Putting long-term care's pieces together.

A new breed of management firm strives to make sense of long-term care's non-system

Based on an interview with Sue Zimmerman

We are a long way from the days when healthcare services for the elderly consisted of a doctor's office, a hospital and a nursing home. Today, of course, we have home health care, assisted living and skilled nursing (subacute) care to add to the mix. This has expanded both service options for the elderly and growth opportunities for providers - but one problem remains: integrating these services into a seamless whole so that they work as cost-efficiently as possible.

It is a problem that is crying out for a solution, as managed care steadily expands into the senior care arena. Managed care - whether administered through HMOs or through insurance-based intermediaries (such as managed) care organizations [MCOs] or third-party administrators [TPAs]) - thrives on cost-efficiency; that is its reason for existence. The integration of healthcare services necessary to achieve this can be accomplished in a number of ways, but one of the more unusual involves a "new kid" on health care's block: an organization called a network management company, an independent firm that contracts with the various payers and providers in managed care and works to get the most for the healthcare dollar through case management.

A pioneering company in this field is CHCS (Capitated Health Care Services). The "capitated" in the name comes from the company's HMO-related business, in which it contracts with HMOs for a fixed per capita amount to arrange subacute care in a skilled nursing facility and home health care for the HMO's members. Some 700,000 HMO members in the South Florida area are covered in this manner. More recently, CHCS has expanded into the long-term care field by coordinating services for beneficiaries of private long-term care insurance policies, which these days cover everything from subacute care to home health care to assisted living. On behalf of eight major insurance companies, CHCS contracts with these providers on a discounted fee-for-service basis.

I submit that this approach to organizing long-term care services is the coming thing - and its key is case management (or, as some we work with in skilled nursing prefer, care management). The basics are simple: assessing the patient needing care, devising a care plan specific to that patient, monitoring the results and making referrals, as needed, throughout the continuum. A patient will move from home to hospital to subacute care facility to home, or perhaps to assisted living or nursing home care, depending on need. Wherever the patient is placed, the goal is to provide her or him with the most appropriate care at the time - no more, no less - a simple enough concept but, in execution, not so simple.

All plans grow from the initial patient assessment. And assessment goes beyond clinical review - efforts must be made to identify the actual benefits covered, help the patient/family plan for the private-pay portion of the coverage and educate patient and family regarding the options available. Once a referral decision has been made, CHCS case managers aid patients/families in the selection of facilities (including adult day care, which is usually not a covered benefit) and in preparing everyone for the move. This advice is unbiased, it is important to note - CHCS owns no facilities or agencies and is therefore able to make independent judgments about their quality.

Making such judgments is another major function for the firm because, after all, the company is "on the line" for the providers it chooses to partner with. To this end, CHCS has a department devoted to qualifying potential contract facilities - investigating provider credentials, checking accreditations and doing financial and criminal background checks. The company has formal tools used for credentialing and quality assurance. CHCS also measures satisfaction monthly - not only member/patient satisfaction, but provider and payer satisfaction. Once admitted, patients are followed by weekly calls from the case manager, or calls every six months in the case of a resident receiving long-term chronic care.

Along with qualifying and monitoring them, CHCS also educates providers, instructing them in clinical and organizational "best practices." Much of this year will be devoted to helping skilled nursing facilities make decisions with regard to the major changes Congress enacted in Medicare through the Balanced Budget Act of 1997 (BBA). Without going into detail, suffice it to say that the forthcoming Medicare Prospective Payment System (PPS) means that providers will have to change their philosophy of care from "more is better" to "more appropriate is better." With the projected five-year "savings" built in ($16 billion for home care, $9 billion for skilled nursing care), providers will have to find more cost-efficient ways to do everything, with zero tolerance of waste, and they will have to be creative in identifying new patient needs that will inevitably arise and finding ways to meet them.

Further, the Medicare+Choice plans that HMOs will be offering this year, courtesy of the BBA, will mean that providers will have to become more effective than ever in developing, marketing and evaluating their services. Considerable investments will have to be made and, in my view, there is no way that most individual providers will be able to go it alone. They are going to need to combine in various ways to achieve the necessary economies of scale.

Organizing a provider response to challenges such as these is the reason for existence of a company like CHCS. By maintaining a perspective on the overall long-term care system, understanding its various pieces and recognizing how they can be coordinated, the company helps society move closer to the goal that everyone seeks: a long-term care system that really works for people in need.

Sue Zimmerman is chief operating officer of CHCS (Capitated Health Care Services), Sunrise, FL. For further information, 1-800-370-7684; fax [phone].