Partners HealthCare is closing one of its rehabilitation hospitals, highlighting the tenuous future some health systems are facing in long-term acute care, and the opportunity for others.
Partners’ Spaulding Rehabilitation Network is closing its 160-bed North Shore hospital in Salem, the former Shaughnessy-Kaplan Rehab facility, in the face of steep business challenges with federal reimbursement changes.
In October, the Centers for Medicare & Medicaid services is going to start applying new admitting criteria for long-term acute hospitals that “will dramatically reduce the types of patients that Spaulding North Shore is allowed to admit,” Spaulding officials said in a statement.
Under the new policy, long-term acute care facilities will be paid at the full Medicare prospective rate only for patients who spend at least three days in an ICU or four days on a ventilator. LTAC care for other patients will be reimbursed on a per diem site neutral rate that amounts to less than the PPS rates on average.
“These new regulations, coupled with a consistent, multi-year decline in inpatient census, have resulted in an untenable situation,” Spaulding officials said. “Sadly, it is no longer viable to continue Spaulding North Shore’s inpatient services and we will discontinue inpatient operations by September 30, 2015.”
Some 300 employees will be impacted by the closure, although they may find jobs elsewhere within the Spaulding or Partners system. After the closure of the North Shore hospital, the Spaulding Rehabilitation Network will include three other hospitals, 23 outpatient centers and three skilled nursing facilities.
“Our primary interest at this juncture is to continue to provide high quality care to our patients and to support our staff during this difficult transition,” Spaulding leaders said. “We will continue to provide inpatient and outpatient care at all other Spaulding hospitals in Charlestown, Cambridge and Cape Cod, as well as our skilled nursing facilities in Boston and our outpatient sites on the North Shore.”
Also on the horizon for long-term acute care financing is the so-called 25 percent rule. Starting in 2017, long-term acute care hospitals that receive more than 25 percent of their patients from a single referring hospital will receive payment reductions.
Though the Medicare changes are challenging health systems like Partners and may spur more closures, they're likely to be beneficial for some in the long-term acute care business, such as Kindred Healthcare, the nation’s largest provider of post-acute care services.
The new regulations are an “opportunity to develop clinical programs and services that better align cost and care over the implementation period to appeal to ACOs, managed care organizations and others,” Kindred said in a presentation at the JPMorgan Healthcare Conference in January. They offer “significant clarity and will allow Kindred to organically grow patient volumes and leverage existing capacity.”