In the realm of strategic management, there is a concept known as weak signals. Weak signals are the early signs that significant changes are coming to an industry. There are important weak signals that are aimed at nursing homes. If such signals are an early warning of a trend, they indicate significant challenge to the size and structure of the industry: there will be a downsizing of the nursing home industry. If you consider the shifting of payment from NYS Medicaid to Managed Long Term Care, the Brooklyn Hospital Medicaid Redesign Team and then consider what is happening in Connecticut it is clear that downsizing is coming to the NY nursing home industry.
The shifting of payment responsibility from NYSDOH to Medicaid Managed Care entities is notable. Such plans, whether for profit or not for profit are incentivized to manage payments and reduce the overall expense so that they are profitable/show a surplus. Most nursing home executives have made this observation and are concerned about the impact. Not many have looked at the Brooklyn Medicaid Redesign Team Report, and nor have they connected the dots. If you haven’t you should. The conclusions and recommendation are a clear message to the entire health care industry in NY. The Report is available on-line and should be read by nursing home executives. (http://www.health.ny.gov/health_care/medicaid/redesign/brooklyn.htm)
The Report evaluates the performance of the hospitals in Brooklyn, particularly those that are on the brink of financial collapse. It lays responsibility for poor financial and clinical performance on the Board of Directors and the Chief Executive Officers. The Report also recommends that the NYS Department of Health be given new powers to appoint temporary management/operators for health care facilities (not just hospitals) that fail to meet both their clinical and financial obligations. While the report does not recommend closing any of the hospitals that it focuses on, it does recommend mergers that ultimately would reduce bed count and/or close facilities. The Brooklyn Medicaid Redesign Team is in essence the Berger Commission version 2.0. It is not surprising that Berger himself led this team given the recommendations that were in the original Berger Commission Report. The Berger Commission was all about closing facilities and reducing inpatient capacity.
In the short-term, closing facilities, whether they are hospitals or nursing homes is the quickest way to reduce overall Medicaid expenses. Nursing homes will not be spared in this budget driven process. If the NY industry looks at Connecticut, it would see a system that is further down this road as well as the potential direction that NY most likely will take. Connecticut Nursing Homes received their Medicaid payments for Managed Care plans. In 2012, the payments will be moved from Managed Care to Medical Homes. However, the State is committed to closing several thousand nursing homes beds (somewhere between 2000 – 7000 beds) based upon financial and clinical performance. After several years of either flat or declining Medicaid rates, Connecticut will have an easy time finding nursing homes to close based upon poor financial and clinical performance.
Nursing homes have to recreate themselves and find a more efficient operating model. Nursing homes don’t have to face this challenge alone; a strategic partner is available! Caretech has been a strategic partner to nursing homes for almost thirty years. During this period, Caretech has developed an array of solutions that help nursing homes lower costs, and become more efficient. Caretech continues to innovate and it continues to grow, serving close to 14,000 nursing home beds. Caretech can help your facility meet the challenges that are coming our way.
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