Nov 7, 2012

Time to Move Forward

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Last night’s reelection victory by President Obama should finally put to rest the long and bitterly partisan rhetoric surrounding the Affordable Care Act (known more popularly and embraced even by the President during the campaign as Obamacare).

It should – but I doubt it will.  While Repeal and Replace was a catchy enough campaign slogan, the “replace” part never really seemed to be manifested in a way that offered any meaningful alternative that could be widely embraced by a majority of the body politic, even in the face of a staggeringly lethargic economy.

I think it is critically important to remember why that is: because the underlying challenges of healthcare delivery in the United States cannot – and will not – be addressed solely through public policy.  I have maintained since 2009 that the Affordable Care Act can provide a workable framework for achieving cost savings by leveraging market-based incentives while improving access and quality through public-private collaboration and care coordination.  But the future success of Healthcare Reform implementation is now squarely in the hands of healthcare providers and the non-clinical supporting cast that must step up and justify its share of the Big Tuna.

Whether before yesterday you were like the ostrich with its head in the sand or the deer frozen in oncoming headlights, today is the day you no longer can justifiably afford to stay in that position without accepting the responsibility and consequences of  your inaction.  I have written and spoken extensively over the past two years about what healthcare providers must do to be strategically positioned for success under the Affordable Care Act.  I won’t take your time again here to beat that dead horse.

With the final significant challenge to ACA repeal behind us, however, I would like to offer some observations of what I think post-acute/long-term care providers should expect over the next two-plus years leading us into the 2014 bi-election.

Latent Political Opposition
As I write above, while the election should end the political opposition to the ACA, it most certainly will not.  What the President certainly did not win last night was a clear mandate of his political agenda, of which quite obviously Healthcare Reform has been the centerpiece.  The country remains deeply divided on issues that are very difficult to reconcile.  Couple this reality with the looming fiscal cliff facing the US and much of Europe, and there is more than enough political fodder available that opposition constituencies can lean on to push back against implementation.

This will be most acutely felt as we move forward with Medicaid expansion and the health insurance exchanges.  States that have been on the fence – whether perceptually or in reality – will now have to come out from under the election’s shadow and determine – very quickly – whether they will participate in the Medicaid expansion and/or develop their own health insurance exchanges (or allow the Federal government to develop them on their behalves).

Medicaid Expansion
The reality is that most states will find it too politically tempting not to take advantage of federal funding in support of Medicaid expansion.  And so, savvy post-acute/long-term care organizations will do well to focus a lot more attention – if they have not been already – on what is happening in individual state houses in 2013 and 2014.  Of particular importance and significance, it is going to require a monumental effort to coordinate service and care delivery to the dual-eligible populations.  States will be looking to both insurers and providers to help develop the systemic infrastructure to support Medicaid expansion.  Organizations that participate in, and contribute toward, those development efforts will be much better positioned to financially benefit from expansion implementation.

Discretionary Funding
Another major political obstacle facing ACA implementation will be discretionary funding.  While major portions of the Act – including the core elements of access and coverage infrastructure – were appropriated within the legislation, there are still significant sections where funding was authorized but still requires congressional appropriation (as in appropriated by the House of Representative: still quite firmly in Republican control).

Given the budgetary realities facing the Administration and Congress – and what will likely continue to be the Republicans’ intransigence on income taxes –  it seems logical to expect discretionary funding will be severely threatened.  This will have the greatest impact on workforce educational programs and community-based health and wellness initiatives, but several demonstration/pilot projects, as well as monitoring and technology assistance initiatives could also be negatively affected.

Compromise
What has become the dirtiest word in Washington over the past decade is going to rear its ugly head again – and probably as soon as during this lame duck session of Congress.  The same fiscal concerns that will impact discretionary spending I expect will also be manifested in delays and compromises impacting implementation of both the insurance exchanges and Medicaid expansion – and perhaps even the Individual Mandate.

There will be efforts to tighten up essential health benefits (EHB).  Exchange policy pricing and subsidy values will be challenged.  Medicaid eligibility criteria will be scrutinized.  All this in the name of seeking to limit the Federal government’s actuarial financing risk (and resultant budget impact).  And though it may appear to be counterintuitive in the face of last night’s election, my bet is that Republican resolve to demand spending cuts will be stronger in the next Congress than it has been in the current.  If the Administration wants to raise tax revenues, it will have no choice but to compromise, and not facing the prospect of reelection in four years will be in a better position to do so.

Medicare
And yet we still come back to the singular policy issue that exists beyond the Affordable Care Act: how to control Medicare spending without impacting access in the face of an approaching tsunami increase in demand for care by Medicare recipients.  There is the physician Sustainable Growth Rate (SGR) formula that hangs like a black cloud, imposing a constant threat to any and all implementation efforts.

There is the $716B in Medicare savings upon which the overall economic success of the ACA largely depends.  There are programmatic payment initiatives driving providers toward payment bundling and capitation.  Medicare Reform is a story that has yet to be written, and the ending is no brighter today than it was yesterday – nor would it have been had Mitt Romney and Paul Ryan have won.  The need to produce more, better and faster with less, fewer and cheaper is the stark reality that cannot be taken away by any political party.  Stay tuned for a very rough ride . . .

Final Thought
As I have written before, although the ACA provides a comprehensive framework, much of Healthcare Reform’s ultimate policy development and implementation is still to be created through future legislation and during the regulatory process.  Or another way to look at it is, today is only the end to the beginning of Healthcare Reform.  So let’s get to work!

Cheers,
  Sparky

 

Filed Under: Affordable Care Act, Editorials & Opinions · Tagged: , ,
Accelerate! ~ Or Be Eaten
Nov 1, 2012

Accelerate! ~ Or Be Eaten

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In the November issue of Harvard Business Review, John Kotter makes his latest contribution to an already authoritative body of work on organizational change management in the article, Accelerate!  I found the article to be very insightful and particularly well timed in lieu of my post earlier this week on the Healthcare Value Equation. 

In that post I wrote about the importance of healthcare organizational leadership being able to manage through transformational change as a condition of future survival in an era of Healthcare Reform.  In our practice at Artower we are already witnessing an acceleration of meaningful efforts to explore, understand and promote clinical integration by and between acute and post-acute/long-term care providers.

For me, an analogy of what this process looks like so far is two American Indian tribes from the 18th century, each living peacefully in adjoining valleys – communicating good wishes now and again for decades via smoke signals.  Then one day the leaders from the two tribes decide to meet face-to-face and find they can no longer communicate because of not sharing the same language.

Those familiar with Kotter’s work will recall his seminal article and then book, Leading Change, and the eight steps of an effective organizational change process.  Now, in Accelerate! Kotter introduces eight accelerators that form the backbone of a strategy network, which he suggests should work in parallel with an organization’s existing operations.   The accelerators differ from the eight steps in their being nonlinear, more organizationally encompassing and ideally facilitated independent of the traditional organizational hierarchy.

Kotter argues that for an organization to maintain the highest levels of operational performance and efficiency while concurrently being able to resiliently embrace and adapt to an increasingly complex environment what is required is a, “dual operating system – a management-driven hierarchy working in concert with a strategy network.”  The applicability of this model to healthcare organizations desiring to survive the burgeoning maelstrom seems rather self evident; thinking strategically isn’t sufficient – acting swiftly will also be necessary, and that typically requires a significant change effort.

So what Kotter has done in this article is tie together two concepts that I have argued for the past decade must be more effectively merged within and by organizational leadership if planning efforts are to result in tangible results: that is, the critical connection between strategy and organizational change management.  Specifically, he notes that, “strategy should be viewed as a dynamic force that constantly seeks opportunities, identifies initiatives that will capitalize on [those opportunities] and completes those initiatives swiftly and efficiently.”  I tried to make this point in my white paper earlier this year and have sought to reinforce it in presentations on strategic planning and positioning for Healthcare Reform.

The key takeaway here for healthcare providers – and particularly for providers of post-acute and long-term care – is that organizational leadership must sponsor and promote both operational efficiency AND strategic flexibility.  Achieving both requires being able to look at the same organization from unique perspectives.  One is a structural framework that aligns individual performance incentives with the organization’s top line goals of improving outcomes while reducing costs (remember: VALUE), while the other is a network framework that is able to leverage the organization’s group genius in ways that facilitate rapid strategy deployment.

The same people in your organization can be high level performers under both frameworks – and can do so concurrently, with the right leadership.  I have seen it accomplished in the organizations we have worked with – and I have observed the tangible results those leadership teams have achieved.

Cheers,
  Sparky

Filed Under: Good to Know · Tagged: , , ,
Oct 28, 2012

The Healthcare Value Equation

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Prior to leaving for Denver and the LeadingAge Annual Meeting & Exhibition last week I posted here in the Pub several questions I was anxious to have answered by LeadingAge members.  I was not disappointed by the vibrant and impactful discussions and sharing of ideas that has come to epitomize that event.  Indeed, I learned a great deal of incredibly valuable insights, as usual.  But it was what I did not observe that – while not terribly surprising – has me nonetheless concerned about many member organizations’ futures.

Overall, I would characterize the leadership view at most organizations toward Healthcare Reform and its attendant ramifications as being acutely aware, justifiably concerned and yet still very uncertain about what types of organizational changes will be required to survive.  And where there is a greater level of certainty, the perceived changes needed tend to be of a more tactical and pragmatic nature, rather than transformational.

I realize this is to be expected because change is anathema to our human psyche.  Even changes that bring about sought after and desired results in our lives are usually disruptive, requiring adaptation, resiliency and an unplanned exertion of focus and energy.

The dynamics of organizational change are such that if you take the individual energy required to adapt to change and then multiply that by the number of individuals comprising an organization, the product will be exponentially higher.  This is primarily owing to differences in the means and speed at which individuals accept and adopt to change.  And the process by which an organization reconciles these differences is a function of effective organizational change management.

Whenever I give a presentation on Healthcare Reform I share what I have learned as a student of Michael Porter’s work on Value-Based Healthcare.  I seek to convey the singular concept that will serve as the platform upon which all future performance improvement efforts must be based.  I refer to this concept as the E = mc2 of future healthcare delivery: Value = Outcomes/Cost.   This is also the formulaic basis upon which leadership teams at organizations that provide healthcare must base their organizational change efforts.

This may seem like a simple enough concept, particularly when we compare its application in almost any other industry in which a product or service is exchanged for currency (or another product or service).  In healthcare, as we know, our delivery system has largely obfuscated the applicability and worth of this formula – first through employer-provided insurance beginning during World War II and then several decades later and subsequently through complex provider payment designs developed by Medicare, Medicaid and commercial insurers.

As Porter asserts, today healthcare providers compete on bargaining power, volume and control of the patient, rather than value.  The demographic and economic realities of this 21st century require a paradigm shift in the competitive model of healthcare delivery, where market advantages will be achieved through actual and perceptual positions of value created for the patient.  Such a shift cannot be achieved through incremental improvements in cost reduction and process improvement – however grandiose the means of pursuing such goals may be.  It requires a transformational shift in how the healthcare organization views itself.

It also requires a new way of thinking about how we understand and define Outcomes; and how we track, analyze and report on Costs.  I will write more on these topics in the future.  But for now, my message is that those senior housing and care organizations that embrace this way of thinking – and determine how to manifest an organizational strategic positioning based on value – will be much more likely to survive and even thrive in the future. 

Cheers,
  Sparky

Filed Under: Editorials & Opinions, Organizational Change Management · Tagged: , , , , ,
Oct 20, 2012

Questions I Have for LeadingAge Members

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This week I will be joining my Artower colleagues in Denver at the LeadingAge Annual Meeting & Exhibition.    We will be hanging out at Booth # 1915 during Exhibit hours.  If you are going to be out in Denver, please stop by and say hello.

My first LeadingAge (AAHSA) conference was in 1991 (San Francisco) when I was working at Ernst & Young.  A lot has changed in the senior housing & care industry over that span, and LeadingAge has been at the heart of much of that change: they are to be commended for their tireless efforts of advocacy, education and applied research on behalf of their nonprofit membership. 

And I have truly enjoyed being a sponsor, supporter and contributing author/speaker to AAHSA/LeadingAge events during that time.  The accepted quid pro quo of that business relationship has been making such contributions to LeadingAge membership in return for access to that membership (though I think the form of those contributions has been decidedly trending more heavily toward financial over in-kind, which I guess reflects the economic realities we live in today).

I have always felt, however, that the AAHSA/LeadingAge quid pro quo relationship – if approached from the proper perspective (i.e., having the ability to listen and learn) – offered a great deal more than just marketing opportunities.  And so as I do every year, in getting ready for this year’s Meeting, I have some specific areas of interest that I am hoping to learn more about.

Industry Consolidation
Industry consolidation in healthcare is in motion, and the trajectory is one of acceleration.  Economic realities mandate the achievement of increased efficiency and productivity as a condition of survival.  The importance of mission notwithstanding, nonprofit organizations providing healthcare will not avoid being affected by consolidation in one fashion or another.  I am curious to learn whether the leadership of LeadingAge members agree with me – and if so, what they are doing to prepare their organizations for the impact of industry consolidation.

Care Transitioning
How are members organizations reacting to the intense regulatory pressure to lower Medicare/Medicaid expenditures through what is believed (hoped?) will be efficiencies and better alignment of care needs with care settings? Hospitals are – finally – beginning to reach out to post-acute/long-term care providers to engage in conversations on this topic.  What are members doing to be prepared for those conversations?

Hospital Readmissions
A similar but more clinically-focused discussion has to do with Section 3025 of the Affordable Care Act, the Hospital Readmissions Reduction Program.  Care Transitioning is a critical element of that discussion, but I really want to understand what members are doing to embrace – or not – the ability to handle increasingly higher levels of patient acuity.

Defining the Boomer
For the past decade or so we have been discussing how the Boomer Generation is going to be a uniquely different market constituency: more demanding, more educated and informed, more willing (and able) to pay for personalized services and care.  We’re another decade-plus away from Boomers starting to have a really significant impact on provider demand, but with the leading edge of that demographic now entering retirement, what are we learning about the reality of the expectations we’ve formed about Boomers?

Information Technology
The silver bullet that’s supposed to pierce the rising bubble of healthcare costs, Information Technology holds great promise – and great peril for nonprofit organizations providing housing, aging services and post-acute/long-term care.  I would like to better understand how LeadingAge members are viewing IT investments and what risk management strategies they are employing to help guide such investment decisions.

Home & Community-Based Services
This is the area that I am most excited about, having been privy to the strategic initiatives of several member organizations that are currently planning, developing and providing service and care programs that will help seniors remain in their homes and communities.  And in each case those efforts are being developed in concert with market and regulatory-driven realities of Healthcare Reform.  I believe that – at least in the short run – innovation in home and community-based services offers a shorter path to achieving organizational financial sustainability than information technology.

Of course I have a lot more questions and areas of interest where I am hoping to learn as much as I usually do from attending the LeadingAge conference.  Please watch this space for after the conference.  I will share what I learned.  Until then, hope to see you in Denver,

Cheers,
  Sparky

Filed Under: Conferences & Trade Shows · Tagged: , ,
Oct 3, 2012

Big Data and Brand Management

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Big Data: big opportunities or big problems?  While most of what I have read seeks to position this question in the context of anticipated investments in human resources and IT infrastructure, I have a different take.  I think the most critical and salient difference in determining whether Big Data has positive or negative implications for healthcare providers will depend primarily on whether and how effectively it is utilized and managed in organizational branding.

Part I ~ Implications of Big Data
In explaining this, let’s start with a look at just a few examples of where and how Big Data will impact healthcare organizations. 

Clinical and Epidemiological Research
Healthcare providers have long been cognizant of the important role that cutting edge clinical and epidemiological research plays in helping educate and prepare them to provide evidence-based care.  They are also aware of the tremendous burden that misguided and/or shoddy research creates on both their time and talents.

At a clinical level, Big Data means being able to utilize previously prohibitive quantities of biomolecular data to test relational hypotheses much faster, while at the epidemiological level it means being aware of social cause and effect relationships much sooner.  In either instance, the impact and expectations of what to do with more information at an accelerated rate will have a significant impact on healthcare providers, as well as patient-consumers.

Consumer Empowerment
There are already literally thousands of smart phone/tablet app’s available to help individuals manage there own care.  A quite natural focus among these has been to design applications targeting chronic disease management.  As the Boomer age wave grows, so too will that portion of the patient population that is not only adept but very conversant in using electronic data and information to be highly informed and highly motivated self-care advocates.

Transparency
Though Big Data is by far not the only force driving greater transparency of financial and operational performance metrics from healthcare providers, it will be the catalyst that transforms those metrics from merely data to usable information – and unfortunately, probably a good deal of misinformation as well.  Providers will have to be both cognizant and vigilant in assessing how this emerging trend will impact their market positioning.

Implications
The common thread of these three examples is what I call the Acceleration of Digital Chaos©.  More data is always beneficial to the extent that it creates greater awareness, enhances education, expands knowledge – and most importantly, creates wisdom.  But as we know, more data does not always lead to such hopeful results.  It also often leads to more confusion, more frustration – and worst, more risk of making critical decisions based upon faulty analysis.

Part II ~ The Importance of Brand Management
Wherever there is chaos and confusion that grows out of attempts to address a basic human need like healthcare, so too exists the double-edged sword of opportunity and risk: the opportunity to bring clarity amidst the chaos in the form of high-value solutions, as well as the ever present risk of making things worse.  And there too lies the associated challenge of branding: opportunities to leverage Big Data in ways that can greatly enhance the value of your brand – or facilitate its disintegration into a pile ashes.

To make sure Big Data serves your brand rather than destroys it will require an active awareness and understanding of where and how Big Data will intersect with Brand Management.  Several examples of these intersections are offered for your consideration.

Social Media
Social Media continues to grow in importance and relevancy to the healthcare industry.  Enter Big Data and now you have a tremendously powerful vehicle for gaining valuable information and insights on patterns and behaviors – of both consumers and competitors.  

To the extent a knowledge advantage can be gained through use of Big Data, that information can be used to help position your organizational brand in concert with consumer demands and expectations – and before competitors achieve that positioning.  I cannot think of a more important market-oriented investment that healthcare providers can make at this time than exploring and understanding how Big Data will transform the way data collected through Social Media can be used to competitive advantage.

Quality and Integrity
Examples in Part I above highlight the likely potential where Big Data will generate tremendous personal anxiety, confusion and frustration.  Take the average consumer-patient looking at knee-replacement surgery in the year 2015.  Armed with 30 published research papers on the advantages and disadvantages of different techniques; over 50 web site addresses stored in the web browser with pages and pages of performance data on surgeons;  15 different self-help iPad applications downloaded to determine the most effective means of post-survey rehabilitation.  You get the idea.

So the ability of healthcare providers to be perceptually positioned as a trusted resource to cut through all of the confusion and frustration will create substantial market advantages.  But, importantly, those healthcare providers that are able to achieve a sustainable advantage will not only facilitate a more efficient and helpful pathway through the confusion – but they will do so while backing it up with consistently higher quality care than competitors.  The two must go hand in hand.

Data Security and Corporate Compliance
I saved the most important for last.  This is a hugely tremendous risk to brand value that will be attendant to using Big Data.  We read of examples every day where patient data has landed in the wrong hands.  The consequences of being at fault – whether real or perceived – for a breach of data privacy and protection could erase years of investment in building your brand overnight.

Yet it is reasonable and plausible that a breach could happen despite the most advanced and diligent efforts of prevention.  In such instance, the organizational fallback position must be a strict adherence to corporate compliance policies that clearly make the protection of personal data the highest priority – not only in theory but in practice.

Please note this post is not by a stretch intended to be an exhaustive survey and consideration of either the ways in which Big Data will impact healthcare, nor the numerous ways in which it has the potential to impact healthcare providers’ brands.  It is intended primarily to help leadership teams of such organizations begin to perform their own assessment of how and where Big Data can have a Big Impact on their future branding efforts.

Cheers,
  Sparky

Filed Under: Brand Management, Editorials & Opinions · Tagged: , , ,
Shoots & Ladders and US Healthcare Delivery
Sep 26, 2012

Shoots & Ladders and US Healthcare Delivery

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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.

Cheers,
  Sparky

 

Filed Under: Editorials & Opinions, Industry Trends & Drivers · Tagged: ,
The Trouble with Avoidable Readmissions
Sep 6, 2012

The Trouble with Avoidable Readmissions

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183911-vlcsnap_2010_05_16_21h56m32s5As a Scot (my name is spelled with one, “t” because my father wanted to be sure I never forgot), I remember with both amusement and annoyance a line from the movie, Braveheart: “The trouble with Scotland is that it’s full of Scot’s.” As I see it, the trouble with trying to address healthcare costs through reducing avoidable readmissions is that there are too many readmissions. Bear with me . . .

Avoidable hospital readmissions are the lowest of low hanging political fruit in the Healthcare Reform debate, representing an immediacy of opportunity to impact aggregate healthcare spending for very little political capital in exchange. The means of cost reduction is directly controlled by the Federal government – in the form of Medicare payment reductions. And the organizations identified as the culprit deserving of such reductions are those behemoth institutions of waste and inefficiency: the hospitals (yes, that’s sarcasm).

To be sure, there is substantial evidence where individuals discharged from a hospital stay wind up back in the hospital because of factors and events that could have been avoided. But avoided by whom – how – and at what cost? Healthcare providers of all types that will be impacted by the readmission penalty had better begin to understand the economic ramifications of how these questions are going to be answered.

As has been rather widely publicized – yet from my personal observation, up until just recently still largely ignored – the Affordable Care Act (ACA) included Section 3025: Hospital Readmissions Reduction Program. Section 3025 amended the Social Security Act such that it now requires CMS to reduce payments to IPPS hospitals with excess readmissions, effective for discharges beginning on October 1, 2012 (i.e., in a few weeks). Initially, the Program has established readmission measures for Acute Myocardial Infarction (AMI), Heart Failure (HF), and Pneumonia (PN).

Excess readmission ratios are calculated by comparing national average rates of readmission for patients discharged to a hospital’s individual experience while relying on a methodology endorsed by the National Quality Forum (NQF). I recognize this is a gross oversimplification, but all of the detail you could hope to find is now widely available – whether on the CMS site referenced above or many other organizations that have made such information available on their web sites.

For FY 2013, determination of the excess readmission ratio is based on actual discharges having occurred during the 3-year period of July 1, 2008 to June 30, 2011. According to a Kaiser Health News report, more than 2,000 hospitals will begin to see payment penalties under the program due to patients being readmitted within the 30-day threshold.  The overall anticipated impact of these penalties is approximated to be $280 million over the next year.

Not surprisingly, as with many aspects of the ACA, the Readmissions Program carries with it a great deal of controversy.  Many clinicians, including physicians, who are directly responsible for the care of those individuals represented by the statistics entering into the determination of a readmission penalty feel that readmissions are ultimately driven by acute medical needs – and patients that need to be in a hospital, well, they need to be in a hospital. Simple as that. Better to pay a relatively small penalty than have a patient die trying to avoid it goes the thinking.

Yet those involved in healthcare delivery on all sides (the clinical, the social, the community and the administrative) understand first-hand the reasonable and plausible goal that the Readmissions Program is seeking to address: a reduction in readmissions that are caused by insufficient and/or improper assistance and care available to the individual after being discharged from a hospital; i.e., the avoidable readmission.

Readmissions resulting from the natural progression of a disease state, comorbidities, unexpected and/or negative reactions to post-discharge treatment – there is legitimate concern that the Readmissions Program will interfere with clinicians’ ability to effectively manage their patients’ health in lieu of what are being considered unwarranted and unwelcomed outside influences and distractions. On the other hand, readmissions that result from a decline in condition owing to non-clinical factors, such as personal trauma associated with transferring and transitioning, the failure to follow a prescribed post-discharge treatment regimen (e.g., diet, exercise, medication), the inability to keep medical appointments – these are significant contributors to readmissions that PA/LTC organizations can have a significant impact upon.

But being able to determine cause in individual cases is going to be a monumental challenge that neither the ACA, nor the regulations promulgated for the Readmissions Program, adequately address. It is going to result in a lot of finger pointing on ward floors – and underneath the tables in board rooms. So we are left with two choices: do some more complaining and hope that the ACA is repealed (and replaced by an ultimately very similar Republican approach two or three years from now), or roll up our sleeves and be innovative in spite of the regulatory challenges.

For those PA/LTC organizations wishing to pursue the latter, I suggest they begin to invest immediately in the development of an operational infrastructure that will facilitate their ability to record, monitor and report the requisite data elements that can be used to evidence all of the contributing factors leading to hospital readmissions of the individuals under their care – clearly and unequivocally. Though, in theory, a large part of the impetus for the Readmissions Program is to engage hospitals in having accountability and responsibility for patients’ welfare post-discharge, as a PA/LTC provider I would interpret that reality as being given responsibility without authority.

Remember this: knowledge is power.  Before engaging in any type of contractual agreement with a hospital that ascribes financial responsibility for hospital readmissions, the PA/LTC organization must be in a position of negotiating strength.  That strength will come from the ability to know and understand – before the hospital does – the nature and root cause of a readmission.  Power will also come from the ability to support that understanding with evidentiary support.

The other integrated concept here, of course, is risk management.  The same knowledgebase that can be used to build negotiating strength can be used to mitigate the risks  – market, operational and financial – associated with hospital readmissions.

PA/LTC provider organizations stand to benefit in several ways from the Hospital Readmissions program.  The inherent demand generated by hospitals seeking to have greater control of post-discharge outcomes should be welcomed in light of trends away from institutionalized care.  The stronger voice many PA/LTC clinical staff have sought in dealing with hospital staff is getting a well-deserved boost.  And done wisely, there are new revenue opportunities available at a time when reimbursement is being ratcheted down at every turn.

As discussed above, however, there are also substantial performance risks that will ultimately bring down some organizations before all is said and done.  Don’t be one of those organizations.

  ~ Sparky

Filed Under: Editorials & Opinions, Hospital Readmissions · Tagged: , , ,
Aug 10, 2012

CCRCs: Healthcare Providers–Or Not?

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To be, or not to be – in the business of healthcare.  That’s the question continuing care retirement communities (CCRCs) are facing today – even though my anecdotal experience would suggest the board and c-suite leadership at many of those organizations have yet to be fully reconciled of such reality.

As reported by Alyssa Gerace in Senior Housing News, a recent panel discussion held at SHN’s inaugural Senior Housing Summit in Chicago on July 26th painted a concerning economic forecast for the future of the CCRC model.  Having been involved in near 50 CCRC project developments since the early 90s, I have some familiarity with that model – the good, the bad and what is apparently largely misunderstood.

For a segment of the senior population, typically over the age of 75, CCRCs are a very attractive retirement housing option. They offer the comfort and security of a community tailored to meet the physical and emotional needs of seniors, the social energy of a community setting and the critically important peace of mind that personal services, assistance and care are available, when and if needed, removing that potential caregiving burden from their adult children raising families of their own.

The fatal financial challenges faced by several CCRCs have been largely driven by economic realities beyond the control of those communities’ management teams.  Yes, there have been a few bankruptcies – isolated cases of weak and exposed capital structures, poor planning, mismanagement and a phenomenon the industry has always been challenged with: service creep.  But the economic malaise of the past several years has not been selective in its impact on any business enterprise involving real estate – and so it has not spared CCRCs.

Though understandably self-serving and a tad superfluous in its explanation of the development process, LeadingAge nonetheless prepared a very useful piece that effectively addresses this phenomenon of spotlighting the unfortunate exceptions in,  CCRCs Today: The Real Deal About Retirement Communities.  I refer Pub Patrons there rather than take up space here for a good rebuttal of media attempts to extrapolate isolated misfortunate into industry condemnation.

What concerns me about the future operational and financial viability of the CCRC model a lot more than market influences and capitalization, however, is the impact of Healthcare Reform.   In explaining why this concerns me, it might be helpful first to provide a short summary of how CCRCs contact with residents for post-acute/long-term care.

CCRCs generally contract with individual residents under three agreement types:
Type A: Life care ~ residents typically pay an initial entry fee (often a significant portion of which may be refundable) and a monthly fee that is adjusted for cost-of-living, but if in need of assisted living or nursing care pay no additional fees of any significance.
Type B: Modified ~ the difference from Type A is that some additional payment is required for assisted living or nursing and the amount depends on the nature of the agreement (e.g., there may be a number of free days provided before payment is required or a percent discount from full rate per diems).
Type C: Fee for Service ~ residents requiring additional care pay the full amount for that care, the same as if they had moved in directly to assisted living or nursing without having first been a resident of the CCRC, though priority access to that care may be provided them.

In my experience over the past decade, new project developments have consistently migrated away from Type A contracts to Type C in an effort to avoid the actuarial risk of providing healthcare to an aging population without the contractual means to significantly realign the revenue base generated by that population as a reflection of caregiving costs above what had been projected.  This has been a trend bolstered by the relative lack of success of long-term care insurance policies and annual healthcare inflation.

But even CCRCs that contract with residents under a Type C arrangement – and this is especially true for nonprofits (of which LeadingAge estimates comprise over 80% of all properties) – assume a consequential market and brand risk of being expected to provide healthcare to residents that may not be able to afford that care.  As noted above, the security of having access to personal assistance and nursing care as and if needed has been a fundamental part of the CCRC’s value proposition.

Healthcare Reform is going to significantly increase and accelerate these risks.  So, my counsel with respect to how CCRCs seek to strategically position themselves as healthcare providers is therefore clear: go all in or get out.  I believe the prospective economic benefits of going decidedly in either direction is a plausible strategy for long-term financial sustainability.  I believe trying to hang out in the middle until the dust settles, short of having a substantial endowment, is a recipe for financial disaster.  I have identified below several of the more compelling ramifications of Healthcare Reform to be cognizant of as those leadership teams contemplate this reality.

Intense cost pressures: although the contractual arrangements to provide nursing care at CCRCs most typically include some form of direct payment from the individual receiving care (i.e., whether through an entry fee, monthly fee or per diem fees – or some combination thereof), most communities still have significant exposure to Medicare and Medicaid.  As I have written here before, these payment sources will continue to see tremendous pressure to control aggregate spending on national healthcare, regardless of what happens politically this fall and into 2013. 

And, as of now anyway, accepting these payment sources exposes organizations to the ACA’s future reporting and transparency mandates, which need to be seriously understood and considered.  On the other hand, it is highly unlikely that future quality of care outcomes (which will directly impact revenue) can be met without incurring annual increases in direct caregiving labor costs well above general inflation.  All healthcare providers are going to have to struggle with how to reconcile that which cannot be reconciled.

New care delivery models: ACOs, medical home models, insurance exchanges, payment bundling, the potential redesign of Medicare Advantage Plans – as these models are implemented they will have an unquantifiable impact on the healthcare buying behaviors of CCRCs’ targeted market populations. They will also impact historical patient referral patterns. One can only hypothesize at this juncture the ramifications of these impacts – but to remain economically sustainable means aggressively and proactively monitoring and understanding how these care delivery models will affect an organization’s operations and financial viability.  It also means actively developing clinically-based relationships with other healthcare providers in those organizations’ markets.

Home and community-based services: Primarily driven by market demands, this appears to be an area where CCRCs have been most proactive (e.g., the CCRC Without Walls concept). But from what I have seen so far, most of the interest and activity has been in socialization, hospitality and personal/home care services. If wanting to stay in the business of healthcare, CCRCs should learn quickly what it means to be part of a community-based integrated care delivery network where revenue is tied to clinical quality performance standards that depend, in part, upon other healthcare providers through contractual relationships.  As an aside, I cannot envision a future viable business model for a CCRC that stays in healthcare and does not include home healthcare as a core element of its care continuum.

Infrastructure investments: to be a competitive provider of post-acute/long-term care in lieu of healthcare reform is going to mean having the operational, clinical and technological infrastructure necessary to assess payment risk, monitor and report on outcomes in real time, be effectively positioned to negotiate capitation contracts and be ever vigilant in assessing the emerging local market dynamics of healthcare delivery.  This is an expensive proposition that in all likelihood cannot be funded out of operations: meaning the necessary investment will require either use of equity, incurring debt or leveraging the infrastructure of other healthcare providers in the market through contractual relationships.

Tax exempt status: Though Section 9007 of the Affordable Care Act requires that only hospitals having tax-exempt status complete a Community Health Needs Assessment, how long will it be before a similar requirement is mandated for nonprofit CCRCs – especially when consideration is given to the average wealth and incomes of the populations served by many of these communities across the country.  Being licensed as a nursing care provider with tax-exempt status will ultimately require addressing the justification of that status in terms of how the CCRC benefits its surrounding community.

These are a few of the important considerations that come to mind when contemplating whether TO BE or NOT TO BE in the healthcare business.  I know there are quite a few CCRC organizations that have already recognized this reality and are proactively planning to stay in healthcare.  I have had the very good fortune to have worked with a number of them.  One thing I found they have in common: they each have assumed a decidedly outward looking vantage with respect to their future strategic positioning.

For better or worse, they have embraced the reality that being (staying) in healthcare very much means being proactively integrated into the surrounding community and healthcare provider network.  The resultant consequences of that reality may not create an attractive positioning for some CCRC organizations – and the resident populations they serve.  This is completely understandable and in many cases ought to be thoughtfully anticipated.  Those organizations may be much better served by moving toward an active adult model.  But they should get out of the healthcare business now, before it’s too late.

  ~ Sparky

Filed Under: CCRCs, Editorials & Opinions · Tagged: , ,
Jul 30, 2012

Medicaid Coverage of Nursing Care in Tennessee: Prudent, Rationing or Inevitable Reality?

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In an article published yesterday in the Washington Post, Guy Gugliotta writes about a new Medicaid policy in Tennessee, which seeks more efficient alignment between reimbursement and cost settings (my interpretation). 

This is very likely an important bellwether of state Medicaid policy that will be repeated in some fashion or other in other states, and it has unsurprisingly been met with a fair amount of controversy and concern.

Operating under a Section 1115 waiver from CMS, TennCare is the State of Tennessee’s Medicaid program, providing health care for 1.2 million with an annual budget of $8 billion. TennCare utilizes a managed care model that extends coverage to additional populations who would not otherwise be Medicaid eligible, while seeking to maintain a consistent level of quality care.  Tennessee has one of the oldest Medicaid managed care programs in the country, having begun on January 1, 1994. It is the only program in the nation to enroll the entire state Medicaid population in managed care.

On June 20th of this year TennCare released a new Nursing Facility Level of Care Guide outlining programmatic changes to its CHOICES program, which, “are designed to target Nursing Facility services to persons with higher acuity of need, while simultaneously making Home and Community Based Services more broadly available.”  This is the subject of the above-referenced article.

With this initiative TennCare seeks to increase the Nursing Facility Level of Care criteria necessary for Medicaid eligibility to a level it believes to be more in line with criteria used in other states while providing a less costly benefit for those individuals who will no longer qualify under the new criteria.  The new criteria are being applied prospectively, so no one currently qualifying for nursing care will be affected.

Under the new eligibility criteria three groups are established:
Group 1: Individuals eligible to receive care in a nursing
                  facility (NF) and requesting care in a NF;
Group 2: Individuals eligible to receive care in a NF but
                   requesting home and community-based services
                   (HCBS) in lieu of receiving care in a NF; and
Group 3: Individuals not eligible to receive care in a NF,
                   but “at risk” of NF placement and requesting
                   HCBS in the TennCare CHOICES program.

Group 3 is the population of concern and being debated from a policy perspective.  These are individuals that may have qualified for nursing care coverage under previous criteria and been eligible for HCBS cost coverage at a level commensurate with the cost of coverage in a NF.  Now the annual benefits available to this population will be $15,000.

From a consumer advocacy perspective the concern is that many individuals in Group 3 will not receive adequate services and care because the $15,000 benefit is not sufficient.  From a state policy perspective the concern is trying to allocate finite resources in a fashion where those individuals with the greatest need are afforded the ability to receive care that meets those needs.  In short, pub patrons, welcome to Healthcare Public Policy in the 21st Century.

From a pragmatic vantage, the initiative in Tennessee has very important ramifications for providers of community-based services and post-acute/long-term care.  This is an initiative that is certain to hasten the trend toward HCBS and away from care in institutional settings.  It is a threat to projected demand for long-term care in NF settings – and it is a threat to projected reimbursement levels available to HCBS providers under Medicaid.

It seems to me that any healthcare provider wishing to include the Medicaid population in its targeted market in the future look now at how to integrate BOTH NF-based care AND HCBS in its care continuum if it wishes to be economically viable and sustainable.  What do you think?

Cheers, 
~ Sparky

Filed Under: In the News, Medicaid · Tagged: , , , ,
Jul 23, 2012

Healthcare Reform Depends on Home Healthcare

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As shared in this space last week, the Council of State Home Care Associations recently completed a five-month project that was designed to gain a better understanding of how well home healthcare and hospice agencies are prepared for Healthcare Reform.  Artower Advisory Services published the summary findings and observations of that report here.  Note that throughout this post I refer to, “home healthcare” without intending to be ignorant regarding the variation in terminology and services and care provided by agencies of different types (e.g., home care, skilled home health, private duty, hospice, etc.).

Now that the survey is over and results published, I wanted to take a moment and share some background behind my passion for working with and supporting the Council’s efforts and, more generally, the home healthcare industry.  In a nutshell, I believe that if the goals of Healthcare Reform are to be achieved, there are two areas where success will be most important: Wellness and Prevention – and Home & Community-Based Services.

The former because finite resources simply cannot afford to save people from themselves forever, and the latter because the age wave will require a more efficient and effective consolidation of services and care in non-institutional settings.  And, promisingly, I believe there are great opportunities where home and community-based services can be effective in promoting and facilitating wellness and prevention – across all age cohorts.

Shortly after the March 2010 passage of the Affordable Care Act I created a reference document that summarized and organized the various programmatic funding opportunities available to organizations both directly and indirectly involved with healthcare delivery.  What struck me at the time – and does to this day – was the number of instances where home healthcare was specifically identified as a potential recipient of funding pursuant to its role in helping to facilitate the intended benefit of such initiatives.

And what also struck me at the time was the hugely important role that home healthcare must play in the evolution of care delivery models under Healthcare Reform.  There are several compelling reasons in support of this belief.  There are also significant obstacles in the way of realizing the potential of these opportunities.  I will discuss each, in turn, below.

Compelling Reasons Underscoring the Importance of Home Healthcare

Policy Advancements
First, and perhaps most important, is the continued public policy advancement that is moving US healthcare delivery away from institutional settings to individuals’ homes.  Driven by a confluence of consumer preferences (i.e., especially of the Baby Boomer Generation), desire to reduce unsustainable capital costs and recognition of the health benefits home-based care can offer, policy initiatives at both the state and federal levels have steadily been moving toward a redistribution of public funding toward home-based care, and this is certainly reinforced in the Affordable Care Act.

Valuable Positioning
Second is the existing knowledgebase that home healthcare providers possess.  They already have established business models, market intelligence, operational capabilities and the clinical acumen necessary to identify, plan and implement integrated care delivery models that bring services and care into the home.  This “ahead-of-the-curve” positioning can offer substantial advantages to home healthcare agencies as they seek to become  a valuable conduit between acute care providers and patients as part of integrated care delivery models.

Alignment with Community-Based Solutions
Third, they are quite naturally already community-based.  One of the most highly attractive programs thus far in the implementation of the Affordable Care Act has been the Community-Based Care Transitions Program.  While other healthcare provider types are in the community, home healthcare agencies very much are the community.  They are ideally situated to leverage the knowledge and awareness gained from caring for individuals in the very homes that are the foundational elements of those communities.

Ability to Transcend Care Delivery
Finally, taken together, private duty, home care, skilled home healthcare and hospice agencies represent a wider transcendence of individual service and care than any other provider type.  From providing the occasional, and as-needed, personal care services (i.e., assistance with various activities of daily living) to intensive, ‘round-the-clock medical care, home healthcare agencies are excellently positioned to facilitate holistic and integrated care delivery.

Industry Challenges

But as the ORASI© survey identified, there are substantial challenges that must be overcome if home healthcare agencies are to successfully take advantage of the opportunities presented.  Some of these challenges are within the purview of organizations to develop strategies for overcoming, while others represent exogenous considerations beyond their direct control.  Thus, to a significant degree, the latter represent important future public policy considerations that must be addressed if the desired benefits from home healthcare are to be realized.

Challenge: Fraud & Abuse
The home healthcare industry has been its own worst enemy for nearly a generation now.  The inability to self police perceptually damaging fraud and abuse has resulted in a giant target on the industry’s back that has been manifested in burdensome regulations, which have often appeared to be throwing the baby out with the bathwater.  Although widely accepted that the isolated actions of a few have resulted in broad brush castigation, perception is reality: and the reality is this is a daunting challenge the industry must address square on before it can hope to be strong participants in integrated care delivery models.

Challenge: Producing the Necessary Labor force
Home healthcare is quite obviously a very labor-intensive business.  Unfortunately, the dichotomy of projected future demand for caregivers and cost constraints holding down the ability to gain a competitive advantage through wage differential is likely to get worse before it gets better.  This phenomenon will likely be the greatest driver of industry consolidation in the near future.  Organizations that are better able to recruit, train and educate and then retain the highest quality caregiving staff will ultimately have success over competitors.

Challenge: Over Reliance on Technology
Not unique to home healthcare is the belief (hope) that technology – both care-oriented (e.g. supportive, remote monitoring,  tele-health) and information (e.g., electronic medical records, communication, operational functionality) will provide great opportunities to increase productivity and efficiency.  This is a belief that I fear will end up costing a lot of agencies their businesses.  While technology certainly offers great promise, successful agencies will recognize it for what it is: an enabler of people and processes.  If the requisite investments are not made in the latter two, expenditures on technology will only hasten the burden of financial unsustainability under Healthcare Reform.

Challenge: Non Home Healthcare Provider Acceptance
In order for home healthcare agencies to be effective participants in a world of integrated care delivery they must be able to partner with other healthcare providers in ways that add value to both those organizations – and, more importantly, their patients.  Healthcare in the US for far too long has been dominated by silos of care segmentation.  Getting different provider types to work together and across disciplines is going to require a tremendous amount of personal discomfort on the part of healthcare providers – and it is going to require a major leap of trust, particularly in the sharing of patient information.  For better or worse, the burden of building that trust rests largely on the home healthcare industry.

Policy Considerations

The home healthcare stands at the precipice of a tremendous opportunity to be the primary facilitator of innovation and the catalyst of sustainable change in how healthcare is delivered in the United States.  It is strategically better positioned than any other care provider type to embrace the underlying concepts of Healthcare Reform embodied in the Affordable Care Act.  It is also functionally and pragmatically better positioned than any other provider type to implement the several programmatic integrated care delivery initiatives of the Act.

But as identified above, the industry faces substantial challenges.  Without being able to make the requisite investments in infrastructure, knowledgebase, technology and – most importantly – caregivers, the industry will not be equipped to fulfill these expectations.  Thus, it is vital that future public policy recognize the importance of providing adequate funding necessary to develop the industry into the national care delivery network required for success.  Not only does the home healthcare industry’s success depend upon it – but the successful implementation of Healthcare Reform under the Affordable Care Act depends upon it.

  ~ Sparky

 

Filed Under: Editorials & Opinions, Home Healthcare & Hospice · Tagged: , , , ,
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