The senior care market was one of the few healthcare sectors to avoid many of the major changes in the Affordable Care Act. But the market is not impervious to what is happening with reform. Instead of a direct impact, many senior care providers are beginning to experience a “trickle down” effect that will dramatically change the way they do business in coming years. “The law accelerated a number of trends that were happening in the market that will have tangible impacts for [senior care businesses],” said Jim Fields, a partner with the Health & Life Sciences practice at Oliver Wyman. Fields said the industry is moving toward a more holistic model of care, like that promised by accountable care organizations (ACOs). This means providers will no longer be able to care for patients only inside their facilities. They will have to form partnerships with other organizations, like hospitals, in ways they haven’t before. They will also need to collect data showing they can save money and improve quality in order to compete for those partnerships.
[See also: Senior housing and care industry M&A driven by smaller operators.] It has historically been difficult to differentiate cost and quality among businesses in the senior care industry, Fields said. These things “arguably didn’t matter much and weren’t rewarded,” he noted. Now that cost and quality will be assessed, high-performing organizations should be able to differentiate themselves and vie for patient volume. Readmissions is a key data point that hospitals are focusing on in the post-reform era, said Shawn Scott, senior vice president of corporate sales for the post-acute care division at Medline, a national medical and surgical supplier. Hospitals hope to reduce readmission rates and want to partner with post-acute care providers who can help them accomplish this. “Many of our hospital partners have 60 nursing homes in a geographic area they serve and may be whittling that down to 16 preferred providers,” he said. “And they can’t afford to have a post-acute care partner that is going to increase their costs.” In addition to their data collection requirements, senior care providers will also need new technology to connect with their hospital partners. Under the ACO format, treatment protocols – and reimbursement – aren’t focused on a single episode of care, but rather tracking a “life” through the system. “We are trying to get hospitals and post-acute care providers to communicate better,” Scott said. “They are going to have to make sure that when a patient goes all the way through the system, they are monitoring risk with colleagues outside their walls.” Collaboration with partners may change the very nature of the senior care business model. Instead of providing services that align with their own strengths, they must offer services that compliment their partners. Kris Hansen, CEO of Western Home Communities in Cedar Falls, Iowa, said this is one of the first things his organization learned when they began determining how to evolve as an institution under health reform.
[See also: Nursing home alliance offers recipe for post-acute system reform.] Western Home is a large continuing care retirement community that provides private duty home health, companion care and skilled nursing. Hansen said the organization was trying to figure out how to become a preferred partner under an ACO model of care, but there isn’t yet a clear vision of that model in the industry. So instead of waiting to see how others do it, they decided to take the lead. “I equate it to wanting to be in the front seat helping to drive where we are going,” he said. “We might only be operating the radio, but I at least want to be in the front seat instead of sitting in backseat along for the ride.” They began talking with ACOs and other systems to determine ways they could collaborate, what they could eliminate and how to be more efficient. They ultimately settled on Unity Point, one of the largest ACOs in Iowa. The two organizations created a contractual agreement through which Western Home provides caregivers and nurses for Unity Point at Home and Unity Points Hospice. The same caregivers staff Western Home’s assisted living facility, so patients receive continuity of care. “We are all trying to do this together,” Hansen said. “We’re trying to treat codependency in a good way.” Senior care providers are going to have to do one of two things in the future, Hansen said. They will either have to provide the entire cycle of care on their own or figure out how to fit inside the ACO model with other providers. “We are ramping up our skill sets to take care of different folks than what we were used to in the past,” Hansen said. “We are developing those skills that our partners are going to demand from us.”