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 More from: "Providers Create Their Own Opportunities"

 

 

Providers Push Boundaries as Diversification Trend Evolves


Long term and post-acute care (LT/PAC) providers see the risk and reward from diversifying their operations in a world of uncertain reimbursement revenue and an evolving marketplace where the benefits of covering one’s bases are more and more apparent. These operators tell Provider oftentimes it pays to not only be expert in skilled nursing or assisted living, but also to build a brand on home health or specialized rehabilitation, health insurance, or data analytics, among a slew of options. 

How a provider goes about diversifying is up to the individual business and can involve a discussion on whether to grow organically on their own or to reach out and acquire a company in a field they hope will increase their revenue. 

Echoing this thought, Mark Scharnberg, vice president of mergers and acquisitions for The Evangelical Lutheran Good Samaritan Society, Sioux Falls, S.D., says there are two areas that his company has focused on over the past couple of years to diversify revenue streams.

One is to invest in strategic home- and community-based services (HCBS) acquisitions. He says the company has added around $60 million in revenue from key HCBS acquisitions since 2014, zeroing in on markets where Good Samaritan already had a presence. “The home health, the hospice, and other areas that we bought have complemented our already existing footprint and either solidified it further or helped complete a continuum of care that we had in those respective markets,” Scharnberg says.

The acquisition strategy has changed over the most recent months, however, as Good Samaritan slowed down its purchases or looked to buy smaller entities. “We haven’t had as much growth in that area [acquisitions over past 18 months], but we continue to look at it as we seek to diversify and share our mission through HCBS lines,” he says.

A New Health Plan Is Born


Switching to the homegrown—or organic—side, Good Samaritan has formed a new health insurance offering in the Medicare Advantage space. Licensed in three states—Nebraska, North Dakota, and South Dakota—and branded under the name Great Plains Medicare Advantage, Scharnberg says the entity is in the marketing and enrollment phase right now with the launch date set for Jan. 1, 2018.

While Good Samaritan has a partner to help with all the administrative elements to the health plan, the provider is the majority owner and is taking the risk of moving into a new field.

“We had experience in this type of plan for probably around 10 years, and it’s been in other parts of the country, an Institutional Special Needs Plan,” he says. “The benefits that the new plan provides our residents are broad access to care not available under traditional Medicare. It is an additional level of medical support that is not as always prevalent for our long term care residents, and also it just creates a more flexible reimbursement model than what we have under original Medicare.”

There is also the matter of having more experience on the risk side that appealed to Good Samaritan, Scharnberg says. Since the marketplace is moving toward value-based payment models, like accountable care organizations (ACOs), providers must be more effective at managing risk through improved outcomes, which are incentivized under new payment models, and entering deeper into the insurance profession is one way to learn and diversify at the same time.

“All payment is moving toward having some outcome attached or tied to it, and we realized we need to be more effective at managing risk. Although we have a number of relationships through ACOs and other models, we are typically not the at-risk entity,” he says. 

The Footprint Matters


Good Samaritan’s focus on growing either externally or from within where the provider already has a presence plays a major role in all diversification and growth efforts. “It is not that we would not be interested outside of our footprint, but we have a strong reputation and links to referral sources and the community. We identify markets where we intend to be for the next 50 years and ensure that we have that network of care that can meet individual needs and be a more effective business partner on the hospital side,” Scharnberg says.

There is pressure to make these moves work, too, he adds, pointing to the increasing financial and regulatory outlook for skilled nursing facilities (SNFs). “You can see nationally a lot of changes on the SNF side. And, overall the LT/PAC landscape is now driven by the financial pressures to have a continuum of care and to be able to have that solution for seniors,” he says. 

Despite the rapid pace of change, the mission of Good Samaritan remains in place, with Sharnberg saying that when an acquisition occurs the company works on not only the legal structures to ensure the mission is intact but also ahead of a purchase to screen potential partners. 

“We ensure the importance of the faith-based, Christ-centered model. When it comes down to values, we want to balance retaining their heritage [the company being purchased] while adopting Good Samaritan values. We make sure there is a level of alignment with our operating philosophy,” he says.

Read the December 2017 cover story
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