Partnering with Hospitals

From volume to value: A roadmap for skilled nursing providers to transform relationships with acute care hospitals

Without question, the new face of American medicine has begun to take shape and will continue to transform relationships among healthcare providers across the continuum. Those that will thrive in this new environment will have proactively forged new, meaningful relationships based on delivering value, defined as better patient outcomes on lower overall costs. 

Implementation of the Affordable Care Act (ACA) is in full swing, along with a multitude of concurrent initiatives to support the CMS Triple Aim goals: improve care, reduce overall costs and better manage a population of patients. While different providers and markets are experiencing varying levels of intensity of change, all hospitals are facing growing incentives to better coordinate care with all post-acute providers, and in particular, skilled nursing facilities (SNFs).

SNFs have the highest rates of hospital readmissions across all post-acute care provider types. Not surprisingly, the attention of hospitals is focused on partnering with SNFs to improve care transitions and reduce unnecessary readmissions. However, other key provisions impacting hospitals in 2013, including the onset of hundreds of accountable care organizations (ACOs) and bundled payment arrangements throughout the country, have expanded the focus to creating closer partnerships with post-acute providers in order for hospitals to achieve the Triple Aim goals (improving health, improving healthcare and lowering costs by transforming the finance and delivery of healthcare) and navigate into a risk-bearing future successfully. This provides a unique opportunity for SNFs to proactively reposition themselves from a vendor and referral destination for hospitals to a partner and value-driven solution to address some of the challenges being faced by hospitals.

Determining Which Hospital Would Be a Good Partner
To successfully reposition the relationship with hospitals to one that is based on value, as a skilled nursing provider, you must have a well-defined strategic roadmap that creates and maintains a compelling value proposition clearly linked to the needs of hospitals in your market. The first step in creating this roadmap is determining which hospital(s) in your market would be a good partner. To do this, you should seek to identify the following:

  • Is the hospital part of a health system or affiliated network that includes other hospitals?
  • Does the hospital or health system operate and/or have ownership interest in its own post-acute components (home health, skilled nursing facility, etc.)?
  • Does the health system have, or is it contemplating, shared risk payment arrangements for private insurance or Medicare fee-for-service such as bundling or ACOs?

The answer to these questions will tell you the reliance of your potential hospital partner on unaffiliated post-acute entities and the degree of risk they are facing as they move from fee-for-service toward population-based models of care. For example, if a potential hospital partner is considering the development of an ACO, then their interest in aligning with SNFs is even greater.

To further narrow your focus to a target hospital or hospitals, you should understand their unique needs and where your organization can directly align your value proposition and strategic roadmap to address those needs. This will involve conducting research and data analysis from publicly available and no-cost sources such as Hospital Compare, as well as pursuing other data sources to obtain hospital discharge data such as average lengths of stay and volumes in key diagnosis-related groups (DRGs). Hospital discharge data is available and can be requested in some states from the state healthcare agency responsible for data collection, or if not available in your state, can be purchased from third-party vendors.

From the data, ask these questions:

  • Are the readmissions rates for CHF, COPD, and AMI for hospitals in my market at, below or above the state and national averages? Can I help with reducing readmissions?
  • Can I help with creating care pathways for common conditions discharged to SNFs which would decrease the DRG average length of stay?
  • Are there conditions being admitted to the hospital which I could help avoid or reduce by caring for those patients in a SNF setting?
  • Can I be a solution for any other problems or challenges these hospitals are facing?

In our work, we have found that some hospitals continue to be challenged by long average lengths of stay for clinical conditions where SNFs can offer a solution by creating smoother patient transitions and defined clinical care pathways with the hospital. Packaging a defined program around these clinical conditions to approach the hospital has clear and tangible value to them. From the review thus far, you should narrow the potential hospital partners in your market based on their fit with you as a partner and begin to formulate your partnership strategy. This strategy should be focused on those areas where you’ve identified a need or challenge and where you can directly provide a clearly tangible solution to the hospital.

Developing a Value-Based Partnership Strategy
In formulating your strategy, it’s now time to engage key leaders within your organization in a series of strategy development sessions. Review the research and data analysis you’ve completed and validate the hospital target(s) and their unique needs and challenges.

For the target hospital(s), based on this research and knowledge about a hospital’s interest in risk-based payment, ask these questions:

  • What gaps can we alone fill for the hospital or health system and how can we help them be successful?
  • Can we create a better value proposition by creating an alliance with other aging services providers and then approaching the hospital or health system as a provider network?
  • What data and information about our patients can we share with the hospital to build a common knowledge base around what occurs with a patient after discharge from the hospital to begin to gain alignment in strategies to improve care and reduce costs?
  • What two steps can we take in the next month toward a value-based partnership with one or more of our targeted hospitals or health systems?

For example, we are seeing hospitals increasingly need more medically complex care to be delivered in SNFs which can be met with highly specialized clinical program development around the specific needs of a particular clinical condition. The ability to care for these medically complex patients with the clinical skills to prevent readmissions, achieve good quality and functional outcomes and ultimately discharge patients to home will differentiate those SNF providers that are best in class from those that are not.

Once you determine where your facility can meet specific hospital needs, take a proactive approach to reaching out to the target hospital and request a meeting with key leaders. But before initiating this meeting, prepare by putting together a presentation that clearly articulates who your organization is and what programs and services you offer, shares data on your patients (volume by diagnosis group, 30-day readmissions rates, quality outcomes, average length of stay, etc.), and defines your current areas of focus and future priorities. Finally, relate all of this back to the information you gathered and interpreted about the hospital and ask them to validate what you have learned and clarify outstanding questions you have.

The meeting goals should partially be about educating hospital leaders and articulating your value as a healthcare provider in your market as well as launching the beginning of an ongoing dialogue with the hospital about their needs and challenges and where you directly can partner together to develop solutions.

The Future Is Now
Hospitals have awoken to the reality that the siloed walls must come down and that cross-continuum relationships with post-acute providers are key to achieving the Triple Aim, especially in vulnerable populations. Throughout the country, hospitals are moving rapidly to form narrow or “preferred provider” networks.

These networks create referral pathways for the hospital’s patients and are chosen based on providers’ ability to demonstrate quality outcomes, manage complex patient populations through evidence-based protocols, and manage overall costs of care.
It is likely that if you are not being invited to network formation meetings, then you are at risk for being left out. SNF providers should act now to develop your value to hospital partners and proactively seek a preferred provider relationship that can become the basis for a longer term, more meaningful partnership in the future.

Brian Fuller has extensive experience as a senior executive for an integrated post-acute healthcare organization and was responsible for positioning the system for future healthcare delivery environments. He has been actively involved in the Center for Medicare and Medicaid Innovation’s Bundled Payments for Care Improvement (BPCI) initiative, both authoring applications and serving as an expert panel reviewer for CMMI to review round one BPCI applications. He is currently senior consultant for Health Dimensions Group.


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