Hospitals select preferred SNFs to improve post-acute outcomes

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.

“We definitely think there is a substantial opportunity to reduce cost and improve quality,” said Christina Severin, CEO of Beth Israel Deaconess Medical Center's physician organization, which created its own skilled-nursing network.

Banner has found that patients sent to preferred facilities have stays that are five to seven days shorter than those sent to nonpreferred facilities. And all but one facility in Banner's network hit their targets for readmissions.

Atrius Health, which selected 35 SNFs out of 100, found that average length of stay in preferred facilities is no more than 15.8 days, compared with 22.3 days outside the network, said Dr. Richard Lopez, Atrius' chief medical officer. And hospital readmissions are 25% lower for patients using the preferred network.

The potential for savings is significant. Nursing home-based SNFs are Medicare's single biggest expense for post-acute care. The CMS spent $28 billion on skilled-nursing care in 2013, up from $13.6 million in 2001. SNF costs vary widely across the U.S. for reasons unrelated to local costs or medical needs, the Institute of Medicine reports.

For skilled-nursing facilities that are excluded from preferred networks, the loss of patients could be critical. “For many providers, it could be life or death,” said James Michel, director of Medicare research and reimbursement for the American Health Care Association, which represents nursing homes.

Health systems using preferred networks have developed criteria for selecting SNFs using state health and safety reports and quality measures reported to Medicare. This includes how well nursing facilities prevent pressure ulcers, manage pain and provide vaccines. Hospital officials also scour Medicare billing data to review facilities' average length of stay and what percentage of patients return to the hospital within 30 days.

Michel said some systems are setting impossibly high standards, and he urged hospitals to consult with nursing facilities in developing qualifying criteria. For example, some hospitals are requiring skilled-nursing homes to have electronic health-record systems, but nursing-care facilities generally are far behind hospitals and medical practices in this area.

Of 140 skilled-nursing homes that applied to be included in Partners HealthCare's Massachusetts' network, Partners selected 47. Two facilities operated by Hebrew SeniorLife—Hebrew Rehabilitation Center in Boston and its campus in Dedham—made the cut. Partners now reports data back to the Hebrew Rehabilitation Center so the facilities can track their performance on referrals, length of stay, readmissions to the hospital and other measures.

Hebrew Rehabilitation now sees more Partners patients, but they don't stay as long, said Mary Moscato, president of Hebrew SeniorLife's healthcare services and Hebrew Rehabilitation Center. The shorter stays have created enough capacity to meet a larger demand from Partners, she added.

Another skilled-nursing home, Wingate at Boston, did not make Partners' cut. Deepa Eberlin, the facility's administrator, said she plans to reapply. “Everybody wants more business from them,” she said.

Other facilities rejected by Partners HealthCare appealed the decision. “Our message is that we have set clear criteria and we're happy to work collaboratively” with nursing homes to improve their quality, said Dr. Sreekanth Chaguturu, Partners' vice president for population-health management.

Health systems that have established preferred networks are working closely with their SNFs. Some have deployed doctors and care managers to the SNFs to better manage care. They also are collaborating with the preferred facilities on health information technology.

In Lincoln, Neb., Catholic Health Initiatives selected half a dozen skilled-nursing homes for its preferred network. CHI found that return trips to the hospital within a month of discharge declined to 11% last December, from 15% when the preferred network was launched in April 2014.

Aimee Middleton, administrator of the Southlake Village Rehabilitation and Care Center, which was selected by CHI, said the preferred facilities in Lincoln have seen more patient volume as a result of the network arrangement. In addition, working more closely with CHI's hospitals has made physicians and hospital staff more aware of the services skilled-nursing facilities offer.

For example, Southlake can administer intravenous drugs. In addition, the facility now employs only registered nurses to care for rehabilitation patients, allowing the facility to care for more complex patients, Middleton said. That could help reduce hospital readmissions.

Tamara Cull, CHI's national director for value-based payment, agreed that the partnership has benefited both sides. “We learned as much from them as they learned from us,” she said.