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Nursing homes stressed as move to value-based reimbursement intensifies

In a new report, Stackpole Associates has commented on and summarized  data  that the nursing-home industry has been avoiding for several years.
Of particular interest to Cambridge Management Group is the effect on nursing homes of moving from volume to value, since CMG has been spending a lot of time in helping clients do that in recent years.
 Among Stackpole’s observations:

“Declining demand in long-term care markets is not a popular topic, but the inaugural SNF {skilled nursing facility} report from the National Investment Center for Seniors Housing & Care (NIC) clearly shows this trend. The occupancy rates in long-term care markets have been dropping, and in the SNF category, occupancy fell from just under 85% in October 2011 to 82.8% in December 2015, according to NIC. The decline in occupancy in this specific long-term care market would have been worse if owners and operators had not been removing capacity (taking beds off-line) from the system progressively over the same period of time. When both the number of beds is declining, and occupancy is decreasing, how can this be described as anything but a late mature, early declining market?”

“The biggest single factor in the decline in demand in the long-term care markets is the Demographic Dip or Birth Dearth. Demographics are like gravity; you can learn to work with it, but you can’t deny it.”

We at CMG take issue with part of Stackpole’s  remarks below. The implication  that nursing homes will only be available for rich people is not correct.    Strong skilled nursing facilities are emerging in the Medicaid sector.

“Compounding the challenges of declining long-term care markets, are the initiatives by CMS and … managed care organizations to reduce utilization, and ‘squeeze out’ margin in the sector. The transition from volume-based payments to value-based payments through such mechanisms as Accountable Care Organizations (ACOs) and Bundled Payment for Care Improvement (BPCI) are laudable and needed, but these will have devastating effects on the sector. The shift from volume to value will benefit the strongest (i.e., SNFs with the best quality payor mix) and disproportionately hurt SNFs serving the most vulnerable populations in our society. As intermediaries and value-based payment initiatives reduce utilization, and margin from the sector, the weakest will be forced to either close or merge with other, bigger and stronger systems.”


Big successes in a Penn. bundled-payment program

Integrated Patient Relationships for Success with Bundled Payments

Clinician-led Design Incorporates Human Needs Across Episodes of Total-Joint Replacement

CMS is pushing providers to fully integrate care to improve patients’ experience and outcomes, which can also decrease the overall cost of care episodes because of faster recoveries and fewer readmissions.

Cambridge Management Group (CMG), working with colleagues at Pyxera, responded to this imperative in a recently completed year of helping PinnacleHealth and other healthcare providers in central Pennsylvania redesign their total-knee-replacement (TKR) episodes.

The work was initiated within PinnacleHealth’s participation in the CMS Bundled Payment for Care Improvement (BPCI) program as well as within a pilot initiative with a large employer involving total knee replacement. The aim of CMS (and other payers) is to achieve better, more integrated health services while saving money – in the case of CMS, the taxpayers’ money.

Among the outcomes:

  • Identifying and developing physician leaders in context of the TKR design team, a process that can serve as at least a partial template for bundled-payment programs in other service lines.
  • Establishing personal/professional links with clinicians across the care episode – essential for care and cost coordination, empathy and higher morale in the working environment.
  • Demonstrating advanced market methods important in attracting a large commercial payer.

The work was suggested by CMG and sponsored by Dr. George Beauregard, chief clinical officer at PinnacleHealth. Dr. Beauregard saw an opportunity to demonstrate a safe, early-learning collaboration with the Orthopedic Institute of Pennsylvania (OIP); Arlington Orthopedics; perioperative orthopedic staff at Pinnacle, and selected post-acute-care providers.

Dr. Beauregard, other Pinnacle leaders, OIP and Arlington saw the potential of redesigning certain aspects of care delivery within the TKR arc of care to improve the patient experience and outcomes, gain additional process efficiencies, improve communication between all stakeholders involved in a TKR episode and reduce costs. The BCPI program was a laboratory for peer-to-peer learning and innovation for use with all TKR payer groups and, eventually, other bundled episodes of health services. (Dr. Beauregard recently became the chief physician executive at St. Luke’s Health Partners in Boise.)

The work was led by Dr. Jack Frankeny, CEO of OIP. Dr. Frankeny saw an opportunity to demonstrate clinician-led design across the episode to re-calibrate the TKR value-proposition (high quality and easy access) to consistently incorporate human-centered features. At the outset, the TKR service was a well-regarded and busy regional service navigated by resourceful patients and families. The objective was to integrate siloed services within the program for a seamless experience preferred by patients, families and providers.

The lens for focusing the work, evidence-based-design (EBD) methods, was provided by Tad Simons, Ph.D., and Don Westwood, founders and partners in Pyxera, in collaboration with CMG. They have nationally recognized expertise in designing systems, bringing evidence-based design to healthcare networks as their staffs learn to manage interactions across newly integrated services. EBD is one pathway to embed skills/values for adaptive, empathetic care coordination — the essential competence to win with bundled payment.

Participants called the experience very successful, and see it as offering guidance for bundled payments in other service lines, such as hip replacements and heart-bypass surgery.

The work first required interviewing clinicians across the continuum of health services to understand the interactions between them. At Pinnacle and most other systems, individual clinicians have tended to have remarkably incomplete knowledge of the identities and work of colleagues in other parts of a patients’ care. The lack of integration has hurt outcomes in some cases, undermined collaboration between clinicians and between clinicians, patients and family caregivers and led to expensive inefficiencies, including duplication of services.

Dr. Simons led interviews of key players across the course of a patient’s care that provided information, insights and, occasionally, inspiration for designing a human-centered experience enhancing the effectiveness, efficiency and low cost already present in the TKR service.

The basic sequence in the project was:

  • Assessing patients’ pre-op readiness for surgery to reduce complications and prepare well ahead of time for the discharge to home.
  • Working with patients and the hospital’s primary-care network to improve patients’ readiness for surgery.
  • Visiting patients’ homes to ascertain social factors, especially the capacity of family caregivers, to help streamline discharge.
  • Preparing patients for productive post-op physical therapy by connecting early to the physical-therapy team.
  • Coordinating in-hospital plans of the surgeon, anesthesiologist and unit staff to enable discharge after 36 hours.
  • Coordinating and enhancing care between multiple providers preceding the first surgical follow-up visit.
  • Coordinating care between multiple providers and improving outcomes during rehabilitative therapy through the end of care.

The project’s leaders are enthusiastic about the experience. Dr. Simons listed the pilot’s key achievements as:

  • “Better coordination and planning with services outside the hospital — for example, physical therapy, occupational therapy and home visits.’’
  • “A deeper recognition of the importance of patient selection and preparation.’’
  • “Spawning excitement among clinical staff about using design thinking for new process development.’’

Dr. Frankeny, the Orthopedic Institute CEO, called the bundling project a “crash course in value-based care for our orthopedic surgeons who were born and raised in the fee-for-service model. They also learned how important collaboration is with all caregivers throughout the health-service episode. It’s the only way to win in the bundled environment.’’

Dr. Frankeny lauded the Pinnacle administration’s transparency about costs, saying that it helped build trust among surgeons and other clinicians.

He noted, as did Dr. Beauregard, the initial strong opposition of some surgeons, who tend to be “Type A individuals who want to win.’’

But, he said, “Confront difficult docs with evidence {about cost and medical outcomes} and they will listen. And they have come to understand they will have to learn to live with a risk-and-value-based system because it will have a direct impact on their income and in how they run their practices. They must do something or something will be done to them. They understand that the data will compel change in any case.’’

And as part of the brave new value-based world, Dr. Frankeny noted, there’s a new imperative to go with the cheapest procedure if there’s no evidence that it produces worse medical outcomes.

Everyone in the project came to understand more than ever before the importance of the interactions between clinicians and other caregivers along all steps of a patient’s care.

Dr. Beauregard, the former Pinnacle chief clinical officer, noted the project’s victory over skepticism and outright opposition. The first reaction of one surgeon leader was “over my dead body,’’ he halfway joked. But physicians changed their minds as Dr. Simons demonstrated the strengths of the design process in improving outcomes, efficiency and collaboration, even as the doctors were reminded of the inevitability that the CMS — armed with more precise medical-outcome and cost data – would make bundled payments mandatory in multiple service lines.

And, in any event, “fixed price points will be beaten down in the commoditization’’ as CMS caps the prices of many procedures.

Dr. Beauregard said of the bundled-payment project: “Change is mandatory. We’re facing reality.’’

If the Pinnacle pilot program is any indication, that reality will be more than tolerable.

To elaborate on the success factors noted at the top of this article:

  • Executive and physician sponsors have used credibility and energy to enlist previously unconnected hospital executives, physicians and other patient-facing staff and a wide-range of other provider-partners.
  • Physician leaders with clinical and organizational gravitas have helped guide busy colleagues (across the episode) as they transform daily work while rebalancing operations and finances.
  • A process (lens) useful now and in the future to enlist and focus the deep and diverse competencies of the full range of providers, patients and families and to inform and inspire the clinician-led design team.


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