News from Colorado, courtesy of The Highland Group (below), shows the continuation of declining occupancy and utilization among skilled nursing facilities (SNF). While these results are from Colorado, similar patterns of SNF declining occupancy are being observed in many other places.
Here’s why, and what to do about it.
The Shrinking Market
These results are due to several factors, not the least of which is the “Demographic Dip” which I have written extensively. From 1925 to approximately 1945, United States experienced the lowest birth rates since 1910 or since. Since the average age of relocation to a SNF for long-term-care is now 87, and in 2017 this individual would have been born in 1929 – at the heart of the Greta Depression. The birthrate declines in the United States due to the Great Depression and the Dustbowl resulted in the smallest twenty-year age cohort on record in the United States. The declining size of the age qualified population in most metropolitan markets in the United States will continue to put pressure on occupancy and utilization among all of the age-related services, the potential exception of home care. There will be a few places that escape this pressure, especially those experiencing robust economic or population growth.
The Shrinking Budget
In addition to the declining size of the age qualified population in most parts of the United States, there is also the case of the continuing pressure to reduce healthcare spending. This is materializing in many ways, including managed care. Medicare managed care organizations are aggressively attempting to curtail the utilization of SNF -based short-term rehabilitation programs. A recent analysis disclosed that 65% of the variation in SNF utilization among Medicare beneficiaries could NOT be explained based on acuity.
In other words, there’s no rationalization for one post arthroscopic patient in the Chicagoland area receiving 20 days of rehabilitation in a skilled nursing center, while a highly comparable patient in Boston receives 6 days of post-op care.
Welcome to Hyper Competition
in situations where the barriers to exit are so high, the markets shrinking, and (unjustifiably)
providers are entering the marketplace, the only possible results are closures and hyper competition. We have seen some closures – there will be more. What is troubling is the competition. This is a condition where providers, struggling to make ends meet, cut costs, increase their competitive behaviors, and attempt to care for consumers (patients) for whom they are not qualified to care.
Benchmarks from other sectors offer insights about how to respond effectively in such a critical situation such as we are experiencing.
First, efficiency will become an existential requirement. SNFs, and ALRs are really inefficient providers of care.
Second, differentiation will become even more critical, especially where consumers do not distinguish well between and among the various types of care, or different “brands” within each category.
Third, the sector is in desperate need of innovation. Skilled nursing centers are, too often, the land that Health Information Technology (HIT) left behind. This must change, and will only be possible through rabid advocacy at the state and federal level.
Finally, we must learn to manage toward loyalty, rather than satisfaction. With so much emphasis on the “customer experience” it is easy to think that happy customers are loyal customers. This is not true. It’s more important to recover effectively from errors that are made, either among patients and families, or our B2B referral sources. Research shows that effective error recovery is far more important in building customer loyalty than providing faultless service.
Give us a call! We can help.
Irving Stackpole RRT, MEd is the President of Stackpole & Associates, marketing, market research and training firm at www.StackpoleAssociates.com. He can be reached directly at: firstname.lastname@example.org.
SOURCE: The Highland Group (with permission)
For at least the 22nd consecutive year, the proportion of people age 75+ in Colorado who are in skilled nursing beds on any given day has declined.
The number of residents in skilled nursing in Colorado has remained relatively flat since 1994 (the first year for which we have data), with 17,558 residents then, compared to 16,721 as of December 31, 2016. However, during that period, the estimated number of age 75+ individuals has increased by 86% (from 156,976 in 1994 to 291,926 in 2016).
Looking at census trends by payer source, about 63% of SNF residents at December 31, 2016 were Medicaid, 15% were Medicare patients, and 22% were private pay/other. The number of short-term Medicare patients in SNF beds at year-end declined by about 200 patients, decreasing from a 2,664 at the end of 2015 to 2,475 at the end of 2016. About 34% of the Medicare patients in SNF beds were in Medicare HMOs at the end of 2016, continuing an upward trend in the HMO proportion of Medicare patients since the mid-2000s.
Colorado department of Local Affairs, Colorado Department of Public Health and Environment, Health Affairs Division Census reports
The number of private pay and insurance residents in skilled nursing increased slightly, from 3,615 at the end of 2015 to 3,700 at the end of 2016. Still, this is a significant decline from the statewide high of 5,373 private pay and insurance residents statewide in 2001, most likely reflective of a strong supply of assisted living, memory care, and home care options for those who can afford market-rate services