WARNING: Paradigm Shift Ahead

In light of the passage last Thursday by the Senate of S. 2553, the Improving Medicare Post-Acute Care Transformation Act of 2014, I thought I would re-share this post from July. 

If you are responsible for leading a post-acute/long-term care organization, I believe you should take note of two recent regulatory and legislative initiatives that provide a rather clear vision of where the post-acute/long-term care industry is headed – and it’s going to be disruptive to traditional thinking (if you want to survive).

ITEM 1: VBP in Home Healthcare
Earlier this week, CMS issued propose rule,
CMS-1611P, which proposed to update Medicare’s Home Health Prospective Payment System resulting in an over all 2.5% reduction in rates when consideration is given to rebasing adjustments and sequestration. Importantly, included with that rule was a solicitation of comments regarding a home healthcare value-based purchasing (HHVBP) model.

Section 3006(b)(1) of the Affordable Care Act directed the HHS Secretary to develop a plan for implementation of a HHVPB program for home health agencies and to issue an associated report to Congress. Key concepts of that report included building upon existing measurement tools and processes, the alignment with other Medicare programs and tying payment to performance.

As currently contemplated, beginning with CY 2016 in five to eight states participating in an initial demonstration, average Medicare payments would be increased or decreased in a rage of 5% to 8% based on quality performance as measured by both achievement and improvement across multiple quality measures. The belief is these incentives/disincentives would encourage better quality via improved planning, coordination, and management of care.


ITEM 2: Broad Spectrum Reform Targeted
Last week, leaders of the Senate Finance and House Ways and Means committees introduced bipartisan legislation (H.R. 4994, S. 2553) that would have the type of disruptive influence that Clayton Christiansen has researched and explained leads to
disruptive innovation. Being referred to as The Improving Medicare Post-Acute Care Transformation Act of 2014 (or, IMPACT Act of 2014), it would require data gathering and reporting standardization across different types of PA/LTC settings to facilitate better comparisons of quality and resource utilization among those settings and to improve hospital and post-acute care discharge planning.

The data collected and analyses completed would then be used to develop new payment system(s) that could be site-neutral and reflect various forms of bundling and/or at-risk capitation. Anticipated quality measures include functional status, skin integrity, medication reconciliation, major falls and patient preference. If enacted, SNFs, IRFs and LTACs would begin reporting some of these measures as early as October of 2016, with confidential feedback sent the following year and public reporting of the measures occurring in 2018.

Taken together, these two initiatives – even if neither is ultimately implemented – reflect the long anticipated but now swiftly emerging paradigm shift away from fee for service in the PA/LTC industry. They also reflect the migration toward a view of PA/LTC that encompasses the patient’s overall and entire experience after an acute care stay. Owning only a piece of the puzzle, without being able to seamlessly and economically integrate with healthcare providers holding the other pieces, will not represent a sustainable business model.

To reinforce this, simply look at the strategy of Kindred Healthcare. Writing in Forbes Magazine recently, colleague Howard Gleckman noted that,

“as recently as 2010, half of Kindred’s business was generated by its skilled nursing facilities. This year, only one-fifth of its revenues will come from its nursing and rehab centers. In a major strategic shift, Kindred is betting the company on in-home care, hospice, care management, and fully integrated care services.” [my emphasis added]

Ironically, PACE models – whose genesis dates back to the early 70s – are well ahead of the curve in successfully providing comprehensive, integrated services and care, though their positioning platform has primarily been a means of serving low income seniors. That road hasn’t been easy, as development and execution is fraught with financial, operational, clinical and regulatory challenges. But the overall long-term programmatic success demonstrates the value created from integrated care delivery under a fully capitated payment model (as in, see above).

So if you’re one of those individuals I referenced at the top of this post, what I would do if I were you is spend some time understanding the PACE model – and a crash course in organizational change management might not hurt either.

Cheers – and Happy Independence Day!!
  ~ Sparky



Shoots & Ladders and US Healthcare Delivery

imageI just wanted to share a quick thought before I lost it.  Do you remember playing Shoots & Ladders as a kid? Do you remember playing Shoots & Ladders with your kids?

Well I was thinking recently of how I would try and graphically depict  our current US Healthcare System to an alien with whom language would be a decided communication barrier – and this is the image that came to mind: a virtual salmagundi of disjointed pathways that individuals are required to navigate during periods in their life when they are least able to do so.  Throw in  the moving staircases of Hogwart’s Castle in the Harry Potter series, and you probably have a pretty accurate depiction of what our healthcare system looks like from a patient’s vantage.

Imagine though if the Shoots & Ladders game board were redesigned.  Instead of having equal squares representing a static and linear path that must be followed – left to  right, going up a row at a time, hoping that you get the care you need by landing on the right space and hoping you don’t get shot off into the wrong direction – what if there were one square (or better yet, circle) in the middle.  That would be where the player (patient) starts.

Then imagine we get rid of the ladders, because although they represent the benefit of jumping ahead in line, they also represent having to climb; and there are, of course, OSHA considerations.  Let’s instead keep the shoots, but make them work to our advantage.  Realign all the shoots so that they flow out from the center and to the several destinations that represent that element of the healthcare delivery system the patient needs.

Around the board then you have the physician’s office, the hospital, the clinic, the lab, the specialist’s office, post-acute/long-term care facilities …  You get the picture, and one can only take a metaphor so far when the subject matter you’re trying to explain has the reality of life and death attached to it.

Of course, what I am describing here is a holistic system of care delivery that puts the patient at the center of all providers and services – all the time; instead of being the center of attention of one provider at a time, 15 minutes at a time, as his or her time allows.  Instead of the patient having to navigate the system, the patient is surrounded by the system and controls the system.

So what has to happen to realize this vision? For starters, we need to find some common public policy ground as a nation.  What neither political party seems capable of accepting – motivations notwithstanding – is that being in the middle of a battlefield is worse than being on either side.  The inability, or rather unwillingness, to compromise is killing this country, and along with it the hope of having any type of a person-centered healthcare delivery system.  The winning-at-all-costs attitude that pervades our political conscious is quite ironically going to end up causing us all to lose a lot.

There are also substantial and difficult individual behavioral changes that need to take place in our country as well, and these aren’t confined to any individual constituency.  Providers need to tear down the silos that have long stood as obstacles to sharing knowledge and information.  Insurers need to accept those providers as partners in striving for shared goals and objectives.  And patients need to assume a much greater level of responsibility for their health – and the consequences of decisions made from which their health suffers.

Often lost in the political maelstrom that has become Healthcare Reform of the 21st Century are the underlying trends and drivers of which the Affordable Care Act was as much a codification of as it was the creation of any bold new initiatives.  Good things happen when people communicate effectively.  Healthcare costs less when production is streamlined and coordinated.  And people contribute their greatest talents when their environment is stable and they feel safe.  So simple even a four-year old could play the game.



Branding in An Era of Healthcare Reform

Larry Minnix, President & CEO of LeadingAge, recently began a video series entitled, a few minutes with Larry Minnix (I am guessing they didn’t hire Porter Novelli to help with the naming – or, maybe they did).  If you haven’t already, I encourage you to take the time to watch these.  Larry does a wonderful job sharing timely and highly relevant messages in his famously comfortable speakeasy style.

In the current episode that I’ve embedded below Larry discusses LeadingAge’s 2011 Annual Report. 

In referring to LeadingAge member organizations, Larry noted that, “we’ve had reinforced the fact that the most valuable, priceless thing that you own is your not-for-profit brand and heritage.”

I agree with Larry – today. Tomorrow – as in the next five to ten years – is a different story. The looming reality facing nonprofit senior housing and care organizations is that to remain economically viable in the future I believe their brand will have to become more synonymous with value than being nonprofit.

For those nonprofit organizations desiring to survive (and thrive) under Healthcare Reform, future brand identity and perception may need to change significantly. Consumer preferences of the Baby Boomer generation, the need to participate in integrated care delivery systems, learning to financially manage through new payment models (e.g., ACOs, managed care, payment bundling) – these are factors, which will have a greater impact on successful brand strategy than a nonprofit identity.

This is why I found that part of Larry’s message so timely and well placed. Tomorrow is not too soon to begin proactively managing your brand in lieu of Healthcare Reform. To be sure, managing a brand is a bit like herding cats: there are things you can control, things you cannot control and things you foolishly believe you can control.

I am reminded of a passage I like to quote from the book, Brand: It Ain’t the Logo: It’s what people think of you™  by Ted Matthews.

“A Brand is the sum total impression and memory of every remarkable, every so-so and every negative experience with any and all pieces of an organization. A Brand is the personality of a company, product or service and is judged and assessed a value by everyone it touches, whether inside the company (your employees) or outside (your customers, suppliers, shareholders and other stakeholders). These perceptions of value may, or may not, be what you want them to be. Which suggests a fact that may surprise you: your Brand isn’t really yours. You don’t own it – all the people thinking about you do.”

Perception is reality, isn’t it. Being able to monetize the perceptual advantage of being a nonprofit will continue to be critically important to brand awareness and positioning. I am not suggesting otherwise. But – it will not be sufficient for survival in the face of the tremendous challenges ahead, and it will be secondary to perceptually positioning your brand based upon the ability to deliver value under Healthcare Reform.

What do you think?

  ~ Sparky



Policy Prescriptions

Advocates for Evidence-Based Health Policy™

Health Affairs BlogHealth Affairs Blog

When 280 characters is just not enough


with Dr. Bill Thomas