The idea of Value-based Care (VBC) is gaining traction across the medical-care community. An approach to healthcare that focuses on quality of care, provider performance, and the patient experience, VBC impacts both medical providers and organizations that pay for care.
Senior living communities don’t fund healthcare. Most don’t act as medical providers. And yet, even senior living executives who aren’t directly engaged in healthcare have an urgent need to understand how VBC works, and how it is poised to impact their industry.
These days, the typical resident’s medical acuity is increasing. “Their medical spend is higher, and the risk associated with their healthcare costs is higher,” said Daniel Kaplan, managing director at Equitage Ventures. As a result, “senior living is increasingly becoming part of the healthcare fold, whether they want to or not.”
There’s a carrot to that stick. Even for those who aren’t directly providing care, working in alignment with VBC “helps to improve resident wellness, it helps to reduce liability, it helps to maintain or improve resident retention or length of stay,” said Justin Schram, MD, co-founder of August Health. “All of those things help to improve net operating income in the current private pay model.”
That being the case, it’s worth taking a deeper dive into this emerging care-delivery model.
What is VBC?
Overall, value-based care aims to provide the best patient experience and improve patients’ health outcomes, while delivering healthcare at a reasonable cost.
“Unlike traditional fee-for-service that links payments to the number and type of services performed, value-based care arrangements tie payment amounts…to the results that are delivered,” according to the American Medical Association. “By aligning incentives and payment, this approach can potentially result in more evidence-based, preventive and equitable whole-person care.”
With an eye toward the senior population, the Centers for Medicare & Medicaid Services goes into greater detail.
For example, in VBC “doctors might coordinate an individual’s blood work so that they only need to go into the clinic once. This approach to care also can help people avoid the emergency department and keep them out of the hospital,” according to CMS. That’s clearly of interest to senior living operators.
“When done right, value-based care presents an opportunity for the residents’ care outcomes to be better,” said Jim Lydiard, chief strategy officer at Pine Park Health. The VBC approach “can complement what the building’s already doing, and all those things can lead to a better resident journey, more rent months, a longer length of stay with fewer complications.”
Senior living executives need to realize that this isn’t just talk: There is money on the table in support of VBC.
In addition to Accountable Care Organizations, or ACOs, Medicare Advantage contracts with primary care providers to deliver in a value-based model. “Medicare Advantage is one source of VBC, either within the buildings themselves, to the buildings through a plan proxy, or through a primary care practice,” Lydiard said.
Implications for senior living executives
The emergence of VBC should give senior living executives a lot to think about.
For those who don’t offer healthcare, it raises the question of whether they might want to. That’s a big decision, and VBC can factor in, to the extent that the senior living operator who offers medical services in a VBC model can potentially see a financial benefit — for example in the form of financial incentives based on improved outcomes.
Moreover, offering care in a VBC model creates an opportunity for senior living communities to be something more than just another housing option. “We have foregone our responsibility as aging experts,” Lydiard said. Through VBC, senior living can assert that expertise; in doing so, “we can build trust and establish rapport with families.”
Senior living that support value-based care can tell families: “If you move your loved one in here, we’re going to help guide you to the right doctor who’s going to improve your loved one’s care,” Lydiard said. “We’re going to help end this vicious cycle of going to the ER as often as you’ve had to. We’re going to end this craziness of you running to Walgreens five or six times a month to pick up all of her drugs. We are going to help shepherd you to the trusted senior resources that our building offers.”
Even if a senior living community isn’t interested in offering medical care (or isn’t ready to do so yet), leadership might still choose to create a contractual relationship with a care provider working in the VBC model.
By doing so, “they can better integrate their operations, particularly on the care-delivery and resident-experience side, with the medical care that residents are getting — either in the facility from outside providers, or by going to outside providers,” Kaplan said.
This in turn offers “a more compelling value proposition to families,” he said. “And if they are able to deliver more integrated and coordinated care to their residents…there’s the opportunity to unlock some of those dollars.”
With the right contracts, care providers could pay operators “for what they’ve already been doing, which is helping to keep patients out of the hospital, helping to keep patients healthy,” he said. Senior living already supplies the foundations of healthy living, the social determinants such as housing, food, and social opportunities. VBC could potentially tie dollars to that. There’s also compensation tied to the care-coordination work that senior housing often provides.
“With just a small few changes in workflow and documentation that, some of those care-coordination payments, and maybe shared-savings payments, could represent very high-margin dollars coming in month over month,” Kaplan said.
It will take some time for the details of that vision to emerge. Meanwhile, senior living executives can take steps to prepare for a VBC-driven future.
Moving toward VBC
A senior living operator for example could team with a preferred provider who offers VBC-based care. “That’s doesn’t necessarily turn on the shared savings revenues” on day one, Schram said. But it creates the possibility. “You would need to have a strategy for contracting around quality outcomes or shared savings. And it would have to be a provider group that is geared towards putting in place those incentives and has the right contracting mechanisms.”
Many senior living leaders aren’t at the point of contracting with a provider, as that will introduce some risk. “It’s a little bit out of their comfort zone,” Schram said. Such models are emerging, though, and senior living executives should be watching that space.
Meanwhile, there are steps that can be taken now to prepare for that possible future journey. It starts with getting better at what you already do. In order to eventually generate revenue in a value-based care model, “you need to be improving outcomes, reducing total cost of care,” Schram said.
“Traditionally, some senior living operators could be actually contributing to higher cost of care. At the first sign of a resident looking unwell, they just send that resident out to the emergency room,” he said. “If you do not have care pathways or telemedicine or availability of urgent care or good preventative practices, you could actually be increasing total cost of care, and you’re not going to have any success in value-based care contracting.”
If the future will call for a “value” perspective on care, it makes sense to look at where you are (or are not) adding that value, and to make changes accordingly.
Ultimately, that may mean taking a hard look at your existing care model. “In a world where the average resident acuity has increased substantially, you need to have best practices in place for managing those conditions,” Schram said. “If a resident has an initial fall or skin condition, there should be care pathways standardized across your communities where you’ve put the right interventions in place to help prevent that from getting worse.”
Senior living executives also can start now to get a handle on the metrics. “This is about using the data coming out of your EHR platform, or the ambient monitoring or the sensors in your communities, to help you to identify rising-risk residents early so that you can and put interventions in place early,” Schram said.
Clearly, the rise of VBC gives senior living a lot to think about. Lydiard argues that is well worth the effort.
Many senior living communities “already have their wellness staff care-coordinate a lot of their residents’ care and treatment plans,” Lydiard said. A shift to a VBC mindset can help to optimize that effort and elevate the outcomes.
“It allows them to not have to chase their tail in what’s already a very fragmented healthcare system,” he said. With a VBC mentality, “we start to undo the fragmented care that seniors have been receiving for decades. We can clean things up and put them on a more livable, high-quality path.”
Improved use of resources, improved quality of life, longer resident stays, perhaps even the prospect of added revenue streams: For these and a host of other reasons, senior living executives need to be taking a hard look at their place in an increasingly value-based healthcare landscape.
Want to learn more?
Those interested in learning more about value-based care are encouraged to register for the upcoming Argentum Senior Living Leadership Summit taking place November 18-20 in Austin, Texas. The session “Communicating the Value of Healthcare in Senior Living” will help senior living owners and operators translate the talk of value-based care into action and will address the critical question: How can senior living operators effectively communicate the value of healthcare services to residents, including encouraging them to align with doctors and/or health plans? Featuring a dynamic mix of Medicare distribution experts alongside technologists and managed care leaders, this session will focus on innovative strategies for aligning healthcare offerings with resident needs and preferences, overcoming common obstacles, and demonstrating the value of these changes.
Those planning to attend the conference are encouraged to register before November 1 to secure the lowest rates possible for hotel accommodation at the Omni Barton Creek Resort, the headquarter hotel of the Senior Living Leadership Summit.
