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 SNFs Are Partners of Choice for Many Hospitals in Value-Based Care Models

A new white paper by Leavitt Partners examines how skilled nursing facilities (SNFs) are increasingly viewed as economically and clinically viable partners by hospitals and health systems looking to reduce costs and increase efficiencies in value-based payment systems.

This is because SNFs are often best-suited to manage the “acuity cascade,” in which patients are transitioned more quickly from higher-level, higher-cost environments into lower-level, lower-cost care settings, Leavitt said.

The report, “Optimizing the Value of Skilled Nursing Facilities (SNFs) in Value-Based Care: Insights for Hospitals & Health Systems,” calls post-acute care (PAC) “the new frontier of opportunity for hospitals, health systems, and risk-bearing entities engaged in value-based payments and quality-of-care improvement programs.”

Natalie Burton, project manager, Leavitt, says the organizations that work with SNFs can cut costs and improve patient care through true care coordination. Hospitals and others that skip the SNF in the care continuum are not truly coordinating their patients’ care, she says. They also are missing an opportunity to align their interests with SNFs and to deliver high-quality care while optimizing episode costs.

The report details how hospitals and health systems, along with all stakeholders in the health care delivery and reimbursement world, are in a rapidly changing Medicare and commercial payment environment.

“They are increasingly responsible for reducing costs and meeting complex quality standards, while caring for patients and populations with unique needs,” Leavitt said. “Innovative initiatives—originating from the Center for Medicaid and Medicare Innovation and commercial payer early-adopters—are shifting how health systems approach revenue, risk, and quality incentives.”

These programs include, but are not limited to, hospital-based value purchasing; the Hospital Readmissions Reduction Program; accountable care organization (ACO) models like the the Medicare Shared Savings Program and Next Generation ACO Model; and episode-based payment initiatives such as the Bundled Payment for Care Improvement Initiative, Comprehensive Care for Joint Replacement Model, and Oncology Care Model.

“Under these programs, hospitals and health systems are feeling pressure to reduce costs,” the report said. And some of the first places they look to do this are from traditional hospital and physician revenue streams, such as the emergency room, observation stays, procedural/surgical interventions, intensive care unit and critical care provisions, and diagnostics. All are under threat from value-based models that look to low-value treatment, Burton says.

This is where the acuity cascade comes in, the Leavitt report said, as a method hospitals use to trim cost is to discharge patients more quickly. “The resulting acuity cascade, in which patients are discharged quickly, can be a two-edged sword for hospitals. They are also responsible for the patient’s outcome throughout the care cycle, instead of solely focusing on patient discharge plans,” the report said. This compounded cost and care burden is increasingly resulting in hospitals and health systems leveraging downstream PAC providers, including SNFs, to provide high-value care.

“PAC providers assume more clinical risk as higher-acuity patients are transitioned sooner. Consequently, hospitals and health systems have started partnering with SNFs and other PAC providers to align, innovate, and effectively leverage each other—striving to achieve the triple aim in a high-stakes care environment,” Leavitt said.

How hospitals and health systems approach SNFs to collaborate in this new value-based effort to improve outcomes and decrease costs is not a one-size-fits-all proposition, but those eliminating the SNFs and other PAC providers do so at their own risk.

“While this approach may reduce cost in the short term, it can have a long-term effect on quality outcomes for patients that need more advanced care,” the report said. For instance, the National Investment Center for Seniors Housing & Care reported that SNF occupancy decreased from 85.5 percent in late 2012 to 82.9 percent in early 2016, with Medicare occupancy decreasing from 16.6 percent in early 2013 to 13.8 percent in early 2016.

“Skipping SNFs may be appropriate for some patients, but can have dire consequences for high-acuity patients with complex needs,” Leavitt said.

The more effective and “holistic” approach is to work with SNFs and other PAC providers to best assess the needs of a patient and leverage the right site of care. “One patient may be able to leave the hospital and function independently to continue their care plan. Another patient may need additional nutritional, rehabilitative, or pharmacological support through a SNF or other PAC provider,” the report said.

Through collaborative relationships, health systems and SNFs can together make appropriate site-of-care decisions, match up treatment plans, and reduce costs, the authors said.

 Read the Leavitt report at

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