Last year, Banner Health officials investigated the operations, culture and quality of care at nearly 100 skilled-nursing facilities in the greater Phoenix metropolitan area.
The due diligence was done to limit the facilities recommended to patients leaving its hospitals who needed short-term skilled-nursing care, which outside the hospital can be in a nursing home or in stand-alone facilities. Of the more than 90 applications Banner received for inclusion in the select group, the system chose only 34 SNFs.
Those preferred providers agreed to work closely with Banner to return patients home quickly and prevent repeat hospital visits, in exchange for a greater volume of referrals. That could increase Banner's margins and save Medicare money. It also may shake up the Phoenix-area skilled-nursing market.
Not surprisingly, facilities excluded from the Banner network have not accepted the decision quietly. “Some were not so kind,” said Lisa Frank, Banner's senior director of post-acute services.
In addition to Banner, other systems creating select networks of SNFs include Catholic Health Initiatives, the Cleveland Clinic, Henry Ford Health System, Partners HealthCare and Atrius Health. They are requiring facilities to submit applications that include quality data, questionnaires and interviews, and they are typically selecting less than a third of the SNF facilities in their markets. Some hospitals and health systems already are finding that using preferred SNFs leads to shorter lengths of stay in the nursing facilities and reduced hospital readmission rates.
Nationally, 1 out of 5 patients in traditional Medicare who leave the hospital go straight to a skilled-nursing facility, which is covered under Medicare Part A for a limited period of care. Now, hospitals want more influence over where patients go and what happens while they are there. Under preferred networks, patients covered by traditional Medicare generally have their choice of SNFs. But hospitals hope to sway their choice by convincing them the quality of care is better in the preferred network.
“Patients end up making the right decision a lot of the time,” said Dr. Tarek Elsawy, vice president of regional medical operations and affairs for the Cleveland Clinic regional hospitals and family health centers. Elsawy's system used infection rates, length of stay and hospital readmission rates to select eight preferred nursing homes with SNF units, though it is looking to expand that network.
Preferred SNF networks represent an aggressive new strategy by hospitals to gain more control over quality and costs in the largely independent skilled-nursing facility sector. SNF operators range in size from mom and pop facilities to large national companies such as Kindred Healthcare, Genesis HealthCare and ResCare.
Hospitals are seeking to hold post-acute-care providers accountable because they have more at risk under value-based payment models.