How to get big enough for management care.

Stand-alone long-term care providers are leveling the playing field for managed care contracting

A problem plaguing the stand-alone long-term care residential community is that it is usually at a disadvantage when it comes to winning managed care contracts. It doesn't offer sufficient "covered lives" or geographic area; it doesn't have the management infrastructure required by managed care contractors. The answer: the new alliances that are springing up around the country to level the managed care playing field. The independent provider now has a chance to score managed care goals and, along with the new contracts, some "extra points" too, in the way of improved service and added buying power.

Take, for example, Kairos Health Systems, Inc., only three years old but already one of the elders of the movement. Kairos, based in Mechanicsburg, PA, is a "messenger model" coalition. This means that it negotiates with a managed care organization on behalf of one of its 61 subacute or skilled nursing facility members on a contract which the organization is then free to accept or reject. The organization therefore gets Kairos' expertise in contracting, while managed care gains access to Kairos' wider geographic base and 20,000 covered lives.

As it happens, Kairos deals solely with faith-based, not-for-profit organizations encompassing 61 subacute and skilled nursing facilities with 8,720 beds, 3,080 assisted living units and 9,400 independent living units, along with access to adult day care, hospice care, wellness services and home healthcare services throughout the mid-Atlantic region. Three of its newest members are Asbury Services, Carroll Lutheran Village and the Hebrew Home of Greater Washington, all based in Maryland.

All three have begun to see results. "When we started," says Warren Slavin, CEO of Hebrew Home of Greater Washington, whose single site is located in Rockville, "we expected this to counteract our disadvantage in the managed care marketplace, and that has proven to be true."

"Kairos is a solution for all of us," agrees Ed Thomas, CEO of Asbury Services, Inc., a two-site CCRC in Gaithersburg. "We don't need to have the managed care contracting expertise on staff." He says that Asbury surveyed its residents as to which were in Medicare risk and with which managed care groups, so that it could be sure that managed care members were covered.

Geary Milliken, CEO of Carroll Lutheran Village in Westminster, says his organization is the latest among a group of Lutheran caregivers that joined in the creation of Kairos as a way to prepare the industry for the onslaught of managed care.

Rather than a consolidation, buyout or merged assets model, Slavin notes, Kairos is a cooperative. That is, it is a for-profit corporation capitalized by shares purchased by its not-for-profit affiliates. Kairos is therefore member-owned; member representatives serve on its board to collectively determine policy and direct growth. By all accounts, there have been no major disagreements as yet, in part because the various member facilities' diverse populations and geographic areas help avoid the possibility of conflict.

The three faith-based Maryland providers now average affiliations with five managed care organizations each. Kairos has even provided enough flexibility to negotiate managed care contracts to the benefit of specific individuals who might have signed up with a Medicare-risk HMO only to find that they would not then be covered by their organization's service provider. "Right now," says Milliken, "too many of our contracts have been boilerplate, and we would like to be able to write them more specifically. That ability is one reason that the Carroll board was so willing to go under the auspices of Kairos. Part of our mission is to meet the specific needs of the residents who want to be served by Lutheran Village, so we need the clout to work for those contracts."

He adds that as managed care grows, "more people will chose it or have it chosen for them through retirement plans." Thus, the Kairos association opens new areas of business for members.

Hebrew Home, for its part, is beginning to see a trickle of subacute patients coming in through MCOs. According to Slavin, Hebrew went from having no managed care clients in its daily subacute short-term census to an average of five. "I know we wouldn't have the incremental revenue from managed care patients without Kairos," he says.

Thomas says Asbury has seen no new business as yet, but does foresee it. "We expect to attract new residents two to five years down the road, as managed care penetration increases. This will be critical to our business," he notes.

"Times have changed," says Carroll Lutheran Village's Milliken. "We used to have a waiting list - we mostly admitted people from their homes, and we lived by our good name." Now, he says, there's been a fivefold increase in admissions, most of them from acute care, and the skilled nursing facility must provide services that nonprofits didn't used to offer, such as high-end IV therapies. Facilities need to adapt with new strategies, adds Thomas, noting for instance that skilled nursing facilities today must learn to provide 24-hour-a-day, seven-day-a-week admissions, as Asbury did.

All of this change takes its toll, and Kairos is geared up to help with that. "When you join Kairos, you can find out how your own practices can be improved," Slavin points out. "For instance, we improved our admissions and patient intake processes. And we can find out how we compare with the others in the industry."

Among advantages Kairos membership offers is an assessment of members' managed care readiness and help with getting up to speed. For instance, there is emphasis on educating staff about overall changes in the healthcare marketplace, as well as their learning to deal with new kinds of paperwork. Beyond this, according to Milliken, "we at Kairos have a vision - not yet mapped out - that includes mutual information systems management. It also includes creating a unique vendor relationship for joint purchasing using the economies of group buying to help control costs. And it involves raising the quality bar."

That bar is already being raised, says Slavin, noting that Kairos affiliation means that "we can share best practices. And if we have a particular expertise, say in case management, the other affiliates can learn from us." To formalize this, Kairos is building a "data warehouse" to gather member clinical and financial data to be used for benchmarking and best practices assessment.

According to Slavin, the affiliate staffs meet collectively on task forces, to study such initiatives as CQI or operations improvement, and thus people get to meet peers and share ideas. "It kind of mimics the advantages of a chain, while we retain our own autonomy and economic structures."

Another area of concern is accreditation, which has become a managed care must. "We have CCAC accreditation from AASHA, and that is approved by NCQA, but managed care is slow to recognize that approval," says Milliken. A dozen Kairos members do have JCAHO accreditation, and the rest are slated to undergo JCAHO surveys in the near future.

Overall, says Slavin, "Kairos has really fulfilled its promise. Consolidation is going to keep happening, and this is a way to realize its advantages while we continue to serve our own community and maintain autonomy."

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