Friday Feature: The Economic Realities
For the past two years, as the pandemic emergency waned, and the U.S. and the rest of the world moved back to a more normalized business and social condition, the fallouts of a mish-mashed pandemic policy (federal, states, local) became evident. School closures with virtual learning impacted kids and their education performance (falling performance on reading and math). Enormous governmental outlays and supports to the tune of trillions, revealed fraud (PPP), begat inflation, and assisted in dislocating millions of people from the workforce via subsidies (rent abatements, student loan payment abatement, enhanced unemployment, etc.). What we know is that short-term measures without a longer-term view of the resultant impacts, can lead to troubling economic times, and sometimes, the cure in terms of pain is worse than the original condition.
This morning, core inflation data was released, known as PCE (personal consumption expenditure). What we see is continued inflation above the Fed target of 2%. PCE measures personal consumption, removing volatile components such as food and energy. This report showed that inflation, minus food and energy, ticked-up in March and rested at 5% year-over-year. With energy such as gas on the rise, expect the CPI number with food and energy included, to continue to be at or above 6%. Here is this morning’s PCE release: https://www.bea.gov/news/2023/personal-income-and-outlays-february-2023
Earlier in the week, another key economic number was released – GDP or Gross Domestic Product. GDP data represents the growth rate of the economy as measured by the sum total of goods and services produced by economic activity. The first quarter number was 1.1%. This result is down from the prior quarter measure of 2.2%. GDP releases are initial and then adjusted, with adjustments typically moving the initial number down. With inflation running significantly above GDP 1.1% vs. 5% PCE and/or 6+% CPI, the economy is either in a state of or moving towards (quickly) a condition known as stagflation and perhaps, recession. Stagflation occurs when inflation runs considerably higher than GDP growth. Here is the GDP report: https://www.bea.gov/news/2023/gross-domestic-product-first-quarter-2023-advance-estimate
So, what does this data translate into for the near-term outlook for the economy? Answer: More of the same struggles and perhaps, some additional challenges. Interest rates will continue to rise as the Federal Reserve is likely to add another .25% rate hike to its core borrowing rate (fed funds rate), now at 4.75 to 5%. This will push the rate to 5 to 5.25%. A traditional economic principle starts to become evident: Fed rates at or above the rate of inflation drive inflation via demand reduction, down. If as suspected, the core inflation driver is 5% or thereabout, a fed funds rate at 5% to 5.25% should significantly slow the economy and move inflation down. The problem is the lag in seeing the impact and whether, the impact will in turn, push the economy into recession.
For senior housing and post-acute care, the current economic conditions are problematic (kindly stated). Real wages are not yet, keeping up with inflation meaning staffing costs will continue to have upward pressures. Borrowing costs are now crazy high and yet, reimbursement rates are not keeping up in growth, with the increasing cost of capital. For debt that is variable, providers are getting a rude and frequent awakening with increasing index rates pegged to the borrowing costs on the debt – rates therefore, rising. I’m watching growing debt defaults for senior housing as expenses have risen, borrowing costs the same in some cases, while revenues are flat or modestly higher but in no way, keeping up with the expense increases. The result is margin reduction and of course, reduced cash flow, translating into lower levels of income available for debt (below covenants).
Here’s a quick snapshot of economic data and conditions to watch over the next quarter.
- Bank capacity and willingness to lend. Credit is tightening and banks with deposit runs, are not capable of generating the same lending levels as before. This will hamper access to credit.
- As I have written about before, a non-existent (or very, very sluggish) home sale market due to high borrowing costs turns real estate primarily illiquid. This is not good news for seniors seeking or needing to sell a home to move into a senior housing project. With occupancy rates still below pre-pandemic levels, CCRCs and other senior housing providers will likely continue to struggle to move occupancy up due to the housing market challenges.
- Access to capital for capital improvements is a necessity for the senior housing sector. I expect a year of tough sledding in terms of capital access and thus, a creep-up in average age of plant with deferred maintenance being the driver (this year).
- Mergers and Acquisitions will also slow (already down) due to higher costs of capital and economic uncertainty. This may mean, with fewer buyers/acquirers, some projects/providers fall into closure/bankruptcy.
- If there is a bit of good news, it may come a bit later this year, in the labor market. The impact will not be on the clinical side but on the non-clinical side. Layoffs which are occurring, will accelerate if further demand reduction in the economy occurs. This will move people into situations where shifting industries for work occurs. In other words, fall-out in construction could beget maintenance staff (an example).
TGIF and Happy Weekend to all!
Top 5 Staff Retention Tips for a Tough Labor Market
Recently, I wrote a post on recruitment in a tough labor market. Suffice to say, I have not in my three decades plus career, seen a tougher labor market for clinical staff (all staff in many regards). COVID had a lot to do with the shifting supply of labor, but I’ll offer that health policies and economic policies during the prime pandemic period and since, had far more to do with where staff went – and clearly, stayed. Societal and government responses to COVID are in my opinion, primarily to blame for the largest impact on staff disengagement from direct care environments. Dissecting the policy side is a topic for another post on another day. The recruitment strategy post can be found here: https://wp.me/ptUlY-vj
The opposite of recruitment is retention. Arguably, the better an organization does at retaining its employees, the less it needs to invest in recruitment. Healthcare has notoriously been an industry prone to turnover, especially among para and non-professional staff. Back in the day (I sound like a codger), I knew some long-term CNAs, ten to even thirty years in one company (one I was running at the time) and similar for housekeepers, laundry staff and maintenance. I simply don’t see that kind of tenure any longer, save a few of the folk almost at retirement. Once the final generational shift occurs, primarily the folk in my age cohort (aka “Boomers”), new outlooks on longevity in one career and one employer become fully operable. Simply, length of service regardless of retention strategy will be shorter. Long-term may evolve to any service in one place between 5 to 10 years. Outliers will be those working in the same place for ten plus years, without a shift in position or level within the organization (e.g., move to management or some other promotion).
Combatting turnover is a function of understanding why people leave, voluntarily. Some of the primary conditions are symptoms of what is going on in the healthcare industry. For example, hours and workload are often cited as primary drivers yet, providers have (often) little choice but to mandate overtime or have folks work short, covering more patients (or cases) than ideal. There is a bit of a circular (dog chasing his/her tail) phenomenon about workload when overall, open positions exist. Staff get tired of working short or covering for call-offs, etc., and thus, turn over. Problem is perpetuated. A somewhat universal list of the top reasons staff leave is below.
- Supervision: Bad managers/supervisors create turnover.
- Recognition: This is different from reward. This is appreciation or acknowledgement of the work being done within the conditions/environment that it is being done in.
- Schedule/Workload: This involves everything from how much patients/cases are on the shift to when shifts change or rotate to length of shifts to weekends to on-call to overtime mandates, etc. Extra hours can sometimes be absorbed without too much difficulty but too often as of late, extra hours are the norm and staff burnout.
- Limited Promotion/Growth: Healthcare is very layered and often, the jobs stagnate. For example, lateral movement is difficult at a professional level. RNs in one area can’t always jump to another clinical area without additional training or without taking a back-step in schedules, etc. If the view is that the only promotion is to management, a couple of realities need to be considered. First, not all (or even most) clinical staff make good management/supervisory staff. The industry definitely does not need more weak managers. Second, taking good clinicians away from patient care is self-defeating to the organization and to the patient.
- Bureaucracy/Regulation: This I’ll call paper before patients. Healthcare as I often hear, is neither fun nor rewarding in the way it used to be. Too much regulation takes the clinicians who went into the industry away from patient relationships. Staff have tons of work to do and on top, supervisors crab constantly about keeping paperwork up to date (documentation). Meetings and in-services are constant and rarely, of any value (per staff). Don’t forget too, the industry lost untold numbers due to COVID mandates (vaccine, PPE, testing) that created massive burnout and frustration.
In a recent survey of post-acute and senior housing executives conducted by NIC (National Investment Center) only 30% of organizations noted retention of 80% of their new hires longer than a month. A year ago, this number was 46%. When looking out a year, only 7% of organizations retained more than 80% of their new hires for more than a year. I can only think of one word to describe this data – YIKES!
No magic bullets are available to remedy this issue. Turnover has lots of causes and organizations can only do so much. We have a supply problem in the industry and until the supply is increased, by societal value shifts and proper public policy, turnover will continue to be an issue. I do, however, know organizations that have made an impact and with the implementation of certain strategies, performed better in terms of turnover. These strategies comprise my top five tips/recommendations for improving staff retention.
- IMPROVE MANAGEMENT: This is not easy, but it does immediately and over the longer term, bear real results. Staff don’t work for companies; they work for leaders. Hire leaders that have proven track records in building teams and retaining staff. Don’t promote people without a prior, successful training program in management/supervision. Provide ongoing training in management and supervision.
- RELEASE AS MUCH CONTROL AS POSSIBLE OF THE SCHEDULE: Give staff say in what hours they work, when they work, etc. Of course, parameters are required but if any one major gripe can be alleviated, scheduling is a prime complaint. Staff need to be engaged directly and provided opportunity to address their own work /life balance. Team scheduling is awesome as are incentives around team performance in this regard. Likewise, stop thinking about shifts and how many staff per patient. Look at work blocks and patient needs and when duties really need to be done and by whom.
- RESTRUCTURE REWARD AND COMP: To the extent possible, flex everything and create for new staff, a very stepped process of achieving ongoing rewards/increases in pay and certain benefits like time-off, during that first year. Gainshare as much as possible as well. This is not about pay per se but about recognition and engagement. Everything needs to be on the table. Start with the total comp budget and note, “what’s the best way to spend it” – ROI v. wages and benefits. The more staff feel connected such that what they do correlates to a reward, a benefit or recognition to them (individual and team), the more they are likely to stay.
- ALGEBRA/SIMPLIFY: For decades, I have worked with and led organizations in healthcare that simply can’t stop themselves from doing dumb things. Often, the excuse is “regulation”. My answer: B.S. Rarely is all of the paperwork, forms, redundancy, etc., required or if it is, it can be simplified. Healthcare loves paper, regulations, rules, etc. Staff get trapped here and supervisors use bureaucracy like a hammer – a blunt instrument. My advice, deconstruct. Remove as much needless and redundant chores, paper, etc. from staff. Look acutely at who has to do what by when and then, look at how it is currently being done. Improvement is definitely possible. Pay very close attention to how much additional, non-nursing work nurses and nursing staff are doing.
- INJECT FUN INTO WORK: Healthcare is too serious and too bureaucratic. Give staff a chance to create an environment that encourages team, fun, fellowship. This is within the workplace and outside of work as well. The reality is that staff that feel part of something bigger, committed to each other, enjoy being part of a cause, etc., work harder and stay longer at their place of employment. This requires a culture shift for most healthcare organizations and a definite shift in management style.
SNFs: 3 Overnight Stay Requirement Returning
As the Public Health Emergency (COVID) ends, healthcare providers will revisit pre-pandemic policies as a slew of waivers expire. One waiver particularly impactful to hospitals and SNFs is the requirement of a 3 Overnight (3 Day Stay) for a patient to receive Part A Medicare benefits in a SNF. Recall, the rule pre-pandemic was that a person had to be admitted to an acute hospital with a stay of at least 3 overnights in the hospital prior to discharge to a SNF, in order to qualify for Medicare coverage applicable to the SNF stay. One little wrinkle, rarely experienced, is that the discharge could be to another location within a thirty-day window of the patient entering the SNF, and the patient still could qualify for Medicare benefits in the SNF. In other words, the patient could be sent home, and for whatever reason, subsequently enter the SNF within 30 days of the hospital discharge and still be eligible for Medicare SNF benefits.
While there has been support for the waiver of this requirement to remain via a continued policy change from CMS, it is now apparent that CMS will reinstitute the 3 overnight rule. The primary impetus for this? Of course, cost control. A study from the AMA, appearing in the JAMA Internal Medicine publication (released on Monday 4/24) basically provides CMS with its positional defense. The study is here for anyone interested: jamainternal_ulyte_2023_oi_230019_1681999138.05344
The study analyzed MDS data for patients admitted to a SNF between January 2018 and February 2020 (pre-pandemic) compared to admissions between March 2020 and September 2021 (pandemic period). During the pre- pandemic period, there were 130,400 care episodes per month, 59% of which were female. During the pandemic period, there were 108,575 episodes, again 59% were female. Per the study: “All waiver episodes increased from 6% to 32%, and waiver episodes without preceding acute care increased from 3% to 18% (from 4% to 49% among LTC residents). Skilled nursing facility episodes provided for LTC residents increased by 77% (from 15 538 to
27 537 monthly episodes), primarily due to waiver episodes provided for residents with
COVID-19 in 2020 and early 2021 (62% of waiver episodes without preceding acute care).”
What was interesting to me is where the predominant utilization of the waiver for non-prior hospitalized patients occurred. Per the study, the 80% v. 68% of the LTC waivers (non-prior hospitalized) were for-profit facilities. These facilities had lower overall star ratings on average with the for-profit average at 2.7 stars v. the non-profit average rating of 3.2 stars. The same kind of variance was found looking at the staffing star ratings – 2.5 v. 3.0. Skilled admission spending was $2.1 billion prior to the pandemic and $2.0 billion during but a big jump in LTC (Medicare covered) occurred from $301 million to $585 million. Hospital spending remained relatively unchanged, despite lower overall patient volumes (COVID incentive payments making up outlay differences).
Here is the key takeaway from the study:
Key Points
Question: Did skilled nursing facility (SNF) care volume and
characteristics change when the public health emergency (PHE)
waiver for 3-day qualifying hospitalization was introduced in March 2020?
Findings: In this cohort study of SNF care provided for 4 299 863
Medicare fee-for-service beneficiaries from January 2018 to
September 2021, waiver episodes without preceding acute care increased from 3% to 18% during the PHE in 2020 to 2021. Among long-term care residents, such waiver episodes increased from 4%
to 49%, with 62% of episodes provided for residents with COVID-19.
Meaning: This study found that the use of SNF care for long-term
care beneficiaries without a preceding qualifying hospitalization
increased markedly during the PHE, primarily for care for patients with COVID-19.
So SNFs will return to a pre-pandemic point where coverage for SNF skilled services under Medicare will require a 3 overnight hospital stay as the Public Health Emergency ends. The study cites cost as the main driver, but I also believe, that cost on an escalatory basis is more the concern. As the pandemic has ended and hospital volumes are normalizing, we’ve seen SNF referrals increase. I noted this trend in a post on Monday…link is here: https://wp.me/ptUlY-vL What this means is that a shift toward more expensive post-acute care is happening and may be more longer-term in trend than not. In other words, while a bias toward discharge to home health was prevailing pre-pandemic, the factors of reimbursement policy, staffing dynamics, and increasing patient acuity on discharge have moved the needle (so to speak) toward SNF discharge. Staffing is of course, the main driver.
What does this mean for hospitals, if anything? Maybe a bit of shift in consciousness about length of stay, inpatient admission, and discharge planning will occur. The growing use of observation stays vs. inpatient admits was always a sore spot for SNFs and patients and families. I saw lots of confusion a few years ago among SNFs and, then unfortunately families, when a patient arrived for admission and lo and behold, the majority of the stay was classified as observation vs. an inpatient admission, not meeting the 3-day inpatient admission requirement.
Medicare Advantage plans will also need to rethink some approaches in their care coordination. While the preference may be a discharge to home health, admission acceptance is still on the lower side (lots of rejections). it may just require a shift in focus from Med Advantage plans toward better coordinated SNF stays.
For SNFs, the loss will be felt among facilities that were able to “skill” typically, long-term care Medicaid patients. The missing revenue will be felt without a counterbalance pick-up readily available. For good performing SNFs that have focused on building strong value propositions and positioned themselves well for value-based care, options are plentiful, but they had been prior to the pandemic. Staffing remains the challenge. My advice for these folk? Get your care pathways together and your algorithms and be efficient in cost and length of stay. Use your data to drive partnership referral bases with hospitals and in particular, Med Advantage plans. Now is a good time to take advantage of the shifting policy dynamics.
In-Depth: CCRCs First Quarter 2023
The smallest distinct segment of senior housing is Life Plan communities or CCRCs. Assisted Living, Independent Living and Skilled nursing, in each segment, dwarf the number of CCRCs yet, CCRC popularity remains and continues to grow, if ever so slowly.
CCRCs run a gamut between large and small, entry fee to rental, with/without SNFs yet always including some extended care services beyond the housing component. In recent years, I’ve watch CCRCs smartly, expand their service offerings to include home health and personal care, hospice in some cases, and other wellness and medical/care services. Typically, the larger the CCRC or sponsoring organization, the greater the service array (home health, personal care, etc.).
The industry remains dominated by non-profit owner/operators. For profit organizations account for about 25% of the industry, the balance is thus, non-profit. Size as measured by units/residency is largest among non-profits. Additionally, the non-profits dominate the entry-fee CCRC market.
For the last two plus years, COVID has had a profound impact on all senior housing organizations. The fallouts from the pandemic include a diminished workforce (fewer health care and support) workers, inflation, and rising interest rates have hurt all providers and driven all kinds of compensating behaviors such as reducing census due to staff shortages, escalatory pricing, service reductions, etc. CCRCs have not been immune to the pandemic fallouts but have weathered the pandemic and the fallouts better than their segment partners (e.g., Assisted Living and SNF). Similarly, we watched CCRCs experience fewer COVID health impacts (outbreaks, deaths, etc.) than Assisted Living or SNFs.
Through the first quarter of 2023, CCRCs have experienced a steady but slow increase in occupancy. At the start of the quarter, occupancy was still behind pre-pandemic levels at 87% (compared to 91% pre-pandemic). Non-profit CCRCs had stronger occupancy performance than their for-profit counterparts – 88% v. 84% respectively. We also see entry-fee communities outperforming rental communities, 89% to 84%.
In terms of rate and inventory, there has been a shift from pre-pandemic levels. Inventory (units for rent) shifted the least for non-profits and where reductions occurred, they did so in nursing care. For-profits had the biggest inventory shifts, across all living accommodations (independent, assisted and nursing). Rent increases are harder to factor but as occupancy has recovered, inflation and labor factors settle-in, we are seeing rather aggressive pricing shifts. Senior Living in general has seen rate increases in the range of 8 to 10%. Diving into living segments, we see memory care and smaller Independent Living units (one bedroom, studios) increasing the most – 9% to 10% – with studios running at 8% plus, the same as Assisted Living. CCRCs tend to have different pricing packages at the Independent Living level vs. at the care levels. Many incorporate various discounts for residents as they transition to the numbers of actual realized rent v. published or asking rent can be quite different (Sources: NIC, LivingPath.com)
As 2023 progresses, there are a number of headwinds for CCRCs still trying to recover from the pandemic and its related fallouts and impacts. Below is my watchlist for the remainder of the year. I’ll touch base on these items from time to time throughout the remainder of the year.
- Interest rate rises will impact cost and access to capital for CCRCs. These organizations tend to be capital intensive as their marketability is tied to heavily amenitized environments requiring constant updates, improvements, refreshment, etc.
- Rising rates have also severely impacted the residential real estate market. New CCRC occupants typically move post a primary home sale. The inability to effectively liquidate their real estate to pay an entry fee will harm occupancy increases. Most CCRCs have units for sale. Depending on the market location, this impact could be very, very profound for the balance of 2023 and perhaps, beyond. The good news is that homes for sale inventory is low so price reductions have not been (yet) dramatic.
- A marketing strategy often deployed by CCRCs is some form of rent suppression, rent reduction or abatement for a period of time to “sell” a unit. Revenues are already suppressed due to lower occupancy and, likely rent suppression in general during COVID. Revenue recovery will be a function of occupancy and the ability to increase rates to accommodate rising costs. This will be a tricky navigation for most operators/sponsors for 2023 and in my view, early 2024 as well.
- Labor will continue to be a major problem hampering occupancy, service expansion, and increasing cost. I don’t see any labor challenge abatement any time soon, beyond 2023.
- In established CCRCs we will continue to see an increase in resident age and debility and a similar trend on admission. This trend, especially on admission, is a lingering pandemic problem as folks avoided moving to CCRCs during the pandemic. As they do now, they are generally older and more disabled.
- Wealth reduction due to market losses will cause some seniors to remain, ill-advised, at home. Couple the liquidity issue (stagnant) on real estate sales (bad market) and estate shrinkage due to investment losses, an impact in qualified seniors for any CCRC but especially, entry fee CCRCs, has occurred. Recovery will not occur in 2023.
- The demand for CCRCs is very elastic such that, there are a number of substitute options available to a senior, such as staying at home with services. As real estate liquidity is a challenge now, the demand curve has shifted a bit similar to what we saw in 2008 to 2010. Expect this shift to remain in-place for at least all of 2023 and likely, until mid 2024.
Friday Feature: The Supreme Court and Medicaid Beneficiary Rights to Sue
TGIF! In a little known but important case argued in November of 2022, the family of a Medicaid nursing home resident in Indiana began a suit against a publicly owned nursing home (originally 2016), Valparaiso Care and Rehabilitation. The nursing home is operated by the Health and Hospital Corp. of Marion County. The corporation’s board is appointed by the mayor of Indianapolis and the Marion County Commission and city council. A ruling is expected from the Court soon.
The Talevski family sued the Health and Hospital Corp. after their father was denied readmission to the facility, alleging he was cared for by Valparaiso and other facilities, negligently. He passed away due to complications from dementia but during his initial stay and subsequent travels among nursing homes, the family argued that he was excessively drugged – six psychotropics. The nursing home claimed that the elderly gentlemen became violent, sexually aggressive, necessitating a transfer to another facility more capable of caring for him. The other facility was an hour away from the family. The family said the facility tried to transfer him to another facility even farther away – 2 plus hours. The facility, Valparaiso, refused to take him back.
After the facility refused to accept the readmission, the family sued. One of the daughters is an attorney. The basis of the suit against the Health and Hospital Corp. is that the extensive use of medication, unwarranted and against federal law (SNF Conditions of Participation), and his unauthorized transfers against his rights, violated his rights under federal law. This law, the Federal Conditions of Participation for SNFs, regulates care provided to Medicaid and Medicare beneficiaries. The suit alleges that it is fundamentally illegal to harm patients, provide substandard care, and received Medicaid reimbursement. The suit seeks redress for the rights violations against the County.
At issue is whether a beneficiary can sue a governmental entity for breaches of rights under a federal program or denial of benefits under a federal program such as Medicaid. The argument against the suit is that programs like Medicaid are a joint federal-state funding contract and as such, beneficiaries don’t have the right to sue based solely on this relationship. The question thus is, can individuals interfere with or become a party to, a contractual relationship between the state and federal government?
The implications of this suit are enormous for seniors in the Medicaid program and for providers that care for Medicaid beneficiaries. For beneficiaries, the risk of loss in this case is that they would not be able to sue a government or governmental agency for things as simple as a denial of benefits, even if they are eligible under Medicaid criteria. Administrative procedure may be the only method for addressing complaints or benefit issues.
Providers and governments take the opposite approach indicating that a codification of a right of a beneficiary to sue could create havoc for key programs such as Medicaid waiver (home, community-based services) programs, PACE, Special Needs Plans, etc. They say that lawsuits don’t create a remedy but do ultimately, push unnecessary litigation costs and damage claims into the program such that funding elements would be harmed.
Court watchers see parallels with a decision and the recent Dobbs abortion ruling – a question of rights and access to certain care and services. Some believe the Court may attempt to place limits around certain beneficiaries and litigation such as the ability to sue nursing homes using provisions in the Federal Conditions of Participation as a basis; a patient/resident rights violation. The thought here is that rule enforcement or rule violations when not enforced or addressed, is a regulatory function. There is no likelihood that the Court would speak to any issue of harm due to poor care which, is a different matter and not part of this suit directly.
I’m fascinated by this case as there is so much at stake for Medicaid beneficiaries and providers in the Medicaid program. Its nuances and challenges are many. It is a poster case, in my opinion, for the overall argument that these programs, Medicaid and Medicare, have become too bureaucratic, over-regulated, and incapable of truly supporting and addressing, the real needs of their beneficiaries.
A good synopsis of the case and the issues is here: https://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2022/11/28/supreme-court-case-could-curtail-rights-of-medicaid-patients
Top 5 Tips for Recruiting in a Tough Labor Market
I’ve done a number of presentations on the staffing challenges facing providers and how, certain strategies work and others don’t in terms of recruitment and retention. Over my 30 plus years in the industry, I’ve had reasonable (ok, very good) success in building and retaining high-performing teams, including direct care staff. I’ve been fortunate to have many folks who have worked with me, follow me from assignment to assignment, some across the country. Leadership is no doubt key to recruiting successfully as people want to work with winning organizations. Likewise, really good recruiting strategies don’t use the same methodology as the past – namely advertise, incent (throw money at it), repeat. Steve Jobs said it best: “Innovation is the only way to win”.
Most healthcare providers can’t financially compete for staff, consistently. In reality though, staff only work for money when they see no long-term value in the employment proposition. I know travel nursing and agency nursing catch lots of news and sound sexy and high paying. I also know nurses (really, really well as the same are throughout my family) and, the lure of travel nursing is short, regardless of the money. Stability, home base, regularity, working with good colleagues and peers has more value to most nurses.
Before I offer my five “DOs” for recruiting, let me offer a few “DON’Ts” and a reminder. The reminder is recruiting is like marketing – it requires constant, incremental effort to achieve success. Superb marketing campaigns and brands build year-over-year. One misstep, however, can damage a brand significantly (see Bud Light). The “don’ts” mostly focus on money as in don’t think you can buy staff and don’t think, sign-on bonuses buy anything other than applications and temporary workers. Don’t focus on the economic alone but on the goal of recruiting. Like marketing, it’s about positioning the organization to attract workers. The sale or close comes via an H.R. specialist or someone exceedingly good in the organization of convincing people of the value of working for the organization.
My Top 5 tips for recruiting are….
- Focus on recruiting introductory, PRN workers first. Stop advertising for shifts, full-time, part-time, etc. Focus on people who are interested in flexible work and are willing to take a role and see how it goes. This is the “dip your toe in the water” insight. Be prepared to pay well but not necessarily crazy. You won’t be dealing with many if any benefits for this group other than some soft stuff (meals perhaps, incentive rewards like a gift card now and then, t-shirts) so hourly rates can be decent. Likewise, be prepared to pay weekly if not even more frequently.
- Have a killer, multi-media/onboarding/orientation program. Little investment here but not much. YouTube, Tik Tok (can’t believe I wrote that), a website, and other applications can be used to recruit (what it’s like to work for us) and to onboard and orient. The more new staff, even your PRN, feel comfortable walking in the door, the easier it will be to get them and keep them. Giving them a stack of policies and procedures, a big manual, a drone-on HR speaker or a computer-based checklist is a certain turnoff.
- Give the Bonus to the Staff. Turn your own staff into recruiters and pay them for it. Nurses know nurses, CNAs know CNAs, etc. Comp and incent them to bring referrals and comp them well. Sign-on bonuses really don’t work but referral bonuses do. Heck, do individual and team and create a bit of competition and fun.
- Create a Marketing Campaign and Have Accountability. Recruiting is marketing. Stop thinking otherwise. Sure, many think it’s an HR function but most who do, are wrong. It’s an organization function today requiring the best talent. For people to join your organization as employees, they need to know “why” – what are the tangibles and intangibles. Why should I work for you? This is not about pay and benefits but about the value and benefit internally, of a person working for XYZ organization. What’s the value proposition? What’s the real reason people work and stay for an organization (trust me, it’s not money). Build the case and sell that case.
- Get out of your own way. I watch organizations fail as their message is all wrong – tired, non-descript, sounding like everyone else. I watch organizations fail as their environment and their culture are all the same. Stop and align the incentives. Reward what matters and differentiate. Remember the Jobs quote in the first paragraph. Innovate. Stop looking externally at what everyone else is doing and stop going to the same conference sessions. Direct care staffing has certain red rules but not as many as providers think. In other words, stop the “can’t, regulations won’t let us” and start with WHAT can we do. Maybe even bend a rule or two if the same doesn’t jeopardize patient care or quality. Worklife for nurses and CNAs in terms of direct care has lots of negatives but many that I see are driven by provider foolishness – too much paperwork not necessary, too many meetings not necessary, and very few positive touches and rewards. If your culture and the work create fun, ownership, and staff love their work and their company, recruiting others to join the team just got that much easier.
Upcoming, I’ll touch on the opposite of recruiting – retention.
Executive Order – Staffing and Medicare Implications Update
Yesterday I wrote a post regarding a significant (and large) Executive Order coming via the Biden Administration concerning long-term care, child care, staffing in nursing homes, expanded supports under Medicaid for long-term care and childcare, etc. The post is here: https://wp.me/ptUlY-uM . While I have yet to obtain the text of the order, I have watched and read various reports on the Order, the most direct being the White House Press Release on the order. It is here, in case anyone is interested: https://www.whitehouse.gov/briefing-room/statements-releases/2023/04/18/fact-sheet-biden-harris-administration-announces-most-sweeping-set-of-executive-actions-to-improve-care-in-history/
What fascinates me about Biden’s Executive Order is how disconnected from reality it truly is. For example, it comes with no projected additional funding. Biden claims no additional money is needed; in fact, his quote is: “The executive order doesn’t require any new spending. It’s about making sure taxpayers will get the best value for the investments they’ve already made.” I for one would argue that he is half-right as there is ample money in Medicare and Medicaid to improve direct care reimbursement for staff wages, etc. The problem, however, is that both programs are so bureaucratically mired in politics and regulatory agenda that money is misallocated. Unless both programs undergo significant reform, the reality is, additional funding is necessary to improve access and staffing.
The other major disconnect Biden/Washington has is at the provider level, community level. I’ve written about this disconnect before. Mandates don’t make reality change. There simply are not enough staff (supply) to meet demand. If increased access is desired, mandates that are anathema to more provider capacity, are a drag to progress. In other words, more access can only be achieved by creating more staff to care for people yet, the Executive Order offers no incentive or policy initiative to increase supply (nurses, nursing assistants, etc.). Further, penalizing providers by reducing reimbursement for turnover when most turnover is out of their control, will further worsen the staffing crisis. I’m truly perplexed at this Order and the logic (if any) behind it.
Below is an excerpt from a statement issued by LeadingAge’s CEO, Katie Smith Sloan, on the Executive Order. I think this sums up the industry view fairly well.
“LeadingAge has long advocated for an all-of-government approach to ensuring greater access to aging services—and addressing the workforce crisis must be the top priority. Today’s announcement shows that the Biden White House has been listening—but, sadly, the order does not meet the ever-growing needs of America’s older adults and families.
- The focus on home and community-based services is too limited and must extend beyond care in the home to address the breadth of the aging care continuum. It doesn’t provide support for other care settings like adult day programs, assisted living, hospice and more, on which millions of older adults and families rely.
- What’s worse, the administration’s approach favors one part of the continuum over another. The order bolsters the home care workforce, while punishing nursing home providers for shortages—despite the reality that employers in both care settings navigate the same challenges in a competitive labor market.
- The administration is still getting it wrong on nursing homes. Over a million older adults rely on the specialized care only nursing homes provide. Already, nursing homes around the country are closing or limiting admissions due to staffing shortages. Why take that option away from the people who need it by implementing punitive policies that potentially worsen, rather than remedy, the ongoing staffing crisis? We are particularly concerned by the threat of withholding Medicare payment if providers don’t have workers – when workers simply don’t exist.
Without staff there is no care. We still desperately need to remedy the severe workforce crisis in long-term care. In addition to increasing reimbursement and wages, the country must address immigration to build a pipeline of new workers through proven programs and pathways for those ready and willing to work in our field”.
Staffing and Turnover: Medicare Payment Implications?
This morning, I caught some reporting on the Biden Administration’s plan to issue an executive order, a rather large order, that will include several provisions related to jobs and long-term care. Recall in recent articles on staffing on this site, I’ve noted that the Biden Administration and CMS are working on promulgating rules under Medicare for required direct care staffing levels in SNFs and ultimately, tying these levels and turnover to Medicare payment in some regard. This is an off-shoot or addition to other non-staffing related VBP (Value Based Purchasing) elements already in-place or soon to be added. See my post here on the recently released SNF Proposed 2024 rule: https://wp.me/ptUlY-tj
The order is expected to include direction to DHHS (Dept. of Health) to adopt a series of rules that add to minimum/mandatory staffing levels for SNFs (these levels yet unknown) and to condition some elements of Medicare reimbursement to staff turnover at the SNF. The expectation remains that DHHS and CMS release the proposed staffing rule yet this year (some say spring, but I doubt that timing).
Also within the order is a directive to cabinet level agencies (e.g., Interior, Commerce, Energy, Education, etc.) to expand access to long-term care and childcare and, provide financial support to workers for these services. The objective is to improve access to care and support for people such that the same with financial support, will allow caregivers to thus, be employed rather than staying at-home to support childcare or adult care. The rule will also seek to have Medicaid dollars apply to fund an increase in home care workers to support additional seniors and the disabled accessing care under Medicaid.
The devil, as always, will be in the details. I’ll be watching for the final order once it is signed and released. Typically, these kinds of Executive Actions/Orders come with little detail as they are a series of directives to cabinet agencies to develop the rules and apply them going forward. What is clear is that the Biden Administration is heavily invested in creating some kind of staffing mandate for SNFs and tying the same to reimbursement. As I have written before, I’m not sure a mandate in an environment with a caregiver supply problem is going to do anything other than create additional economic hardship for providers that already, can’t obtain enough staff. Similarly, while I know turnover is a problem in the industry, many of the turnover drivers (regulations, aged facilities, inadequate numbers of staff, negative regulatory environment, etc.) are beyond control of the industry.
Medicare Claims, Audits, Denials and AI
AI or Artificial Intelligence has been in the news a lot over the past few months. ChatGPT is the program that I’ve seen the most about. Elon Musk has come forward warning of the advance of AI and its implications for societies. I’ve seen story after story about how AI has the potential to be a “game changer” in medicine and in science advances but also, how it has the potential to produce scary outcomes. Heck, even Joe Rogan is sounding the alarm after a full version of his podcast was done through an AI creation.
As one would suspect, the advances in AI are finding their way into Medicare and Medicaid to adjudicate claims and to detect potential fraud. The first and most prominent use (for AI) is within Medicare Advantage plans. In an analysis published in the health and life sciences publication STAT, the authors found insurers in the Medicare Advantage plans using AI based algorithms to determine post-acute lengths of stay as well as for prior authorizations for certain levels and amounts of care. The purpose is to place a “best practice” construct around certain diagnoses and conditions, reducing variability. Sounds good in theory.
I have been a proponent of the development of clinical algorithms based on certain diagnoses and patient comorbidities. Readers can find some of those algorithms posted on this blog. I also received a U.S. patent for the development of a web based chronic disease management system that involved a highly integrated series of algorithms and pathways to assist patients and physicians with the management of Type 2 diabetes. What I have never been a proponent of is rigidity such that the pathway or the algorithm is the sole determinant of a patient’s care journey and treatment regimen. Every patient is different and some because of the influence of non-medical issues in their life, will require more integrated approaches in their care and treatment plans. For example, where a patient lives (environment, stairs, etc.), who the patient lives with (caregiver?), and what resources the patient has for assistance are all important factors in determining length of stay in a post-acute setting. In other words, some folks need more time, some can advance to discharge sooner.
The government/CMS has been integrating evidence-based algorithms/pathways/protocols into claims reviews and claim adjudication for several years. InterQual Criteria, a McKesson Health Solutions product has been used by MAC (Medicare Administrative Contractors), QIOs (quality improvement organizations) and Administrative Law Judges for years; two plus decades (https://www.businesswire.com/news/home/20161219005102/en/CMS-to-Continue-Use-of-InterQual-Criteria). The theory is that highly researched and fine-tuned, evidence-based data tools can provide a proper roadmap for treatment that emphasizes efficiency and reduced variability and negative outcomes. Code words for “reduce costs”, primarily. I haven’t seen a whole lot of better care, especially in terms of reductions in repeat utilization patters (re-hospitalizations, etc.) among the elderly, especially those with multiple comorbidities.
A rather good report was done on the heels of the STAT article by the Center for Medicare Advocacy. That report can be downloaded here: AI-Tools-In-Medicare What I noticed as most interesting in the report is the discussion around slippery-slopes and the gaps between what AI does/doesn’t do and what role humans and policy, play. For example, the Jimmo v. Sebellius case and its implications. Jimmo’s decision is fundamentally contrary to how AI is being used to determine continued coverage. Where AI is used to factor when care (and thus coverage) should end under Medicare, Jimmo basically says that coverage is not dependent on improvement or potential for improvement and can continue if the goal is to resist deterioration or is required by the patient’s need for skilled care.
Coverage does not depend “on the presence or absence of an individual’s
potential for improvement, but rather on the beneficiary’s need for skilled care.” The settlement
re-emphasized what was already provided for by regulation: restoration potential is not the
deciding factor in determining whether skilled care is required. Skilled nursing or therapy
services are coverable when an individualized assessment of the beneficiary’s clinical condition
indicates that the specialized judgment, knowledge, and skills of a nurse or therapist are
necessary to safely and effectively deliver services. The settlement applies in the skilled
nursing facility, home health, and outpatient physical therapy settings.
As AI use advances within reimbursed health care, the likelihood of a continued disconnect between providers and insurers and ultimately, patients will grove. We have an aging society that will continue to demand and utilized, more health care resources. The federal govt. is intent to continue to drive enrollment in Medicare Advantage plans as traditional Medicare Parts A and B continue to have funding challenges and face, default conditions as tax revenues and fees are headed to a condition of inadequacy to fund the outlays. While evidence-based medicine and the algorithms it can produce have great promise in many regards, reliance on overly broad, one size fits all approaches can cause unintended consequences in terms of overall patient care and quality. When reducing utilization and thus, saving dollars is the primary goal, a short-sighted impact is likely – the forest for the trees adage applies. A good article to wrap this post is here: https://skillednursingnews.com/2023/03/ai-use-by-medicare-advantage-blamed-for-increased-denial-of-nursing-home-services/
SNFs: Compliance, Medicare Billing and RACs
Despite significant delays due to COVID, Phase 3 requirements of the “mega rule” are now in effect and one of the most unique elements for SNFs is the Ethics and Compliance requirement – 483.25. A good primer on the requirement is attached here. I have highlighted some key points relative to this post. SNF Compliance and Ethics
Aside from a bit of a title misnomer (ethics), the requirement is really about compliance with applicable Medicare and Medicaid law. Ethics refers to “business ethics” versus bioethics and providers need to understand that the core requirements of care and service delivery contained within the Conditions of Participation are in many ways, separate from this requirement, save the billing contexts.
I know confusion arises at this point but in reality, it is quite simple. Ethics and Compliance for SNFs focuses on how providers “operate” or “conduct business” versus how care is delivered. There are dozens of COPs related to how residents are supposed to be cared for and the same, assessed and documented. This condition ties the business aspects and in particular, the payment aspects with the care delivery.
The key for providers to note with this requirement is that the documentation, delivery of care, and billing must be in harmony. It is against federal law for a provider to bill for services not rendered, care not required (by definition) or care that is substandard. This is where RAC audits and auditors come in.
RAC auditors are responsible for assuring that care provided is properly substantiated and billed. They conduct their work on a post-payment review basis. CMS continually updates their (contractor’s) charge by identifying audit conditions that should be reviewed. While CMS states that RACs are charged with identifying overpayments and underpayments, the overpayments are the focus. Overpayments typically relate to billing for services unsubstantiated by payment in relation to actual care provided or required (upcoding, excess service utilization). The current approved RAC audit list for all provider types is attached here. I highlighted the conditions impacting SNFs. RAC approved_issues_list_04_12_2023
What RACs and compliance requirements mean for SNFs is simple but difficult in application. SNFs in the new Ethics and Compliance requirements are obligated to monitor their billing practice and to do so via an audit process. The best audit processes incorporate an independent dimension meaning, using an outside source/contractor. This is different than engaging an accounting firm to audit financial statements and records and produce GAAP statements. The process is basically, assuring that the claim sent to CMS or Medicaid, is accurate and supported by records and assessments; services rendered. The best audits also incorporate a dimension of patient/resident satisfaction.
For proper compliance, how frequent the audits are completed/conducted would really depend on the volume of Medicare/Medicaid claims a facility submits. For most SNFs, bi-annual is more than adequate with periodic topical checks of common RAC results/pitfall areas. In other words, there are patient types and diagnostic codes that are flagged or targeted more often than others for billing impropriety (e.g., IV, infections, wounds, etc.). Lengths of stay are also an issue (long and short). Good compliance audits also detect care/documentation deficiencies. In looking at how care was documented/assessed versus what was billed, the audit can detect sloppy documentation or perhaps, knowledge gap problems necessitating training. For many facilities, it is not uncommon that a good audit will detect opportunities for additional reimbursement as facilities commonly underbill rather than overbill.
For the SNF, the goal is not to avoid a RAC audit (can’t) but to be able to withstand claim scrutiny by having systems and processes in-place, to assure compliance. This is the purpose of the Ethics and Compliance requirement. Being vigil and consistently testing the process of care provided, documented and then billed, assuring accuracy and integrity, is a best practice. For organizations that I ran and consulted for, using this type of an audit process was a requirement and best practice, well before CMS made it a Condition of Participation.
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