As health systems like BayCare consider inquiries from rehab providers looking to partner, they must decide whether it makes more sense to join up or go it alone. There are pros and cons of both.
Hospitals are increasingly on the hook for the total cost of patients' care under Medicare bundled-payment programs or Medicare Advantage plans. In that environment, executives said they prefer to have ownership over all aspects of their treatment, including—if necessary—inpatient rehab.
"To be able to do that in a continuum of which you have complete control is a potentially even more reliable way to ensure, first and foremost, optimized care for every single patient," said Tom VanOsdol, CEO of Ascension Florida and Gulf Coast. "And secondarily, optimized performance under any episode-based payment methodology."
Ascension Florida and Gulf Coast is also taking calls from rehab providers about joint ventures. The system doesn't currently offer inpatient rehab, and VanOsdol said they're actively considering the best way to add it. It'll likely make more sense to insource, especially because the health system participates in iterations of Medicare's Bundled Payments for Care Improvement program and its Comprehensive Care for Joint Replacement model, he said.
For their part, rehab providers argue that outsourcing to them and succeeding under value-based contracts aren't mutually exclusive.
Bundled payments are easy to manage under established partnerships with rehab providers, said Mullin, of Select Medical. Hospitals can easily track patients' progress. If there's not a relationship, it can be difficult to transfer patients to rehab in a timely manner, potentially resulting in costly delays, he said.
Orlando Health, a 10-hospital system that's growing rapidly, with $1 billion in active construction projects, is yet another system looking to grow its inpatient rehab offerings. It already has a 53-bed unit at one of its Orlando hospitals, but is assessing where to expand and by how much, said Matt Taylor, Orlando Health's vice president of asset strategy.
It may make sense for Orlando Health to partner with a provider that's solely focused on inpatient rehab, Taylor said. The system has already entered joint ventures on home care, urgent care and hospice services.
"You might want to think about, 'Can we do this better, faster, cheaper and for higher quality by partnering with someone that only does this?' " Taylor said.
But increased participation in value-based payment could also mean providers have incentives to keep patients out of expensive inpatient rehab facilities if it's not entirely necessary. They might instead refer patients to home care or outpatient physical therapy.
If that plays out, Florida will soon have an overcapacity of inpatient rehab beds, given all the construction underway, said Doug Baer, CEO of Brooks Rehabilitation, a not-for-profit rehab provider based in Jacksonville. That said, Florida's rapidly growing population is adding demand, he said.
"The more prevalent those models are, I think some of the utilization of higher-cost facilities—which are inpatient facilities—are not as much," Baer said.
Nathan Carroll, assistant professor of health services administration at the University of Alabama at Birmingham, was among the healthcare experts who predicted that scenario. But the results of his 2019 study suggest that participation in Medicare's BPCI program doesn't make hospitals any less likely to refer patients to their own inpatient rehab.
"What it suggests to me is that maybe the financial incentive under the bundled-payment program isn't stronger than the financial return for treating patients at the inpatient rehab that you own," Carroll said.
Carroll's study also found that Medicare paid more for hospitalizations—inpatient and post-acute combined—in cases where hospitals owned inpatient rehab compared with when they owned skilled-nursing facilities and home health services.
If those results hold true in Florida, the federal government can expect to spend more on care when the new inpatient rehab facilities come online, Carroll said.
"Post-acute is a big concern with respect to controlling the overall Medicare budget," he said.