Post-Acute Partnerships: Four Critical Considerations

In the last two years, rapid changes to the healthcare marketplace have driven a sharp increase in the number of strategic post-acute partnerships formed between hospitals, skilled nursing facilities (SNFs), physician groups and payers. Bundled payment initiatives, readmission penalties, value-based purchasing programs, Medicare rate adjustments and the birth of ACOs have motivated many organizations to seek synergies and combine efforts to thrive in the new marketplace.

Hospitals and SNFs particularly see additional pressure from market forces and regulatory agencies to focus more on what happens to their patients both during a stay and post discharge. Patients, caregivers and payers are taking a closer look at quality measures, health outcomes and costs.

Now, more than ever, hospitals and skilled nursing facilities need to carefully evaluate their partners to ensure consistent results across the care continuum. Partnerships will be formed to create networks of preferred providers, and organizations that are not competitive candidates will be left out. All partnerships must be value-based in this new environment, leading hospital and SNF executives to also consider their own value proposition and what they bring to the table to stay competitive.

Although the path to evaluate existing and potential partners requires an in-depth, strategic process, there are some considerations that we view as the critical foundation for any hospital or skilled nursing facility management team. They include:

Management and coordination of care

The new healthcare marketplace requires both hospitals and SNFs to carefully evaluate how potential partners manage and coordinate care. What processes are in place to ensure appropriate care, reduce emergency room visits and prevent unnecessary hospitalizations? What happens to a patient post-discharge? How does a potential partner leverage technology to share information, monitor progress and track outcomes?

Capabilities

What specific skills does an organization bring to the post-acute partnership? Although an organization’s unique strengths and market differentiators will be key components of an evaluation, the new marketplace also has raised the bar in terms of minimum skills needed to compete. Some post-acute facilities are even embedding primary care in their care models to improve outcomes. Beyond clinical capabilities, hospitals and SNFs should also think about payer relationships, information technology and staff expertise – these can also be important differentiators for a partner.

Quality

Healthcare reform spurred payers, providers and patients to emphasize and improve quality of care across the healthcare spectrum. Innovative payment demonstration projects, pay-for-performance incentives and quality scorecards on both the state and federal level have placed additional pressures on post-acute organizations to stay competitive. Evaluating a partner’s quality of care can encompass multiple facets and incorporate many different measures – so it is critical to be mindful of context. What quality measures does your own organization target? What areas of quality hold potential for the greatest synergy?

Cost

The post-reform marketplace has pushed providers to “own the cost” for patients, especially for those with multiple chronic conditions – and hospitals and SNFs must shoulder a large portion of the burden. How a partner manages the costs of care can make a significant difference in the level of success a partnership reaches, especially for those organizations participating in payment innovations or payer incentive programs. How are costs tracked and managed per episode of care? What processes are in place to balance care innovation, appropriate utilization and cost management? And, for those organizations participating in innovative payment programs with deferred incentives, does the partner have the ability to share payment risks?

Having a knowledgeable partner to help formulate a strategy and guide an organization through the process of evaluating capabilities and partnerships is critical. For example, we have assisted a health system that did not own a skilled nursing facility to develop an SNF network strategic business plan, draft an RFP to develop the network and craft the clinical models to be embedded in the SNFs selected for the preferred network.