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Strategic Countdown: Restructuring Post-Acute Care

No longer just the province of discharge planners and case managers, post-acute care (PAC) has emerged as a major strategic concern for health systems as they seek to reduce readmissions, rein in costs, succeed under bundled payment or alternative payment models, and, most importantly, improve patient outcomes and satisfaction.

Current efforts to “repeal and replace” the Affordable Care Act under the new administration do not ease pressure to reduce utilization and spend in post-acute care—they instead accelerate it. As a result, hospitals are under increasing pressure to change their mind-set from day-of-discharge placement expedience to an intentional approach that matches patient needs and preferences with high-quality care at the lowest-acuity, clinically appropriate site.

Sg2 recommends the following strategies and action steps to help organizations gain perspective on the post-acute care environment and tailor a path forward.

 Assess current utilization and collaboration with post-acute care providers.

  • Analyze existing PAC use patterns. Document your current PAC placement process and perform a comprehensive inventory of PAC providers and services.
  • Tier PAC sites based on performance data. Gather as much information as possible to identify preferred providers and group them into preference tiers. Consider metrics such as: payers accepted, specialty program(s) offered, readmission rates, unscheduled returns to ED, ALOS, quality outcomes and discharges to home.
  • Foster collaboration with high-tier sites. Empower preferred PAC sites through clinically integrated processes, data sharing, EMR access and staff development.

 Reenvision your organization’s role in an evolving landscape.

  • Prepare for ongoing payment change. Bundled payment models are incenting providers to take a second look at PAC so they can achieve savings beyond a target price. A recent Congressional Budget Office (CBO) report showed that the majority of savings are coming from “reducing the use of PAC, shifting to less expensive types of PAC and reducing readmissions/ED visits.” Despite the debate about mandatory bundles and their success, a significant portion of the CBO-projected $159M in savings (from 2017 to 2021) will come from alternative payment models, strengthening incentives for acute and post-acute providers to collaborate to redesign care.
  • Address site-neutral payment and site-of-care shifts. Site-neutral payment and a MedPAC-recommended unified payment system for PAC will likely proceed. Sg2 estimates that 15% to 20% of current patients could be admitted directly to less-acute PAC settings or stepped down earlier. For example, the impact of site-neutral payment on inpatient rehabilitation facility (IRF) utilization is incorporated into Sg2’s projection for a 4% decline in IRF volumes from 2016 to 2026, along with projected increases in skilled nursing facility (SNF) and home care volumes.
  • Move to standardize PAC placement and site selection. At many organizations, physician preference is one of many factors complicating PAC placement. Soon, evidence-based algorithms will likely augment clinical decision making in this regard.
  • Leverage virtual care technologies. Recognize the significant potential for electronically enabled care (eg, telehealth, patient monitoring, medication adherence apps) to improve quality and extend the reach and capacity of clinicians. If virtual care can prevent the use of more expensive sites of care (by serving as a “hospital at home”); reduce expensive complications and readmissions; and/or replace some labor costs (through home visits) the financial argument for its use will become stronger. Concurrently, value-based care models will continue to drive care to the PAC setting, and virtual care technologies will play an important role in the care redesign construct and as a safety net for patients.
  • Weigh organizational structure changes to ensure PAC strategic visibility. Many organizations are creating a service line or governance structure to ensure care redesign efforts and strategic decisions are supported by a clinically integrated System of CARE. Most organizations do not own all levels of PAC in their market (nor does Sg2 recommend this) but future success will increasingly require leaders to understand market capacity, payment changes, growth in PAC sites of care (the fastest growing segment of the Sg2 forecast) and programmatic needs.

Sources: Congressional Budget Office. Answers to Questions for the Record Following a Hearing by the House Committee on the Budget on CBO’s Estimates of the Budgetary Effects of the Center for Medicare & Medicaid Innovation. October 28, 2016; Sg2 Impact of Change® v16.0; Sg2 Analysis, 2017.

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As of February 11, 2016, Vizient, Inc. has completed its purchase of MedAssets Sg2 and spend and clinical resource management segments from Pamplona Capital Management, LLC. MedAssets revenue cycle business will continue to operate as a wholly-owned subsidiary of Pamplona Capital Management LLP.

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