INDUSTRY INSIGHTS | FALL 2011 EFFECT

The Role of Senior Care Organizations in Health Reform

by Rob Schile

If you are a health care provider that is not a hospital or medical group practice, determining where you “fit” as part of health care reform can be challenging. With so much of the regulatory focus aimed at doctors and hospitals, it is easy to understand why other providers are feeling at a loss in determining their future role. Add to this the regulatory complexity and magnitude of potential change and the feeling of uncertainty only escalates.

Here are some practical guidelines to help senior living providers identify opportunities.

Know the regulations

Even though the regulations are aimed more directly at hospitals and medical group practices, understanding these regulations is critical for other providers to identify how they can play a vital role in supporting the reform transition. For example, beginning on October 1, 2012, hospitals will be penalized for having excessive readmissions and the penalties will be applied against all Medicare inpatient payments.

To reduce avoidable readmissions, hospitals will partner with skilled nursing facilities, home care, and other community services providers. To be an effective partner, all post-acute providers should understand the penalties and incentives associated with readmissions, so they can play a role in reducing them.

Understand payment reform and new contracting strategies

A key concept in health care reform is to “bend the cost curve.” From a payment perspective, this means reducing the total payment outflow for health care services. There are many ways to accomplish this including reducing utilization of services, offering services in lower cost settings, and providing better preventive care to avoid unnecessary, more complicated care later.

The current fee-for-service payment system has built in disincentives to accomplishing any of these, so providers at the forefront of reform will be searching for new contracting strategies with third-party payers. These new strategies will include sharing in cost savings generated from changes that bend the cost curve, as well as additional incentives for achieving certain quality parameters and patient satisfaction indicators. To earn these incentives, hospitals will be looking for partners who can help them achieve the goals outlined in these contracts.

Assess organizational strengths

Transforming the health care delivery system will require collaboration among all health care providers, which will be very different from the historical siloed approach. Effective collaboration will require organizations working together to maximize the strengths of each other and minimize the weaknesses.

Providers at the forefront of health care reform will be looking for partners who have strengths that will offset their own weaknesses, or strengths that will supplement the strategic direction in which they are moving.

Successful collaboration will require an honest assessment of skills and attributes in order to determine strengths, weaknesses, and your potential to combine with other providers to improve the overall quality and cost of care in the local community.

Proactive communication

The next step is to proactively communicate with other providers on how your organization can be an effective partner. We have heard that some organizations do not appear interested in engaging in discussions with other health providers. As is the case in any significant transformation, there is a transition period before strategies and alliances can be formed.

For example, all providers need time to understand the regulations themselves. They also need time to assess their own organizational strengths and weaknesses, and develop parameters around what attributes define a good partner.

Currently, many of these organizations have moved through this understanding period, and are actively engaged in discussions with providers they have sought out, who can help them succeed in the future. Putting together a portfolio that demonstrates your understanding of the regulatory and payment reform changes, and the strength your organization can bring to a collaborative effort—will position you at the front of the line when it comes to identifying and selecting potential partners.

The transformation of the health care delivery system and all its moving parts is complex, and the future is filled with unknowns. However, within this mass of complexity and ambiguity there are tremendous opportunities as well. Those leaders who are driven to stay informed and educated, have the courage to honestly self-assess organizational strengths and weaknesses, and can stretch their comfort zones through new collaborative efforts—will be the first to position their organizations for success in the transformed world of health care.