Yesterday, the Alliance for Quality Nursing Home Care announced the release of a new study from Avalere Health, which projects a $65 billion cumulative reduction in Medicare funding of skilled nursing facility reimbursement over the next ten years. The cuts are projected to result from implementation of the Affordable Care Act’s productivity adjustment ($35.3 billion); the regulatory case-mix adjustment enacted in FY 2010 ($17.3 billion); a CMS forecast error adjustment in FY 2011 ($3.2 billion); and the sequestration provision of the Budget Control Act ($9.8 billion).
Several news sources have picked up the Alliance’s press release and noted those states with the highest levels of projected annual cuts, e.g., Florida ($370 million), California ($350 million), Texas ($240 million), Illinois ($240 million), New York ($220 million), Pennsylvania ($200 million) and Ohio ($200 million). I don’t think the aggregate comparisons are necessarily very useful because there are a host of other considerations that should be included to truly understand the relative impact of these reductions on individual SNF providers in each of these states. What is quite meaningful, however, is the stark reality the industry is facing: the decade ahead will see tremendous operational and economic challenges as providers try to accommodate the demographic realities of increasing demand at the very same time less resources are available to cover costs.
Big Data to the Rescue?
In the July 2012 issue of HealthLeaders Magazine Philip Betbeze writes about Healthcare’s Big Data Problem. Well, it’s a problem in so much as substantial obstacles still stand in the way of being able to use healthcare data more effectively – and more pointedly, to the real time benefit of operational, financial and clinical decision making.
If I could sum up that challenge it would be this: how do you take an unparalleled amount of disparate data (e.g., demographic, operational, financial, clinical) and meld it together into a warehouse of information, such that the various elements of that information can be combined, compared and contrasted in ways that reflect and then empower the distinctive thought processes of clinicians, managers and executive leadership of healthcare organizations?
As the article points out, some very encouraging progress is being made to overcome this challenge, including something called, “natural language processing technology,” which integrates clinician notes from the patient’s EMR into the aforementioned information warehouse. This could be a huge step forward because it has the potential to address a major obstacle sited by many clinicians: i.e., the ability to effectively capture and later be able to quickly recall and share ad hoc note taking that is such a critical component of a patient’s record.
When looking at the path from data to actionable knowledge it is important to remember that data becomes information only after it has been collected, aggregated and organized. Information becomes knowledge through analysis. Knowledge becomes wisdom through synthesis. Wisdom is the foundation of economically beneficial decision making. Unfortunately, effectively navigating the winding path from raw data to informed decision making has a lot more to do with human nature and individual personalities than it does with the ability to store and manipulate binary data bits.
The Big Idea
So what does this have to do with post-acute and long-term care? As many providers are beginning to realize – and some I dare say, even accept – the economic future of healthcare delivery is going be built upon value-based incentives and risks. Ultimately, the distinctive difference between financial sustainability and going out of business will depend on the ability of direct service and care workers – whether that is the medical director or the food service aide – to make real-time decisions that allocate the organization’s resources in ways that add value and minimize risk.
Empowering those individuals with the requisite knowledge (see above) to make those decisions more quickly, more confidently and more in alignment with the organization’s value-based mission will create competitive advantages that lead to comparatively stronger financial performance under value-based contracting and integrated care delivery models. This is a critically important consideration to have in mind when beginning to explore potential relationships with other healthcare providers in your market.
It is likely that many if not most post-acute/long-term care providers will have to link into and utilize the Big Data solutions of more formidable acute care organizations. In doing so, PA/LTC organizations must be in a well-informed position so that they can clearly articulate how such solutions must serve them and their direct service and care workers as a prerequisite to their adding value to an integrated delivery network. It fundamentally has to be a core element of the negotiating process.
So my advice to the leadership of PA/LTC organizations is straight forward: if you don’t yet realize and understand the impact that emerging Big Data solutions will have on how well you are strategically positioned to compete in a value-driven world of healthcare delivery and integrated models of care – learn quickly. Or, as an alternative, find someone you trust who does – and listen to them.
That’s what I think, anyway. Would love to hear what you think!