Michael Torgan, executive of business development & strategy at First Quality Healthcare Group, asked the panelists which metrics were the most important. Barrows listed some common measures, such as census and readmissions. Estes likes the Net Promoter Score, a metric tracked by hotels and restaurants.

Panelists agreed that quality metrics are paramount to running a successful business in an evolving industry where government, partners, payors and customers all want to know what strategies are being used to help residents thrive.

Estes noted: “Customers have high expectations.”