Inspiration can sometimes be found in unlikely places. For Shea Family, a long term and post-acute care provider in southern California, shipping giants FedEx and UPS sparked an idea that led to the company’s new admissions process. Although a seemingly improbable source of inspiration for Shea, examining the supply-chain experts taught them how to more efficiently manage their patient admissions.
“One thing we did was step back and say, ‘Who manages a continuum well?’ And, guess what? FedEx and UPS understand how to manage a continuum,” says Ken Lund, president and chief executive officer (CEO) of Shea. “It may be a package but it’s still following somebody or something through a life cycle, and that’s when we centralized our admissions.”

Shea Makes Shift

Lund’s revelation helped to drive a key change in Shea’s operations: It shifted from managing admissions at each level within the company to managing the process via a centralized database. “All skilled, assisted living, home health, and transportation admissions go to our logistics center now,” Lund says. “So instead of a dozen phone numbers for prospective residents to call, they now call a single number.”
Process changes and efficiency improvements like this one helped Shea position the company to become the primary post-acute care partner to the Pioneer Accountable Care Organization (ACO) in the San Diego area.
 It was not an easy feat.
Lund says it’s taken years of slow, steady changes in everything from purchasing incontinence supplies to tweaking nurse hours to get to a balance of improved outcomes and efficiencies.
“It’s been an expensive and painful learning experience for everyone—from ownership down to any level of the organization,” says Lund.
It has been painful, he says, because they’ve had to find every way possible to change a multitude of processes that helped the company meet the needs of the ACO as well as the customer.
Established by the Patient Protection and Affordable Care Act (ACA), ACOs are groups of doctors, hospitals, and other health care providers who combine their efforts to voluntarily give coordinated, high-quality care to Medicare patients. The goal of ACO programs, according to the Centers for Medicare & Medicaid Services (CMS), is to ensure that patients, especially those with chronic illnesses, get the right care at the right time, while avoiding unnecessary duplication of services and preventing medical errors.
If this model sounds a bit like managed care, it is. A number of ACOs are modeled after managed care. But there is a difference between the two: Medicare ACO patients must remain fee-for-service, which means they retain the ability to choose their own provider, regardless of any network that may exist. In a managed care model, networks are closed.

There are three types of Medicare ACO programs: Shared Savings, Advance Payment, and Pioneer.

Why The Fuss Over ACOs?

A recent study of ACOs by Oliver Wyman, an international management consulting firm, found that successful ACOs will be game changers.
“They won’t just siphon patients away from traditional providers and attract the attention of payers, employers, and partner organizations. They will change the rules of the game in the regions where they operate, leading purchasers to expect lower costs, higher quality, and greater patient satisfaction,” the study says. “As that happens, there will be a race to adopt the best models. Providers that fail to do so—or that commit halfheartedly to real change—will stand no chance.”
Backing up its claims, the Wyman study found that about 14 percent of the population—almost one in seven Americans—is now in an organization with an ACO arrangement. What’s more, more than 40 percent of Americans live in areas with at least one ACO, while 28 percent of the population lives in a community with two or more ACOs in it.
“The shift to accountable care is a massive opportunity, and many providers, payers, and enablement companies have already invested millions of dollars in transforming, becoming, incentivizing, and supporting ACOs,” Wyman said. “We cannot ignore how the ACO movement has already earned the confidence of these sophisticated players across the health care system.
“For those who intend to be part of tomorrow’s market, it is time to move quickly, even for organizations that have already given up the chance to be first. The data are clear: The fight for tomorrow’s health care market has already begun.”
Adding to the quantity argument are some data on quality. In July, CMS announced “positive and promising results” from the first performance year of the Pioneer ACO model “that have the potential to impact post-acute care providers in a major way.”
The results are impressive: higher-quality care and lower Medicare expenditures.
“ACOs, including the Pioneer ACO Model and the Medicare Shared Savings program, are one way CMS is providing options to providers looking to better coordinate care for patients and use health care dollars more wisely,” CMS said in a press release on the results.
“These results show that successful Pioneer ACOs have reduced costs for Medicare and improved the quality of care for their patients,” said CMS Administrator Marilyn Tavenner.

ACOs And Post-Acute Care

Why are ACOs important to post-acute care providers? At the center of a successful ACO is care coordination throughout the continuum of care, and in order to succeed, ACOs will have to determine continuum-wide, cost-effective care pathways; implement best practices in transitions; and engage patients and families in their own care, said Jared Landis, senior consultant for the post-acute care collaborative with the Advisory Board Co., during a webinar on the topic this past March.
 Jared Landis
“The ACO model is no longer a mythical concept,” Landis said. “I think for so long it was a bit of a unicorn in the health care space, where we heard lots of talk about it but had very little idea what it actually looked like practically. That’s no longer true. ACOs are cropping up in nearly every market in the U.S.” Since ACOs are responsible for keeping the total cost of care for their patients under a predetermined threshold, Landis said, they are likely to want control of the spectrum of care in some manner.
“Hence, the mindset shift from managing episodes of care to managing the full gamut of care,” Landis said.
Although some hospitals have acquired post-acute care provider groups, “most will be looking at tighter integration, not acquisition.”
Landis pointed to the Michigan Pioneer ACO, which includes Detroit Medical Center, as an example of what’s in store with regard to innovative arrangements. The medical center recently contracted with Hospice of Michigan to support patients with advanced illnesses in its system. The hospice will provide customized care and will share in some of the savings.
“This reflects a broader theme in the market where ACOs are turning to post-acute care organizations to provide geriatric care management—a new skill for many ACOs, but where post-acute providers have significant experience,” said Landis.
In addition, hospitals will continue to develop affiliations to create tighter referral networks, he added.
In Massachusetts, where there are five Pioneer ACOs, there exists a very close collaboration between post-acute providers and ACOs, but across the country relationships between the two entities run the gamut, says James Michel, director of Medicare research and reimbursement at the American Health Care Association (AHCA).
“We’ve seen in Massachusetts a very close collaboration with ACOs, in which they have jointly developed expectations. It encompasses not only what the ACO requires of the SNF [skilled nursing facility] provider, but what the SNF requires of the ACO.”
This kind of two-way conversation is the more preferred, more sophisticated kind of approach, says Michel. “But we’ve seen, on the other hand, ACOs that just send applications to SNF providers in their referral markets saying, ‘You need to get your length of stay to this, you need to get readmissions down to this,’ with no basis, no collaboration, no anything,” he says.
“In some cases, they have said, ‘If you don’t do this, you’re not in the network.’ Because we’re seeing those extremes, we know there’s a lot of in between happening. But it isn’t defined.”
To avoid this issue, Michel suggests that providers would be wise to proactively engage ACOs in discussions around performance expectations early.

In Massachusetts, Lots To Do

The ACO environment in the Bay State may be highly collaborative but post-acute providers nonetheless have their work cut out for them.
Tara Gregorio, vice president of government relations for the Massachusetts Senior Care Association (MSCA), estimates that at least 40 percent of the state’s Medicare beneficiaries are part of a federal ACO, whether it be one of the five Pioneer ACOs in the state or 12 Shared Savings ACOs.
“This number will only grow,” she says, noting that she and her colleagues are engaged in an ongoing effort to educate and assist member providers about ACOs.
“There will continue to be increased pressure for skilled nursing centers to be clinically prepared to care for higher-acuity patients for a shorter period of time,” says Gregorio. “In addition, facilities will need to provide data to ACOs, hospitals, and payers to demonstrate high quality, efficiency, and customer satisfaction.”
Provider groups in the state have convened a Payment Reform Task Force that meets at least monthly in an effort to work with the Pioneer ACOs and skilled nursing centers to develop strategies for quality post-acute care, says Gregorio. “This month, we will begin the difficult work of developing measurements for the skilled nursing facility strategies, and we expect the Pioneers to initially focus on developing rehospitalization and length-of-stay measures.”
Also on the agenda for MSCA is the development of model legal principles to give providers the background they need to make informed decisions regarding contracting with ACOs for payment or quality initiatives. MSCA will release the document as a series of education programs this month.
Gregorio points to analytics as another key component of their work with ACOs. “Data is certainly king in this evolving health care system,” she says. MSCA has contracted with both Tufts University and PointRight on “critical data analytics that we need to inform health policymakers.”
Tufts provided MSCA with data on the potential savings that could be realized by eliminating the Medicare three-day stay rule. “The data show that eliminating this nearly 50-year-old policy could save more than $450 million,” Gregorio says. “PointRight provided important data for us on length-of-stay drivers, which will be enormously helpful in our discussions with the Pioneer ACOs on a length-of-stay measurement.”
To that end, Gregorio says MSCA is in the process of organizing an analytical education program in the fall to assist its members in measuring critical data elements that are important to ACOs, hospitals, and payers.

Smells Like Managed Care

Managed care is not new to Arizona. In fact, it has become ubiquitous within the Grand Canyon State, and so the entry of ACOs is not sounding alarm bells, but it has been eyed with both optimism and caution.
“The state has been operating in an ACO-like environment for some period of time, and this is just another overlay to a very complex managed care environment serving dual eligibles,” says Kathleen Collins Pagels, executive director of the Arizona Health Care Association
 Kathleen Collins Pagels
“ACOs have a lot of similarities to managed care, and it creates a competitive environment as well as a climate of preferred partnerships. And our concern is that all our members are able to benefit from the existence of ACOs. I would say we consider it an opportunity as well as a challenge here in Arizona because it is a new framework for care delivery.”
In terms of preparing her members to contend with ACOs, “for us it’s more like business as usual than in other states because there is already a climate in Arizona of preferred partnerships with hospitals and post-acute providers,” she says.
Some ACOs have aligned with providers to create more of a system, so the organization is working with providers to protect the choice of beneficiaries to go to any skilled nursing center.
“Our concern is protecting resident choice,” Collins Pagels says.
California is another state that has a history of managed care. “ACOs are another component of managed care initiatives that will change the post-acute care industry,” says Nancy Hayward, assistant director of reimbursement for the California Association of Health Facilities (CAHF). “This is just another name for similar models that are currently operating in California.”

California Providers Take It In Stride

To that end, CAHF is focused on helping its members get in touch with local managed care health plans as opposed to the large ACOs, says Deborah Pacyna, director of public affairs. “Although the same strategies apply.”
For providers who need help with contract negotiations, CAHF has a dedicated Web page that includes contact information for health plans, a contract checklist, and a contract toolkit to help them with their individual negotiations.
Hayward is also relatively calm about the impact of ACOs on providers, but that may be because she’s prepped her members. “For the past two years, we’ve been telling members to prepare for managed care that will be implemented by multiple initiatives. And at the local level, individual skilled nursing centers are being quietly invited to the ACO tables,” she says. “They are entering into a competitive market that will be data-driven, so we’ve asked them to get to know their average length of stay for different types of patients, readmission rates, and costs to provide care so that they can negotiate adequate rates.”
Hayward also advised her members to work on improving their Five-Star ratings, upgrading their centers’ appearances, and to prepare to accept admissions 24/7. In short, ACOs are data-driven and looking for partnerships with skilled nursing centers that have “outstanding performances,” she says.
Shea’s Lund recognized this fact several years ago and has prepared his company accordingly. “Hospitals are very sophisticated in terms of data management,” he says. “The big systems—the Sharps and Kaisers of the world—they know their data.”
And while Shea is not as sophisticated as the big hospital systems, Lund says the company is getting there. “We’re much more sophisticated than we were,” he says. And because we’re more sophisticated, we’re able to drill down on multiple indicators.”

Data & Efficiencies: Getting The Right Balance

All of the process and preparation has made Shea a better company, especially in terms of managing resources, Lund contends. But it hasn’t been easy. “A lot of industries have benchmarks that you can point to, but those aren’t available in long term care; it doesn’t necessarily exist in our industry. So you have to develop your own benchmarks,” he says. “Why would a company do this? Because if nothing else, you say ‘here’s where we are today, we’ve got to do better.’ And you start implementing some processes and techniques for a quality improvement process. So whatever the metric is, you say, ‘if it’s $2.00 day, let’s make it better tomorrow.’ But the minute outcomes are slack or go south, you’ve pushed too hard. The really, really good thing about this is we’ve become intensely more efficient. We’ve been able to balance outcomes and efficiencies.”
Meeting customers’ needs is another theme that Lund and Shea Family have embraced. Lund also believes the customer has changed dramatically, “seemingly overnight,” he says, “even though the writing has been on the wall for decades.”
Over the past three years, he and his team have been prepping for this new customer. In addition to centralizing admissions, Lund describes a slew of other initiatives that have primed his company’s entry into the world of ACOs.
In a strategic customer-oriented move, Shea boosted its ACO curb appeal by diversifying. “When I joined in 2010, we were skilled nursing, period,” says Lund. “Today, my single largest operation is in-home services.”
For Shea, in-home services include retrofitting homes for Americans With Disabilities Act compliance and similar modifications that enable individuals to stay in their homes longer. “We’ll put ramps in, we’ll put grab bars in, we’ll widen doorways, those types of things,” says Lund. “That’s not a service that skilled nursing provides.”
Indeed, it is not a typical skilled nursing service, but it is a service that has served Shea well, especially with regard to its involvement in the local ACO.
“We don’t mind where a patient goes within our system; we want what’s best for our patient. And so, what we’re saying is that the physician and the family need to make a decision about where the patient should go, and whatever decision they make, we can create that solution,” Lund says. To that end, Shea also created a transportation company that takes residents where they need to go from any of its buildings.
“So in-home services means more about learning to say yes and filling a need than it is about providing health care,” says Lund. “And health care becomes a menu option in that business.”
Lund’s advice for post-acute providers: “Develop some thick skin, be patient, and know that your numbers and your revenue model change because it goes from being a sales process in a transaction to a sales process based on a systems approach.”
It goes from being focused on individual buildings to more of a logistic model to managing someone through a continuum rather than an episode, Lund explains.
Lund also cautions that the model providers have used for decades won’t work in the future. “Maybe one of the most interesting things I’ve learned in this process is to look outside our industry [a la UPS and FedEx]. There are enormous lessons to be learned by looking at industries that have been forced into consolidation, such as agriculture and banking. There are lots of non-health care industry examples that we looked into.”
The results speak for themselves: “We’ve proven in our ACO partnership that we can deliver equal or better outcomes based on CMS’ definition of reduced length of stay and reduced readmissions,” says Lund. “And on a limited number of quality indicators, we delivered equal or better outcomes and reduced the readmission rates from the mid-20s down to the 10 percent range.”
Also notable is that Shea cut its patients’ average length of stay down to 12 or 13 days from about 30.

Advice For Providers: Know The ACO Landscape

It’s not too late for post-acute providers to get into the game. In order to do so successfully, they need to be paying attention to what’s happening in their referral markets, says AHCA’s Michel. “They need to know their own landscape with ACOs in their states.”
Michel advises providers to do the following to prepare for ACO involvement: “Identify which providers in your market are in ACOs, find out what they’re looking for, and set up internal processes to be able to track data against what they’re looking for,” he says.
“We know, based on members’ experiences, what most hospitals are looking for: rehospitalization/
readmission rates and lengths of stay.”
 James Michel
The percent of patients in ultra-high Resource Utilization Groups (RUGs), or RUGs distribution; sophisticated staffing and turnover data; ease of access; and admissions are some other key areas that ACOs are considering.
Providers interested in prepping for ACOs should have conversations with their referral sources, Michel suggests. “Ask them what they want to see. Think about how you can make yourselves attractive. And if hospitals are thinking about it but haven’t come to you, maybe go to them with reports and say, ‘this is how we’re doing relative to our competitors,’” says Michel.
Lund believes that ACOs aren’t an end in and of themselves.
“They are the beginning,” he says. “People need to get that ACOs are just a point in the journey. Two years ago no one wanted to talk about managed care, and now ACOs have hit the Holy Grail. It’s just a point on the journey; it doesn’t matter whether ACO as an entity or concept survives, it’s still managed care.”
For Gregorio in Massachusetts, the road ahead has its share of challenges and unknowns, she says. “Particularly when we begin thinking about global payments and the state’s Jan. 1, 2017, mandate that all health care providers have interoperable electronic health records.”
But there is also great opportunity.
Skilled nursing facilities continue to demonstrate high-quality patient care at a lower cost and are focused on safe, appropriate discharges to the community, Gregorio says.
“This will ultimately save the system money, improve patient access to quality care, and improve satisfaction, thus meeting the goals of the ‘Triple Aim’ of better care, better health, and lower cost.”
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