Is your organization prepared to meet the dynamics impacting Skilled Nursing Units?
This presentation, given at this year's LeadingAge conference in Boston, MA, will leave you and your team members with industry insight into the latest trends impacting skilled nursing facilities (SNFs) as well as strategic recommendations on how to address these developments.
For more information on how Wagman can help reposition your facility, visit our website at www.wagman.com or email us directly at wci@wagman.com
2. Repositioning Skilled Nursing:
Opportunity and Challenge
Joe Wagman, Chairman – Wagman Construction, Inc.
Susan Brecht, President – Brecht Associates
Rick Barger, EVP, Treasurer – Diakon Lutheran Social Ministries
Rebecca Townsend, Chief Strategy Officer – Covenant Health Network
3. Session Overview
• Joe Wagman - Background
• Susan Brecht - Market Trends
• Rick Barger – Diakon’s Response
• Rebecca Townsend - Strategic Issues
• Discussion
6. Background
• Repositioning
o Private pay declining
o Sales of stand alones
o New SNF’s less common
o ‘Small House’ phases
o Remodels – buying time
o Segregating STC
7. Background
• Alternative ideas
o Exit? – Resident expectations
o Central facilities for system or affiliation?
o STC separate business line from LTC – physically separate
STC from LTC re quality measures?
o Outsource STC and LTC?
9. Nursing Homes: Changing World
• High demand for renovating or rebuilding nursing
homes
• Average nursing home is 45 years old
• Capital available through HUD, REITs, commercial
banks, private equity investors
• Just under 30% owned by single-site providers
• There is and will be increasing competition from
traditional providers and hospitals
10. Changes May Include
• Overall upgrade of common spaces, hallways, room décor
• Conversion to more private rooms
• Converting or developing dedicated post-acute/sub-acute units
• Dedicated short term rehab sections with all private rooms and high
level amenities
o Flat screen TV
o Upgraded furnishings
o Separate dining
o Separate entrance
o High-quality rehab facilities
• New homes average 725 SF per bed total size 2x size of existing
facilities
11. Prominence of For-Profits
• Nearly 75% of investment grade nursing homes are
owned by for-profit entities
• For-profits may be ahead of the game because of
ready access to capital through a wide variety of
funding sources, and ability to act quickly to access
those sources
• REITs have played active role in acquisition of nursing
home portfolios
12. The Green House™
• Now 12 years old
• Serves 10-12 people in
single story design that
looks like real home
• Current 183 homes across
139 organizations
• 60% are willing to pay more
• 73% willing to drive further
• Other models include small
houses and neighborhood
design
http://thegreenhouseproject.org/green-house-model
13. Mainstreet – Next Generation
• Based in Carmel, IN
• Has built 25 new projects in 5 states
• Has another 50 projects in 11 states under
development
• Typically 75-100 licensed SNF units + 30 assisted
living units
• Focuses primarily on transitional care
• Do not take long term care patients
• Average length of stay 20 days
14. Wellbrooke of Westfield
• Wellbrooke brand – partnership between Mainstreet
and LCS®
• Currently 6 Wellbrooke Centers
• Financed with private equity, construction finance, tax
increment bonds
• Model is typically 70 SNF/30 AL
o Received Senior Housing Design Awards 2013
o Consists of SNF and AL in Westfield, IN
o Image is of urban lodge
o Hotel-like amenities and appearance
http://www.wellbrookeofwestfield.com
18. Genesis Powerback Rehabilitation Centers
• Short-term rehab concept – about 124 private rooms
• Currently 10 PowerBack Centers
• “1-2-4 Promise”
assessed within 1 hour
meets therapist within 2 hours
See doctor within 4 hours.
• Length of stay 14-16 days
• Patient education after discharge and follow-up
• Powerback Rehabilitation card
• Emphasis is on client being in control
http://www.powerbackrehabilitation.com
19. Survey of Providers
• We conducted a survey of providers including most
of you here today
• Survey addressed:
o Short term rehab vs. long term care
o Source of admissions
o Changes in size of SNF
o Remodeling/renovation
o ACOs
• We received 72 responses
21. Short Term Rehab
• 77% say short term rehab admissions have increased
in the last three years
• Only 23% say they have more SNF beds than they
need
22. Remodeling/Renovating in Last Five Years
Have remodeled in last
five years
Plan to remodel
Dining 72% 48%
Common Areas 65% 53%
Nurses Station 44% 0%
Converted Semi-Private to
Private
60% 0%
Therapy Room/Gym 65% 10%
New Emergency Call System 65% 0%
23. Expanding Relationship
• 54% have or are contemplating a relationship with an
ACO
• 38% have an ownership position in a home health
organization
24. Key Takeaways
• Skilled Nursing is still an important part of the
continuum of care and providers are doing what they
must to bring it to competitive standards
• Short Term Rehab is a major driver
• Most don’t feel they have an over-abundance of
beds (perhaps due to rise in Short Term Rehab)
• Connectivity to the larger health system is extremely
important
26. Divestiture of Freestanding SNFs
• In 2005 – Sold 9 stand-alone SNF/AL facilities
o Recognized need to focus and reinvest in continuum
of care
• Acquired two CCRC Communities
• Cap-EX 2005 – 2015 -- $278 Million
o Approximately 20% or $57 Million related to SNF
• Future Cap-EX for SNFs focused on renovations
for Therapy space and short-term stay
accommodations
27. Diakon Case Studies
• Buffalo Valley – Lewisburg, PA
o 102 Beds
o New Construction
• Luther Crest – Allentown, PA
o 58 Beds
o Final phase of CCRC Repositioning project
• Hagerstown, MD
o 80 Beds
o Renovation, Face Lift, Electric Service and HVAC
28. Diakon Case Studies
• Reason we chose to build new vs. renovate
• Challenges of renovating while continuing operations
• Before and after challenges and results
29. Construction Cost Data/Incremental Revenue
Buffalo Valley Luther Crest Ravenwood
Approach New Renovation Renovation
Square Footage 75,801 21,842 33,196
Construction Costs $14,900,000.00 $2,100,000.00 $1,300,000.00
Cost per SF $196.00 $94.00 $44.00
Incremental
Revenue
$1,500,000.00 $1,400,000.00 $860,000.00
YEAR I
Incremental
Revenue
$2,000,000.00 $1,600,000.00 $1,300,000.00
YEAR II
30. Current Unit Mix – Campus Wide
Unit Mix
Buffalo Valley Luther Crest Ravenwood
Skilled Nursing 102 58 80
Personal Care/Assisted Living 40 30 110
Independent Living 90 275 65
Total 232 363 255
31. Skilled Nursing Census Data
Number of Beds
Buffalo Valley Luther Crest Ravenwood
Prior to Construction 102 60 84
Current 102 60 80
Average Number of Skilled Units Occupied
Prior to Construction 92 56 72
During Construction 93 53 72
Current 100 59 78
32. Neighborhood Concept – Buffalo Valley
• Features
o Neighborhood concepts with separate activity/dining for each neighborhood
o Semi-private rooms with toe-to-toe lay out offers privacy
o European showers in each room
• Challenges
o Higher construction costs – estimated to add $100 SF
o Higher operating costs
• Strong support from Lewisburg, PA community
o Capital Campaign raised over $600,000.00
34. Revenue per Patient Day
$0
$50
$100
$150
$200
$250
$300
$350
$400
Buffalo Valley Luther Crest Ravenwood
Prior to Construction During Construction Current
35. Operating Expenses per Patient Day
$0
$50
$100
$150
$200
$250
$300
Buffalo Valley Luther Crest Ravenwood
Prior to Construction During Construction Current
36. Operating Margins per Patient Day
$0
$20
$40
$60
$80
$100
$120
$140
Buffalo Valley Luther Crest Ravenwood
Prior to Construction During Construction Current
37. Conclusion/Lessons Learned
• Building new
– Neighborhood concept costs more to build and operate
– Planning should include consideration of post construction operating costs—
internal and with contracted service providers
• Renovations
– Construction while operating requires daily communication and a team
approach between staff and contractor
– Strong acceptance from both referral sources and residents
• Future plans
– Expanded Therapy space to accommodate increased short-term stays
– Renovation of resident rooms and common spaces
39. Impact of Change in Health Care Reform on
Continuum of Care Models
• The “sea of change” is the issue of sharing risk as
systems are now expected to manage their
populations health
o Accountable Care Organizations
o Bundled Payment Models
o Medicare Advantage
o Medicaid Managed Care
o Acute Care Systems
• Readmission Penalties
42. Person Centric Continuum:
Post Acute Network’s Opportunity
Subacute
Rehab
Memory
Support
Skilled
Nursing
Respite
Care
Assisted
Living
Supportive
Living
Senior Health &
Wellness
Center
*Community Based Services
Wellness Program Assessment
Care Transitions
Planning &
Management
Independent
LivingAdult
Day Center Services
Memory
Support
Asst’d
Living
Home Health
Care
Skilled
Nursing
Hospice Units
ACUTE
Transitional
Care
*Transportation; Parish Nursing; Counseling; Meals-
on-Wheels; Home Care; Home Repair/Adaptation;
Emergency Response System; Remote Monitoring
(Technology)
Affordable Housing
With Services
43. Strategies to Assure Relevance
• CCRC’s eliminating skilled nursing from continuum
entirely
o Contractual relationship with nearby skilled
o Visit residents regularly while in skilled to assure smooth
transition
o Provides high level of service & staffing within their
supportive, assisted or personal care – also providing
service through Home Health.
o Positioned for future bundled payments where location is
less important than service levels.
44. Strategies to Assure Relevance
• CCRC’s size skilled care only for residents – some as
small as 10 to 12 “beds”. Particularly in full Type A
contracts.
• Joint Ventures being created to expand continuum
while limiting risks
o Interlude – restorative suites
o Benedictine, Allina Health and Presbyterian Homes – joint
venture designed along 5-star hotel model
• No additional Medicare $ yet as improved outcomes or decreased
lengths of stay have not been demonstrated
o Specialty Services – such as geri-psych – Volunteers of
America
45. Strategies to Assure Relevance
• Renovations moving to “neighborhood” models for
increased flexibility of program, enhanced
marketability and opportunity for culture change.
• Joint Ventures for Home Care, etc. – Ohio – Life
Enriching Communities / Episcopal Retirement Homes
and Blackstone.
• Post-Acute Networks being formed for shared risk in
bundled payment models: Grand Rapids, MI and
Cincinnati, Ohio
• Clinically Integrated Deliver models such as Covenant
Health Alliance of Pennsylvania - CHAPa
46. Not for Profit
Affiliates
Covenant Health Alliance of
Pennsylvania
Integrated Quality Delivery Post Acute Network
Serving
seniors
Acute Care
Partners, Payors
Managed Care Single
Point Contracting for
the Network
Care Transitions Quality Initiatives Consulting –
Process Improvement
Education and
Training
47. Clinically Integrated Post Acute Network:
Quality Initiatives: Key Metrics
• Process Improvement
o How closely best clinical practices are followed
o How well facilities enhance patient’s experience
o How well we perform on each measure
o How much improvement on each performance
measure was achieved compared to established
benchmarks.
48. Clinically Integrated Post Acute Network:
Quality Initiatives: Key Metrics
• Analytics being measured throughout the Network
o Unnecessary Hospitalizations and Readmission
o All Cause Chronic Disease Conditions: CHF, COPD, PNE, Diabetes,
Infection
o Length of Stay
o Preadmission, Post-discharge Patient-Centered Care Planning
o Medication reconciliation
o Hospital Compare, Home Health Compare and Nursing Home
Compare:
o 5 Star Rating: Inspection, Staffing, and Quality Measures
o 18 Quality Measures
49. Clinically Integrated Post Acute Network:
Quality Initiatives: Key Metrics
• Analytics being measured throughout the Network
o Unnecessary Hospitalizations and Readmission
o All Cause Chronic Disease Conditions: CHF, COPD, PNE, Diabetes,
Infection
o Length of Stay
o Preadmission, Post-discharge Patient-Centered Care Planning
o Medication reconciliation
o Hospital Compare, Home Health Compare and Nursing Home
Compare:
o 5 Star Rating: Inspection, Staffing, and Quality Measures
o 18 Quality Measures
50. Clinically Integrated Post-Acute Health Network
Additional Advantages
• Provides a single point of entry into continuum of services
o Match need with capacity (skills and occupancy)
o Match need regardless of location
• Skilled Nursing
• Home Health
• Hospice
• Palliative
• Home Care
• Other
o Provide feedback regarding plan and outcomes
• Environment for study – UTI example, Pharmacy study, increase acuity, pay for
performance
• Resident Satisfaction measures
• Enhanced Informatics –role in support of collection, analysis and consolidation of
data.
• Quality review ongoing for all members and business partners – process
improvement resources readily available when necessary.
51. As the landscape is changing…Opportunity
• Bundled Payment models offer opportunity to determine models of
care and support with improved outcomes and reduced costs.
Continuum providers are best suited to consider this model
however risk concerns require mitigation. Perhaps a network or
joint venture.
• Hospital systems and payors are just now beginning to acknowledge
the significant role which senior service providers, particularly not
for profit, can play for their health populations.
• Strategic repositioning of the continuum is essential – includes
capital improvements, technology, message of measureable
outcomes and redefinition of quality care.