Late in 2002, our principals embarked on a quest to set a new standard of leadership in the management of long term and rehabilitative healthcare facilities. As the population ages and medicine’s ability to heal and to maintain human function flourishes, the work of provider allies in the long-term and rehabilitative healthcare fields grows more important every day. These inevitable factors, coupled with the ever-changing reimbursement dynamics facing today’s providers, make sound, evolved management a necessity to ensure, outcome-driven care, while meeting financial objectives.

 

About Our Industry

Prior to 1997, the post-acute health care continuum consisted of providers in the skilled nursing facility (SNF), acute rehabilitation hospital (ARH) and long-term acute care hospital (LTACH) settings, each with an economic incentive to extend its own scope of services in order to attract patients from referral sources in the traditional hospital setting. Under variations of cost-based governmental reimbursement, providers had little cause to monitor the cost of providing; even the most specialized of services to Medicare beneficiaries, as much of the tab was ultimately passed along to the Medicare program.

Among the phenomena that accompanied this period of high industry growth, was the creation of huge overhead structures to support expanding operations, including leases, which raised the ceilings on commercial health care real estate costs. The industries’ inability to restructure these lease arrangements, in response to the reforms enacted in recent years, has been a significant contributor to the insolvency and bankruptcy issues faced by large operators in the post-Prospective Payment era.

The Balanced Budget Act of 1997 and subsequent supportive legislation called for the systematic restructuring of governmental reimbursement to be “prospective” and linked to predictable outcomes based upon existing care and cost data, rather than “retrospective” and based upon allowable costs, as in all previous years. In the years since, distinct Prospective Payment Systems have been implemented and now comprise the mechanism of payment for all but a few providers.

Since implementation, there has been a restratification of health care entities with regard to both profitability and efficiency; most often it has been stockholders and creditors of larger operators, which have been left to bear the burden of the reforms. In the resultant delivery system, each provider needs to not only recognize the pitfalls of its own potential inefficiencies but also the opportunities that exist in the limitations of other providers.

Specifically, there now exist, consistently across most market lines, opportunities for collaboration where boundaries were once drawn. Higher acuity patients who have, in the past, been welcomed in skilled facilities are now regarded as too costly. Other patients, traditionally welcome for stays in the LTACH setting of 50 to 100 days, must now find alternative ways to heal wounds, wean from ventilators and receive appropriate dialysis care. It is our position that these voids are best filled in a cost-effective, care-effective manner, by integrating, rather than paring services in these settings.