Skilled Nursing Integration: Will COVID be the Catalyst for Tighter Hospital Partnerships?

Unlike home health and other post-acute sectors, skilled nursing operators and hospitals have not entered into many joint venture partnerships. The COVID-19 pandemic, however, may be the wakeup call hospitals need to consider more integrated relationships that strengthen alignment. In the latest NIC Leadership Huddle, titled “Skilled Nursing Integration: Will COVID be the Catalyst for Tighter Hospital Partnerships?” health system executives got together to discuss joint ventures with skilled nursing partners.

Andre Maksimow, senior vice president, Kaufman Hall, began the discussion by illustrating how a Kaufman Hall client’s discharge pattern has changed over the pandemic. The Northeastern health system, which typically discharges 22,000 Medicare and Medicare Advantage patients annually, sent far fewer patients to skilled nursing facilities (SNFs) last year. “It’s a two-order effect, a compound issue,” he explained, pointing out that, on one hand, there was “less volume coming out of the hospital,” and on the other, “less going to skilled nursing versus home health.” Skilled nursing providers in the area are currently seeing a 25% reduction in overall discharges.

“I can tell you that we have fundamentally shifted as a provider organization in how we view our post-acute discharge process,” explained Dr. Mark Terpylak, D.O., FACOG, senior vice president, Population Health, Summa Health. His organization used to ask what kind of care they could qualify a patient for upon discharge. “We don’t do that anymore,” he said. Instead, his staff ask whether they can send a patient home. “If we can’t, then we work our way up the ladder in the other direction. That comes in large part with our movement into risk.” He explained that he looks to his network of providers to deliver lower-cost, value-based care, as his organization shifts their financial model.

Asked whether discharge volume to skilled nursing facilities would remain lower than pre-COVID rates, Dr. Terpylak responded that, “when possible, we’re not going to discharge to another facility…if it serves the patient and their family well, we’re going to try to get them discharged to the home.” Only if the patient fails to qualify for that course will the hospital send them to skilled nursing. He looks for skilled nursing partners who share the health system’s values and are, “committed to providing care for those folks in the most cost-effective fashion.” He also noted that for healthcare organizations and providers who bear risk, “we are not financially aligned with the typical skilled nursing operator.” He explained that this presents an opportunity to align in a different way, which he spoke to later in the discussion.

David Dafilou, CAO, CIN & vice president, Capital Health System, agreed that his organization would not revert to pre-COVID patterns. “Patients would much rather go home…they don’t want to be in the hospital at all. They don’t want to go to another facility. When possible, they want to go home.”

Maksimow asked why healthcare organizations are now interested in closer relationships and partnerships with skilled nursing facilities. In answer, Bryan Crum, director, Post-Acute Care Management, Summa Health, said, “We still have a big need for the right level of care at the right time…we want more patients that had been going to SNFs…going to home health. But we still want to utilize our SNF partnerships more.”

Addressing the same question, Dr. Terpylak explained that his system has historically been facility-based – and, as a result, was more comfortable sending discharges to another facility. “We had a very narrow-sighted view of what happened after folks left us. We didn’t really think much about it.” That is changing, and the healthcare organization is looking more closely at what happens when they discharge patients to a skilled nursing facility, and also at what happens once they leave that facility on the other end of a stay. “We need to find a different way to align ourselves with the skilled operators in our market that are open to partnering around a different methodology, different metrics, and a different level, frankly, of care integration.”

Given the new interest amongst healthcare organizations in forming partnerships and joint ventures with their post-acute providers, are SNF operators reaching out to upstream providers? Brian Cloch, principal, Innovative Health, LLC, pointed out that in years past his organization tried – but couldn’t get their calls answered. That, too, is rapidly changing, although in Cloch’s experience, many healthcare organizations, even when taking on risk, are still not fully embracing value-based care. When an organization understands the benefits of value-based care and takes an interest in working with a partner downstream, they are likely to find SNFs willing to work with them.

Cloch went on to explain that, in such a partnership, he hopes to gain referrals that might otherwise have gone to other facilities, such as ERFs or LTACs. Part of his strategy is to capture that portion of the market. “We scratch our heads and wonder ‘how does that happen?’ I get paid $600 a day, they get paid $3,000 a day or $2,800 a day. Why would somebody pay $1,800 a day more for the same care? That’s the target that we’re after.”

Not everyone on the panel is looking to partner in a joint venture. Dafilou pointed out that patients value choice, and that geographic considerations are important, and that in his area of the country, with a very high population density, there are many facilities nearby. He is looking at other ways to align with SNFs, such as putting healthcare providers within a facility, for example. In return for working with his organization, the SNF should be able to expect a greater volume of referrals. Capital Health recently reduced their preferred provider network down from 12 facilities to eight. He hopes that will enable a boost in referrals to each remaining SNF in his network.

Asked where he sees SNFs heading in the near future, Cloch said, “I think we’re going to be okay.” He pointed out that quality SNFs boast a very low hospital readmittance rate. When compared to higher readmittance rates in home health, in his view, SNFs may compare very favorably, in terms of total cost of care.