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Long term care markets in the US – 2016

Long term care markets in the US – 2016 February 4, 2016

Marketing, research and business development consultant in healthcare, human services and senior living.

Demographic Dip 1925 - 1945

Here are a few observations and more challenges about the long term care markets in the US. If you agree or disagree with any of these, I certainly hope you will weigh in.

1. Occupancy /utilization struggles in the long term care markets

The long term care markets will continue to be impacted by the decline in live births which occurred between 1925 and 1945.

Long term care markets
Demographic Dip 1925 – 1945

This demographic fact will continue to show up as reduced occupancies at all types of age related services, including hospitals, skilled nursing centers, independent living, assisted living, rehabilitation centers and others. In the long-term care markets, the exception to this will be means-tested operators serving lower income populations, and congregate care centers serving persons with psychological and or behavioral disorders. Growing income disparity, increasing rates of Alzheimer’s and related disorders and the general psychological ill-health of our society will make sure that these services continue to be in high demand. Read more about the long term care markets by following the link below.

The Birth Dearth

2. Competition in the long term care markets comes from “all over the place”

No longer will skilled nursing be competing for the long-term care markets with skilled nursing alone, or only with assisted living. Home care, assisted living, skilled nursing, independent living, even hospitals, will all be competing for the same shrinking or declining market, so look out for competition from around the corner, and places from which you never had competition before.

3. Home care demand will be strong.

One of the very few sectors of the long-term care markets that will be robust is home care. In fact, we will continue to see more complex cases being cared for with elaborate technology and staffing in the home, or patient’s domicile. This is the result of growing supply in home healthcare (the franchises are doing a good job selling themselves), as well as a cultural preference for “staying at home.” Of course, the concern here is that the federal government will step in and make policy or regulatory changes to curtail utilization, especially if it grows as rapidly as it did in the late 1990s.

4. Care transitions is “hot”

This was predicted for the long-term care markets, and now everyone is getting into the act of attempting to make transitions between and among care providers smoother, less fraught for the consumer/patient and her family, and riddled with fewer errors. The initiatives around mitigating hospital readmissions were only the early rumblings of this change. There are now huge, very deep-pocketed players in the sector, including academic medical centers and insurance providers. The complexity will be transformed by these mega-behemoth organizations into standardized protocols – not a good environment for long-term care.

5. Value-based payment – a race to the bottom

The value-based payment models, which have emerged in the long-term care markets over the past several years, will become deeply ingrained in the long-term care service delivery model. These include Accountable Care Organizations (ACO) and Bundled Payments for Care Improvement (BPCI). Revenues in the sector will be parsed very carefully by agencies and organizations which are either “upstream” in the long-term care markets. Referral chain, or paid to extract money from the system. SNFs, HHA’s and assisted living residences will participate in a variety of episode management and care coordination initiatives. While the per episode payments, or shared savings incentives seem attractive, make no mistake about this; value-based payment, in the absence of increased efficiencies, means only one thing – reduced income. For many in the sector, involvement in competitive value based payment models will be a “race to the bottom.”

6. “Efficiency” will become critical.

In the past, whenever “efficiency” was discussed by organizations in the long-term care markets, the term has been a thinly veiled reference to staff reductions and cost containment. In the evolving value-based payment environment in the long-term care markets, the only way long-term care providers will survive is by developing a far more sophisticated and data-rigorous approach to efficiency. Specifically, we must learn to achieve higher levels of outputs for existing or reduced inputs. As everyone in the long-term care markets knows, the highest inputs are from staff, which routinely represent 65 to 80% of operating budgets. Despite this, managers have little experience, and extraordinarily poor tools to actually measure, and therefore to have a hope of improving efficiency. This state of affairs in the long-term care markets is the result of payment models which for decades had been “cost reimbursed.” So it didn’t matter if you added staff, this only increased your cost basis. We can see how difficult it has been for operators in the sector to pivot away from this model. In addition, professional nursing organizations, very influential in the sector, have made it difficult for forward thinking managers in the long-term care markets to more effectively utilize their most expensive strategic asset.

7. Pharmacy services – your key partner.

How on earth we have kept pharmacists in the basement this long is an absolute mystery. In long-term care, and at home among age or disability-qualified markets, polypharmacy, non-adherence, and untoward drug interactions are the leading categorical cause of injuries of seniors’ in the home, (falls, overdosing, etc.) and the best data suggests that almost 50% of avoidable hospital admissions and/or readmissions are due to these pharmacy related untoward outcomes. And pharmacists are trusted by the population in the United States and Western Europe on a par with clergy. (Far more than nursing home owners!)
Those of you who are enough to remember Jimmy Durante, he was famous for saying, “I hate music, especially when it’s played.” Similarly, I hate predictions, especially when they come true.
My hope is that we can continue the dialogue about long-term care markets by connecting with me on LinkedIn, following me on Facebook or bookmarking this blog!

Marketing, research and business development consultant in healthcare, human services and senior living.

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