More Hospitals Taking a Collaborative Approach to SNF Integration

Andrew J. Smith

Andrew J. Smith

Practice Management Consultant

Published January 13, 2014

A patient comes into the ED nearly dead from heart failure. He's admitted to the ICU and ultimately lands on the med-surg floor. He's still fragile and is going to need 24-7 care for at least three more weeks.

In situations like this one, access to a good skilled nursing facility (SNF) can be a boon for both the hospital and the patient. The recovering man gets safe, round-the-clock care that and will likely incur fewer out of pocket costs and aid his transition back to his home. Meanwhile, the hospital can significantly cut its length of stay (LOS) and costs.

Access to quality SNF care also plays an important roll in reducing readmission rates, which helps hospitals avoid rising Medicare penalties. FierceHealthFinance reports:

A study published in the journal Health Services Research concluded that hospitals that operated their own skilled nursing facilities had 17 percent of their patients readmitted within 30 days, versus 21 percent of those that do not operate their own SNFs. The study examined 2.8 million Medicare patients discharged from 2,477 hospitals to 15,063 SNFs between 2004 and 2006.

Some hospitals (as suggested above) have opted to integrate vertically by running their own SNFs. This approach has some distinct advantages. Denials are no longer an issue, and transition planning and communication can be streamlined. Physicians and therapists can continue rounding on their discharged patients, and the hospital gets to capture some additional revenue.

Given these advantages, you might expect to see more and more hospitals operating SNFs. But in reality, the opposite is true. Many hospitals are actually getting out of the SNF business.

Perhaps the biggest reason for this is administrative burden. Much like hospitals and post-acute rehabilitation, SNFs are a highly complex health-delivery model and demand many levels of expertise. Running one takes specialized knowledge and infrastructure that hospitals often don't have.

Cost is another issue. SNF expertise and clinical/administrative infrastructure are expensive due to constant changes in Medicare billing. Regulatory changes fueled massive waves of SNF closures in the 1970s and again in the 1990s.

So what's a hospital to do? Fortunately, it's now possible to reap the benefits of SNF access without actually operating one. This is because an increasing number of hospitals are forging collaboratives with local post-acute care providers.

Almost every community has its share of independent SNFs that vary greatly in pricing and quality. (In fact, an analysis by the Institute of Medicine found that post-acute care pricing accounted for 40 percent of all variation in Medicare spending.) Because the SNF market is highly competitive, these facilities are almost always scrambling for patients. By collaborating with local SNFs, hospitals can control costs and care for patients while ensuring the best post-acute providers are rewarded with steady business.

I had the opportunity to participate in one such collaborative while working with Banner Health, a 27-hospital health system in Phoenix, Ariz. About 60 percent of patients discharged from Banner received some form of post-acute care, and about 40 percent of these transitioned to SNFs. So the hospital had an excellent incentive to form stronger ties with these facilities.

Banner invited every SNF in the area to participate in the collaborative — so long as they were willing to report their quality, readmission and length of stay metrics. During the setup phase, we did a one-year data analysis of about one hundred local SNFs to see which ones were providing the best outcomes. The results were surprising: some SNFs were bouncing up to 57 percent of their patients back to the hospital. Others of the same size had extremely low readmission rates.

Based on this data, Banner entered agreements with the best-performing SNFs to provide each with the opportunity to accept patients directly from its hospitals. Efforts are made to provide participating SNFs with an equitable patient mix, with each facility handling the same per capita percentage of charity care. Outcome data is reviewed quarterly to ensure that patients continue to receive high-quality care.

Banner and the SNFs also worked hard to provide smooth transitions for patients. Unfortunately, at some hospitals around the country, case managers often tell patients (illegally) that they're simply going to a certain SNF, and patient choice is not provided. In addition, sometimes patients are presented with a perplexing laundry list of 50 or more SNFs but no data on the quality of care these facilities provide.

At Banner, when a patient doesn't have a specific SNF in mind, the case manager offers a choice of three high-quality SNFs. He or she explains that the facilities have been vetted and provides handouts containing information on quality metrics, mission and vision, amenities and so on. This approach respects patient and family autonomy and makes the choice an easier one.

Health systems across the country, including many Vituity partner sites, have identified hospital-SNF collaborations as a best practice that improves patient outcomes while cutting costs. At Banner and many other large health systems, the model is now being expanded to hospice, LTAC, home health and other post-acute services. And new Web-based services are taking the referral process digital.

So will this trend continue into the future? It's hard to say. A lot depends on Medicare regulations, because they determine whether or not it is fiscally viable for hospitals to operate SNFs. If the "three inpatient days" rule were eliminated allowing hospital EDs to admit patients directly to SNFs, we might see a resurgence in direct-to-SNF transfers from our EDs — and as a result, more hospitals purchasing SNFs. But for the moment, the collaborative model provides a workable solution that benefits hospitals, patients and the best post-acute providers.

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