Post pandemic marketing… really?
Since the public health emergency was declared in the US on February 3, 2020, the consequences on nursing homes (SNFs) and assisted living (ALs) have been severe. As we try to emerge, those of us in congregate care are beginning to have patients / residents trickle back into our buildings. A sense of relief can be felt coast to coast. The “pressure” seems to be relieved, and we’re back to doing what we’ve done for decades. The flood of Federal funds has kept the bankruptcies at bay.
Since the test positivity, hospitalization and death rates have declined in many areas and vaccinations have increased, we need to face some facts. My purpose here is not to be depressing but to offer a sober look at some facts which I pray will offer a reliable way to plan.
We aren’t going to get to “herd immunity”.
Despite what the popular press and political pundits are saying, it’s highly unlikely that the United States will achieve 70% full vaccination among the population. Moreover, “Herd Immunity” will be a political hot potato, and used by certain media to further disparage public health initiatives. The public is having, and will continued to have difficulty grasping shifting, elusive goals and behavioral standards. Pandemic exhaustion will be widespread, and healthcare providers which are trying to protect their residents and staff may come to be seen as actors in a theater of the absurd.
Marketing tip: Be prepared to explain infection control and containment procedures at an 8th grade level.This is relevant from a marketing point of view, especially in the direct-to-consumer channels because long-term care providers will be forced to both mitigate fear and appear balanced and reasonable in their policies.
Referral recovery will be irregular.
Referrals from other healthcare professionals/organizations (B2B) will be fewer and much more selective/concentrated. Market share will become very difficult to shift away from downstream LTC providers which establish themselves as preferred destinations within risk-bearing networks. The corollary opportunity of this market shift will be to those SNF/IRF/LTACH/HHA providers which take their data, go to hospitals and the medical groups in their marketplace areas and bludgeon them into submission.
This may not seem like a marketing point of view, but the decision-makers in our marketplace areas know they need congregate long-term care providers, but they have no idea how to speak our language. As I have urged many times before, it is up to us to learn how to speak their language and to use all the data we have been collecting to show hospitals and doctors why Mrs. Jones should not go home but should rather be admitted for five days of rehabilitation. If you can’t prove this, why do you exist?
Choice-based congregate care providers such as age-qualified independent living, board & care and assisted living will be faced with a slightly different set of challenges. In many marketplace areas, independent living and assisted living providers did not suffer the same PR nightmares as did nursing homes. The result will be a renewal of interest and return of move-in’s. Many independent living providers didn’t suffer the same loss of occupancy as other types. The challenge for these choice-based congregate providers will be the progressive medicalization of their populations. Aided by increased penetration of Medicare Part C Plans (Medicare Advantage – MA), we will truly see what had been talked about for years – that assisted living will begin to look like nursing homes. As more and more of the population is covered by MA and providers enjoy what amounts to a federal subsidy, this market will further stratify, but this is a story for another day!
Downstream long-term care providers who are unable to find a seat at the risk-bearing table may survive in certain marketplace areas but, overall the casualties will be from 5 to 12%. Once the federal stimulus dries up, my estimates are that 780 to as many as 2,000 nursing centers will go bankrupt or close, and there could be more. (This is not a typographical error.)
In the direct to consumer (D2C) markets, the timeline and rate of recovery will be based on:
- Publicity. If the publicity was extremely bad because of high levels of infection and/or deaths, or just because advocacy groups and the press decided to do hatchet jobs on skilled nursing providers, recovery will be painfully slow. Marketing tip: In marketplace areas where your operation is, “the only game in town”, there may be no better rationale or time to do a “brand refresh”. The American public has a very short attention span, and the fast news cycle can be in in your favor.
- Fear. How long the fear of contagion will affect consumer behavior is unclear; there has not been much good research done about this. The demand for skilled nursing is not driven by consumer choice, but rather by exigent need. There are steps that can be taken to mitigate fear in the community and among consumer prospects. And while the length of this article doesn’t allow me to go into detail, the principles are: a. tell them what you’re doing to protect them; b. be specific with numbers, and; c. show them images & pictures to “display” safety.
- Demographics. Remember that the 85+ age cohort were born at the very bottom of the trough in the demographic dip. In the next five years, the size of the 85+ cohort will begin to slowly increase but will need to be adjusted for lower survival rates due to the pandemic.
Value based healthcare will be devastating.
None of us should forget that The Affordable Care Act was designed to both make insurance more available (which it has) and to reduce the costs of medical services in the United States (which it hasn’t). One of the central tenets of cost reduction (remember, “The Triple Aim”?) is so-called value-based healthcare. Once the noise about the pandemic subsides there will be a renewed push for VBH, and long-term care providers will once again receive intense focus from CMS and other intermediaries. There’s no moralizing involved: the variability in charges is too great, so LTC is a target. Bundles, episodes of care, risk-based population adjustments will become commonplace.
Value-based healthcare will squeeze the last crackling breath from many long-term care providers
Especially those serving the poor, indigent and otherwise marginalized populations in marketplace areas where other providers take a seat at the table. We estimate another 380 to 1,100 SNFs will go bankrupt or close as a result of VBH. To prevent this, there would need to be an entirely new model for congregate custodial long-term care, and in the immediate guilt-shifting, post-pandemic world, there will be little appetite for novel ways to convert decrepit buildings, pay adequate wages, or fund operating losses.
Crises in employment will become entrenched.
Not to put too fine a point on it but, “Where will the help come from?” Workforce, staffing, or labor – no matter what label you assign, the “means of production” in long-term care is people! We can be fascinated with robotic dogs & cats, pill-dispensing R2-D2’s that roam the hallways, but the bottom line is that efficiencies are hard to find, and it is simply not possible to provide long-term care without carers. Most frontline caregivers are women, women of color, and often those who work multiple jobs. These are what sociologists refer to as asset limited, income constrained and employed (ALICE). These individuals were among the most devastated by the pandemic, and while economic necessity has kept many of them in these positions, how attractive will these jobs appear to be going forward? Even today, all the data shows that the jobs market is heating up. There is a fundamental supply and demand mismatch (fewer candidates for a growing number of jobs), and the inflationary wage pressure is heating up. Just before the pandemic and even during the pandemic there were growing number of states where staffing ratios were being mandated; this is just tightening the noose on many nursing centers.
We are seeing a race to the bottom in the frontline caregiver market, with nursing centers and home health agencies competing with escalating incentives and bonuses for dwindling numbers of people willing to work in these challenging jobs. From a marketing point of view, the portrayal of staffing appropriateness will become a gold standard among consumers and referring professionals alike.
These are my marketing observations for the post-pandemic environment. The US has too many nursing home and assisted living beds in most locations, there is mal-distribution of them, the regulatory / payment systems is a real mess, the inventory of nursing homes is decrepit or at least obsolete and the shortage of labor will get worse and remain endemic. The challenge is to segment the markets and to be proactive in ways that the sector has not been in the past. For those who love a challenge, let’s get started!