The historical relationship between hospitals (acute care) and nursing homes (post-acute care) has always been strange. Hospitals and nursing homes always have been considered to be different on many levels. Beside the obvious differences of acuity and length of stay, they differ in financial models (nonprofit, for-profit) and size.
Because of the way healthcare customers typically flow through the system, nursing homes always have depended on hospitals for their lifeblood in the form of discharges that they then convert into admissions and revenue. Due to the limited supply of hospitals in most markets, this dependence can be quite extreme.
With the coming evolution toward capitation payments and emphasis on population health, the worlds of acute (AC) and post-acute care (PAC) will become even more entwined. This movement toward greater connectedness will not be without its challenges and opportunities. As PAC has depended on AC settings for its survival, hospitals increasingly will depend on their its PAC partners for their financial health. The following is an effort to describe past and present efforts to connect both worlds as well as the challenges that continue to drive this process into the future.
PAC NETWORKS: PAST
In the early 2000s, Summa Health System in Akron, Ohio, began one of the first hospital-sponsored PAC networks in the United States. Under the visionary leadership of Kyle Allen, DO, the Care Coordination Network (CCN) began to formally bridge the divide between the worlds of AC and PAC. The CCN was a loose federation of 40 or so skilled nursing facilities. Facilities obtained membership through an application, attended meetings and participated in efforts to improve care transitions.
The CCN made some notable accomplishments, including spearheading the creation and implementation of a five-county post-acute-to-acute transfer form. It also worked on emerging issues impacting care transitions and had done groundbreaking work in the area of readmissions more than 10 years before this became such a prominent healthcare issue.
In the parlance of relationships during this time of evolving PAC networks, hospitals and nursing homes were dating. The relationship was free of commitments, and hospitals did not perform a lot of due diligence on their PAC partners. These networks gathered to foster a common commitment to quality care and smooth transitions of patients moving between respective worlds. They were collegial and collaborative with relatively few expectations of one another.
PAC NETWORKS: PRESENT
Summa Health System realized that as the healthcare industry was evolving, so must the approach of the CCN. In the summer of 2013, an effort was undertaken to reconstitute the CCN to make it more reflective of the new realities of accountable care and an AC reimbursement system focusing more on population health and penalizing poor performance by both AC and PAC providers.
While the structure of Summa's CCN is being finalized, an industry-wide shift toward more exclusive PAC networks seems to be occurring. Some of the common denominators of these evolving networks:
- Standards for PAC providers to gain initial entry into PAC networks and to maintain their membership.
- Focus on publicly reported metrics.
- The tracking of hospital-centric metrics, such as 30-day readmission rates, so that PAC providers’ performances can be evaluated on an ongoing basis.
PAC networks have effectively moved from the dating stage to a betrothal. This move is significant in that PAC providers with a shiny new diamond ring will be able to trumpet their network membership to their constituents as a stamp of approval by the universally credible AC world. The downside to the upside of PAC network membership is that nothing is necessarily forever. PAC networks will get smarter about measuring quality, and failure to to meet standards may well mean loss of network membership.
PAC NETWORKS: FUTURE
In the final stage of this relationship analogy, future AC and PAC networks will come to resemble a marriage. As these networks, accountable care organizations (ACOs) and bundled-payment quality care models evolve, they will be much more legally binding and driven by reimbursement and, most significantly, risk/reward sharing. PAC providers will at long last have “skin in the game” (for better or worse).
The promise of admissions and revenue flowing from bundled payments and ACOs to PAC providers will be intoxicating. If this is additional revenue, all the better. This added revenue will come with a price, however. Some of these new realities:
- The risk associated with not managing the population health effectively will result in revenue take-backs for PAC providers.
- The need to manage patients well will require at a minimum new models of care delivery.
- At the outside, additional dollars will need to be spent by PAC providers to provide more and/or better and/or different care and services.
If the AC and PAC worlds can successfully align their goals and priorities in the world of shared savings and risk, these arrangements will form the basis for a mutually beneficial and synergistic relationship.
If they fail, the result will be confusion and fragmentation. In the old days of “silo-based” reimbursement, this would have been largely ignored as a by-product of a messy healthcare delivery system. In the brave new world of capitation, this will result in real costs to the patients crossing the AC/PAC divide as well as the entity holding the “pot” filled with capitation rewards and risks (be they hospitals, health systems, physician practices or insurance companies).