As the state embarks on its most aggressive effort yet to move people out of costly institutional models of care to more community-based settings, the nursing home industry is looking to adapt to a new reality.
The state’s effort to ramp up the Money Follows the Person program will likely lead to further consolidation within the industry and force some nursing home operators to rethink their business model, experts say.
But industry officials say they aren’t opposing the effort to relocate 5,200 people out of their facilities over the next few years.
In fact, they have been supporting it, recognizing that continuing to over rely on institutional care won’t be economically feasible. And the industry remains optimistic that despite its many financial challenges, it will continue to play a key role in the continuum of care, especially as Baby Boomers reach retirement age and need more medical attention.
“There will continue to be strong demand for nursing homes,” said Matthew V. Barrett, the executive vice president of the Connecticut Association of Health Care Facilities. “The older population is not as well as it used to be, suffering from more acute diseases like obesity and diabetes. Those types of patients will require nursing home care. But the industry does need to evolve to meet consumer demands of Baby Boomers.”
Gov. Dannel P. Malloy has set out an aggressive plan to enhance the federal Money Follows the Person program in Connecticut, with the goal of transitioning 5,200 people out of nursing homes and into community settings by 2016. The program, which began in the state a few years ago, originally set out to move only 700 individuals, but Malloy is upping the ante to take advantage of increased federal reimbursements.
The 5,200 figure represents about 25 percent of the current nursing home patient base that receives long-term care, and Malloy has estimated the move can save the state more than $16 million in Medicaid costs.
Barrett said the transition will impact nursing homes, likely reducing occupancies and leading to further consolidation. It’s estimated the program could drain as much as $70 million in industry revenues by 2013.
But Barrett said he doesn’t expect the need for nursing homes to go away especially with Connecticut’s aging population and Baby Boomers beginning to turn 65 this year. And he also expressed some caution warning that dramatic rebalancing of the long-term care system in the state could negatively impact access to quality care for seniors, especially when beds may be needed to accommodate population growth.
Department of Social Services Commissioner Michael Starkowski said he, too, realizes the impact Money Follows the Person will have on nursing homes, but he said the state and federal government won’t leave the industry to fend for itself.
There will be financial incentives for nursing homes that transition residents to the community. And money will also potentially be available for homes interested in diversifying their business model.
Business diversification could play a key role to how long-term care facilities adapt to the changing health care landscape, industry officials said.
In some ways nursing homes have already been evolving. To mitigate losses from Medicaid underfunding, for example, nursing homes in the state have been increasingly becoming transitional care providers, offering rehab services for patients who leave hospitals. That has provided homes some financial stability, said Paul Liistro, owner of the 126-bed Manchester Manor and 120-bed Vernon Manor Health Care Center, because those services are paid for by Medicare or private payers, which provide better reimbursements than Medicaid.
Other diversification strategies could include nursing homes adding home care, adult daycare or senior housing, or converting empty wings to office space that can be leased to physicians, dentists, or other medical practitioners, Starkowski said.
Chris Wright, president and CEO of iCare Management, which manages nine nursing home and rehabilitation facilities in Connecticut, sees the changes first hand.
ICare’s Farmington facility, formerly known as the Farmington Care Center, just underwent a renovation and rebranding as the company emphasizes more of its rehabilitation business.
Now called Touchpoints at Farmington, the facility is developing a new specialized program for cardiac rehab, while continuing to strengthen its orthopedics rehab services.
Rehabilitative care now makes up close to 40 percent of Touchpoints’ business.
“In order to survive in this environment we have to rely more on non-Medicaid sources,” Wright said. “We need to make sure we are diversified and if we are successful we will move it to other facilities.”
Wright said the change is not spurred solely by the Money Follows the Person initiative. He said the health care landscape in general is shifting rapidly, and requires all providers in the continuum of care to align more closely, both for payment and quality of care purposes.
That’s why staffers at Touchpoints are being retrained to work more closely with hospitals, physicians and home-care agencies.
Moreover, hospitals face greater pressure to reduce readmission rates, so finding quality post-hospital care providers — a niche the nursing home industry says it can help fill — is also important.
Liistro said that his Vernon Manor added a 10,000-square-foot addition years ago that now houses a child-care center. But he also noted that changing or adding a business segment isn’t easy, and requires a capital investment.
“It’s not easy to diversify,” Liistro said. “Nursing homes are living on flat revenues and increased costs so it’s hard for them to take big steps.”