Are post-acute networks on the horizon?
Are post-acute networks on the horizon?
Hospices could benefit from strategic alliances
In this age of mergers and consolidations, the health care industry is no different from the likes of media conglomerates and high-tech industry. As its components strive for market share and efficiency, providers of health care services have been joining forces to make their mark on a rapidly changing health care landscape.
Acute care hospitals have led the way by forming integrated delivery systems. But the continuum of care doesn’t stop with a hospital discharge. Providers of post-acute care are seeing the advantage of forming networks that address the care continuum outside the hospital.
Although hospices have seen reimbursement rates rebound, they and other post-acute providers struggle to make ends meet with government-sponsored programs. As a result, hospices and others will have to rely on managed care for a greater portion of their overall revenue. That means hospices, along with home care agencies and skilled nursing facilities, will have to compete for managed care contracts.
Contracting with fewer entities
Managed care organizations have shown that they prefer to contract with providers who can provide a broad range of care, thus eliminating the need to have to contract with several smaller providers.
Hospice leaders looking for ways to promote referrals could benefit from collaborations with other post-acute providers. A post-acute network, in turn, would market the entire network’s services to managed care providers who favor contracting with larger entities rather than individual providers.
In its broadest sense, the term post-acute care includes all health care services delivered outside the acute hospital setting, says Gail Currie, MS, ABD, founder and president of Critical Edge, a health care consulting firm in Far Hills, NJ.
From her firm’s web site (www.criticaledge. com), Currie says post-acute care generally refers to a network within a given market encompassing a broad range of health care services in a variety of care settings outside the hospital, including primarily subacute medical and rehabilitative care and home health care.
In addition to these core services, an integrated post-acute network may extend its service capacity with selected outpatient services such as family medicine practices or diagnostic or surgi-centers that meet key health care needs of the population served. They may also provide pharmacy or other consumer health products to patients.
What is included in the working definition of an integrated post-acute care in any given market will ultimately depend on the needs of the covered population and the opportunities of a given community marketplace.
Whatever services are encompassed in the offering, integrated post-acute care must be provided by a goal-oriented, physician-directed, interdisciplinary team with specialized skills for treating patients with complex medical and/or rehabilitative needs who require less intensive care than that available in traditional acute care or rehabilitation hospitals.
Having a continuum of services that has effective linkages for coordinated discharge planning will be more important to managed care companies, experts say. What is important to managed care companies, as well as to Medicare, is the provider’s ability to manage a patient’s care cost-effectively across the entire continuum.
They have to align themselves soon’
But in many communities, post-acute providers are still a collection of independent providers who treat patients from the narrow scope of their own company. To be competitive, post-acute practices will have to form their own post-acute continuums, says Ann Keillor, EdD, vice president of Superior Consultants, a health care consulting firm in Ann Arbor, MI.
"They have to align themselves soon," Keillor says. "They can take referrals from everyone for a while, but eventually, alignment will have to take place."
Further, for the sake of the continuum’s success, some providers will have to shed some of their independence for the larger organization
to succeed. "Their independence will diminish somewhat — everyone’s will," Keillor says. (For a list of the components of an effective network, see p. 93.)
Keillor has found that as managed care exerts greater influence on a market, patient care is managed more aggressively. This means providers will need to develop programs to allow patients to be admitted directly to post-acute facilities rather than entering them from an acute hospital, because it is more cost-effective.
"As markets go through this transition, what they need to look at as a system is to be able to move patients directly into these levels of care," Keillor says. "An individual provider will either have to develop these programs alone or have to develop formalized relationships with those who do have these programs."
These formalized relationships will constitute the beginning of continuum development. The hospital usually takes the lead in forming a post-acute network because it has greater access to money and contracts. Hospitals also see network formation as a way to control patient flow and to lower their own cost by moving patients to less expensive postacute care.
The best way to bring all of the above services together is a formal organization, such as a health care system that integrates not only post-acute providers but physicians and hospitals as well.
But the reality may be that unless market forces push post-acute providers into mergers or consolidations, most post-acute providers will remain independent businesses. So building a continuum will hinge on providers’ ability to form joint ventures or create an organization of loosely affiliated providers, similar to independent practice associations for physicians.
"It is extremely difficult to integrate a number of different proprietary entities into a streamlined continuum," Keillor says. "What we find is that programs will compete for the same patient population."
Difficult, but not impossible. Hospitals will not have enough money to buy all the post-acute services in a market, so the chances are strong that a continuum will include providers who have only an operational commitment.
"You have to be clear about what the mission is," Keillor says. "You have to have willing participants. You need post-acute providers who are willing to take more patients and take them at a higher level of care."
Organization interests vs. Individual interests
In forming an organization of independent providers, the larger organization risks territorial battles and infighting when the individual interests of providers clash. For example, if a post-acute organization takes capitation from an HMO for the entire post-acute continuum and distributes the per-member per-month payment among the various providers, conflicts could arise as a result of patients moving along the continuum. A home care provider may find itself at odds with the subacute provider because patients are being discharged to home care too early, causing the home care provider to expend more money to care for the patients.
Diminished independence will also come in the form of abdicating responsibility for patient flow to one central authority: a case manager. Central case management involves guiding patients from one point in the continuum to the next, working closely with case managers at the individual provider level. While it would be difficult to develop clinical paths that cover the entire continuum, the central case manager will have to work with provider case managers to develop clinical paths for each provider site.
As managed care proliferates and Medicare reimbursement is reduced, the knee-jerk reaction of some post-acute providers may be to focus on reallocation of costs to compensate for reductions in payment. But the key to long-term success lies in managing costs by placing patients in the most appropriate setting.
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