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By John Whitman
Chairman and Chief Executive Officer
The Whitman Group
Huntingdon Valley, PA
No matter what anybody says about the health care industry, one basic fact cannot be denied: Form follows finance.
As reimbursement changes are introduced by the Health Care Financing Administration, a direct and often profound change follows in the provision, location, and target market being served by providers. As a result, administrators of rehabilitation facilities must constantly think strategically about serving new and different market cohorts within their service areas.
For many organizations, the senior market traditionally has represented a significant portion of their patient population and overall business. A strategic look into the future, however, with the rapidly approaching prospective payment system for acute rehabilitation, strongly suggests that now is the time to reevaluate this special population to identify new areas of need that represent service and financial opportunities for your facility.
Time and time again over the last four decades, we have seen example after example of major, sometimes sweeping changes brought on by nothing more than a modification of reimbursement. Look at the introduction of the Medicare and Medicaid programs in the 1960s, the prospective payment system for acute care in the 1980s, managed care in the 1990s, and now the prospective payment system for Medicare skilled rehab care. Let's not forget some of the other "minor" changes such as "caps" on physical therapy (PT), occupational therapy (OT), and speech therapy and limitations on home health care.
While many are viewing those more recent changes as very close to being "the straw that broke the camel's back," others are taking a more realistic view and asking themselves two important questions: What can I do now to best serve my patients, yet still make money for my facility? How can I change my services to prepare for the future?
To these positive thinkers and doers, I tip my hat! They have the attributes we need in health care today. Individuals who know the system is flawed know change must take place, and they work toward that change while never losing sight of their primary objective — to serve their patients well. It will be these forward thinkers who first begin to meet market demands for senior services.
Senior market a strong niche
While markets can change dramatically from one area of the country to another, the rapidly growing senior market is one constant everywhere in the United States. The growing volume of seniors is in itself worthy of concern. As health care continues to improve and people are living longer, it becomes easier to see the potential issues and opportunity.
Is your facility responding to this opportunity? It's more than just offering PT and OT for hips and joints. It's not simply providing outpatient service to follow up hospital discharges. Those services are truly important, but rehab facilities have been providing them for years.
If your facility is really interested in serving this ever-expanding market cohort, it's time to take a big step back. It's time to commit the resources to understand the needs of your senior market. It's time to go outside the traditional lines and develop responses to meet those needs while maintaining and contributing to the financial integrity of your organization.
How do you do this? Well, first you need to understand, truly understand, the senior market in your community. This can only be done through basic research. You must construct a true and accurate picture of your market and the seniors you want to serve. You must understand that "the senior market" represents multiple subsets each with their own set of needs and required services. The "purchaser" of services could be the patient, but more likely it will be their children or Medicare of managed care programs.
The best way to truly understand the senior market is to go back to basics. Look at these specific demographic characteristics:
• age cohorts — in 10-year cohorts;
• living status;
• health status;
• income levels.
Second, look at what senior services are currently being offered in your market by competitors and noncompetitors, including the local area office for the aging and the county office for the aging. Knowing what is being offered helps to identify gaps or needs not being meet.
Ask seniors what they want and need
Third, listen to those who know. That includes not only local professionals involved in health care services for seniors, but also the clergy, hospital discharge staff, and health maintenance organizations, which usually do have good statistics on senior services. Perhaps most importantly of all, you should listen to the seniors themselves. Hold focus groups with eight to 12 seniors, grouped within the same age cohorts if possible, and you will quickly identify what is being done well in your market and where needs still go unmet. Your senior volunteers perhaps offer you the greatest opportunity for frank commentary on what they and their friends see as needs in your market. Seniors are a great source of information but are too often overlooked. As professionals, we tend to assume we know what their needs are and how to meet them. That kind of attitude has resulted in disastrous financial consequences for more then one health care organization in the recent past.
Also, don't forget to talk to the adult children of your seniors. After all, they are more often the purchasers of services than the seniors are. Conduct several focus groups with those adult children, again trying to group them in cohorts by the age of their parents.
Another group that often has incredible insights into the needs of the elderly is your local clergy. Convene several focus groups with representatives of your local clergy and discuss the needs they see among their seniors. Be careful to structure the discussions to properly assign the needs they identify to the right age cohort within the senior population.
While some of the programs you might identify have third-party reimbursement available, others will not. In the past, some providers have steered away from other-than-basic services for seniors, due to the lack of reimbursement or fear of financial losses. While it is true that many of the service needs you will identify in your market analysis do not have traditional reimbursement available for them, you must think creatively. In many markets, the seniors themselves have significant resources, and paying out of pocket is a very appropriate option.
Other options exist as well. Rehab facilities can become catalysts in their communities. They can convene a summit of local financial institutions, area offices for the aging, clergy, and others serving the elderly. The focus of the summit should be establishing a reverse mortgage program or other financial mechanism that will allow local seniors to access the equity in their homes without the fear of being forced to move. Many elderly people are cash poor.
Developing a trusted approach where they can access their equity will provide additional cash to purchase services they need. This is just one example of nontraditional thinking with the ultimate goal of providing the seniors in a rehab facility's market with services they need while assuring financial integrity for the rehab facility.
What services are creative in today's market? While you will need to conduct your own in-depth evaluation of your market, some of the current programs that are responsive and responsible for many markets include the following:
• Incontinence programs. This should be more than a part-time effort initiated in a physician's office or PT department. It needs to be a well-planned effort designed to identify seniors over 70 who have incontinence, hide their problem, and currently do not seek treatment. Recent studies have shown as many as 30% of community elderly over 70 have a problem with incontinence, yet only one out of 12 seeks help! Just think of the impact your facility could have on an individual senior with incontinence by returning some control to his or her life. Multiply that by 30 or 40 each month. In addition, your facility can actually make money with an incontinence program through Medicare and most managed care programs.
• "Operation Stay Independent." Regardless of what name it goes by, this program includes a wide range of efforts geared to help seniors live safely in their homes for as long as possible. Rehab facilities should consider a full spectrum of support services to help seniors remain independent, including evaluations to assure safety, basic maintenance, shopping, house cleaning, visiting nurses, and homemaker services. Reverse mortgages as discussed previously offer an opportunity to make services available to more than just those seniors with the immediate resources to pay for them out of pocket.
• Senior wellness centers. Senior wellness programs have become popular in many parts of the country and are typically geared toward the younger, healthy senior cohort. Many facilities have tied them into wellness programs for their own staff gaining additional benefits.
Keep in mind that not every program will work in every market, and your facility may not be the best to offer a specific service. Carefully evaluate each opportunity and identify those that are best for your organization. Also, an important detail to remember is that not all needed services will have adequate reimbursement. That is where the creativity comes into play. In addition, don't lose sight of the fact that it is the overall system impact that is important — not the financial viability of a single program. For example, if your facility needs to pay $5 for transportation to assure a senior in the community can keep a physician appointment or a needed therapy treatment, isn't that cost offset by the overall financial benefit of the services provided?
Which senior services are right for your facility? To make such a decision, you first must have the facts and details needed to make an informed decision. Complete your in-depth market analysis, then apply the findings to your facility's mission statement, recognizing your available assets. Carefully evaluate the programs you have selected and develop revenue and cost projections. Don't forget to include the system impact in your financial review. Select the best programs and then make a decision and begin to implement the plan. Too many facilities study potential opportunities to death and move so slowly that a once-good idea may no longer be appropriate, effective, or profitable.
The important thing to remember is a rehab facility can meet the needs of its senior market while maintaining financial integrity. At times it may not be easy, but it can and should be done.
[Editor's note: Whitman can be reached at 3501 Masons Mill Road, Huntingdon Valley, PA 19006. Phone: (215) 657-9990, ext. 203. Fax: (215) 657-9547. E-mail: jwhitman@whitmangroup. com.]