The industry speaks predictions for 2007 ... and beyond! Welcome to Contemporary Long-Term Care magazine's crystal ball. More than 30 of long-term care's best and brightest offer guidance, advice, projections for the new year, and even a little soapbox philosophy--all in the name of giving you a head start on what's sure to be another wild and woolly year in our industry.

WHAT NEW REGULATIONS DOES CMS HAVE IN store for 2007? How should nursing homes handle all these F-tag revisions? What are the industry's representatives in Washington doing to advance the long-term care agenda on Capitol Hill? What will the reimbursement picture look like a year from now?

These are just some of the items our interviewees made it their business to address. In the following pages you'll meet legislators, reimbursement consultants, investment strategists, heads of major associations, regulatory experts, and nursing home professionals alike.

Don't forget to read beyond our interviews for an in-depth look at the latest in Green House[R] design. And make sure you check out our information technology (IT) briefing--no long-term care professional can afford to ignore IT advances any longer.

THE BIG PICTURE

LARRY MINNIX: The accountability system has to [exist], but when it's applied inconsistently and unjustly, then good organizations wind up suffering unfairly. We are working closely with CMS, our own members, and other associations to make sure that [survey] change is done in a fair, just way. I think overall we're in the front-end of a transformational era for long-term care. We're just beginning to understand what quality is, how to measure it, and what the consumers are expecting of us.

CINDY FRAKES: Almost every month last year there was some new regulatory thrust. That, combined with the push for culture change and resident-centered facilities, is too much pressure for some. It's overwhelming--too much, too fast, and that prompts a lot of people to leave the industry.

LARRY MINNIX: There ought to be two kinds of providers--the excellent and the nonexistent.

DOUG PACE: The Commission for Quality Long-Term Care will be looking at the current survey and certification system very closely We're hearing in some areas that it's going okay and in others that there needs to be better training of surveyor staff to apply regulations appropriately. I certainly don't perceive that the commission would say there shouldn't be a survey and certification program, but we need to identify goals to go in and [make changes].

MARY OUSLEY: For 2007, we can expect some increased intensity in the survey process with the implementation of the new interpretive guidelines, [which have been] coming out since 2004, and coming out fairly rapidly. It is clear with the new guidelines [CMS] has set what could be called higher expectations in facilities for leadership and organization. My advice to everyone is to look at how well you are doing on the domains of staffing and your survey outcomes and what type of unanticipated hospitalizations are occurring in your facility.

LEAH KLUSCH: We have somewhat universally inaccurate coding for a lot of the clinical indicators because the coding on the MDS [Minimum Data Set] is very hybrid, and the frontline clinical staff--the nurses--have not learned the MDS vernacular. The database, therefore, is not really representative of the acuity and a lot of the interventions that we're delivering. This core database is inaccurate, but it's what legislators and politicians use to make their decisions about the regulatory process.

LYLE WILLIAMS: When you're dealing with an industry that's showing 2% profit nationwide, you can't leave any dollars on the table. We've lost 2,000 nursing homes in the past five to six years nationwide, and somebody's got to take care of America's most vulnerable.

DAVE MASON: There will be continuing pressures on the federal government on the Medicare program and the amount of growth in expenditures for all sorts of Medicare services. That obviously will have an impact on both coverage and payment rates.

Pay for performance poses both possibilities and risks as [the government] develops such a system. How are you going to measure quality? How are you going to measure superior performance in order to qualify for bonus payments or avoid reductions in payments? The devil is truly in the details if you look at the development of a system like that. But for facilities that provide high-quality services in an efficient manner, it might be a very positive change.

THOUGHTS ON THERAPY

MARC ZIMMET: In three to five years, I think we will have more admissions to SNFs for rehab at the expense of rehab facilities, and probably have additional levels of reimbursement to compensate for that higher level of care.

MASON: We've supported legislation to appeal the therapy caps entirely. We've been hamstrung by the fact that the budgetary impact of completely repealing the provisions of the 1997 law are so big that Congress never seems to be able to find enough money to pay for repealing it.

DOLLARS AND SENSE

LYLE WILLIAMS: The industry was given a challenge by CMS in the past years, and the industry exceeded what CMS asked it to do. Those of us who represent the industry are going to take that data and say to CMS, "You asked us to do something, we did it, now hopefully you will listen to us as to how to structure a payment system." I'd love to see a new [prospective payment system], because it's a dinosaur.

DAVID HEBERT: We've always been very sensitive to the swings in Medicare and Medicaid reimbursement--the key is to try and find some stability. I think that will be sort of our clarion call with the new Congress, to maintain stability of funding. At the same time, Congress and the administration have called for enhanced quality, which we support, but don't let us be whipsawed by reduced and uncertain reimbursement.

RENA SHEPHARD: One of my biggest concerns about nursing homes in general is that there area lot of owners, operators, and administrators who don't understand the complexities of the [MDS] process. There's no question the buck stops with them, but some don't understand what the buck is.

NATHAN LAKE: They are doing a new time study now, and my fear is that computers have actually reduced the amount of time it takes for a nurse to deliver the necessary care to a resident. And that can be used as a justification to lower the reimbursement levels.

KLUSCH: Operationally, we have to be focused on the true cost of care delivery. Then we have to make sure we are completely aware of how, when, and for what we get paid. And we have to use the benefits people bring, not only Medicaid and insurance, to appropriately pay for the services we render them.

RENA SHEPHARD: There are still a number of clarifications of the MDS coding rules I'm hoping we'll see--[a lot of things] in the reimbursement piece--but nursing homes don't even understand their role in monitoring these processes. I'm hoping the coming year will bring increased awareness around those issues.

SURVEY SAYS!

MARY OUSLEY: It's a little bit sad that we continued, still in 2006, to focus on survey and certification, but it is a high priority. We need to finally move away from what remains a fairly punitive system of evaluation.

STEVEN BURKE: The facilities will start seeing themselves cited if their medical director isn't involved in policies and procedures in the nursing home. Often, the medical directors don't even read what they're handed, they just sign it. It's lip service. CMS is looking to make these things legitimate, so [administrators] need to look at the involvement of the medical director and why he or she isn't on top of things.

CINDY FRAKES: The revisions are causing more deficiencies. There's no doubt about that because the), are changing the way surveyors review the F-Tags and changing the expectations of how things are documented and done.

KLUSCH: I really like the format CMS is using for [revised] F-Tags--producing quality definitional material as a background that can be used for education and establishing standards of practice. F#314 and F#315 really led the way on this.

CMS is going to need to do a really good job in training the surveyors. I see a lot of opportunities for surveyors to make mistakes because they don't have all the information. It's going to be a difficult transition, even if it's handled well.

DEBBIE BERA: I choose to look at the survey tags as a positive. They are making care more resident-centered, improving the resident's dignity and quality of life, and actually taking steps toward [improving care in] nursing homes the way we'd want it to be if we were living here.

TOM LOHUIS: [In the past], there was way too much interpretation on the surveyors' part. It's sort of like people playing Monopoly without having read the rules. If surveyors read the regulations now, it should be easier to comply. It's very clear. You could almost develop checklists from the items in the regulations.

KLUSCH: With the unnecessary drug tags, you're trying to affect an already stressed system with those large boluses of information, and this is an industry where the physicians either don't have that information or aren't using it.

It would be nice if we could say medical directors are going to take the lead on this, but we have a minority of really serious, prepared medical directors out there. They're not functioning at the level they need to function at yet.

A QUESTION OF QUALITY

WILLIAM DOMBI: We are seeing a culture developing both from policymakers as well as providers on quality--a culture that says quality is a deep primary focus that needs to be undertaken here. Initiatives that involve oversight, that involve data reporting, and involve transparency, I think those initiatives will absolutely take hold. It's not just Medicare and Medicaid, but it's top to bottom in the healthcare system.

MASON: If [a quality initiative is] approached in a realistic way, it is very achievable, but it is something that needs to be designed and implemented appropriately from the government's side and done in a manner that the industry has a fair opportunity to make adjustments to it. It can't come on overnight.

LAKE: [Quality initiatives] give people more information to play with and more data to crunch, but I bet you the CNA [certified nursing assistant] working the floor doesn't know what the quality indicators do to the facility and don't really care what the new quality initiatives will do to it either.

DIANE CARTER: To me, it's very interesting that goal 8 of the quality improvement initiative is about consistent assignment of staff. I believe if we were to have consistent assignment of staff, all of the other measures would improve dramatically. In other words, I think by having consistent assignments, you would see improvement in skin care and see changes in the use of physical restraints. Therefore, I would encourage facility staff to focus on consistency of staff, and all the other measures will very likely improve.

MEDICAID AND THE DEFICIT REDUCTION ACT (DRA)

DELORES GALIAS: I think when we have this population explosion [when baby boomers hit retirement age], Medicaid might be an unwieldy bureaucracy for the government to maintain.

MINNIX: [The American Association of Homes and Services for the Aging] is putting forth a plan on how to finance long-term care for the future. We need to look at the big picture on how we reposition and redefine networks of services in every community, and second, how to pay for those, because everybody knows that Medicaid is falling under its own weight.

NATHAN LAKE: Quality initiatives are a great idea, but we've had quality improvement attempts in the past. PPS for that matter was supposed to have increased quality. When the QIs [quality indicators] came out, that was supposed to increase quality: In my opinion, they did not significantly affect the way business is done in a nursing home.

BONNIE FOSTER: The baby boomers are coming. My generation is not going to play bingo, and they're not going to want to share a room with a roommate.

TESSA CHENAILLE: Where [the DRA] really affects facilities are those that are in the $5 million club. It's very important that they have a formal written compliance program, that employees go through training, and that they have a reporting mechanism. They need to have policies and procedures in place to teach their employees about false claims and what their responsibilities are.

LARRY SLATKY: There are government committees out there appointed to look at the future and a strategic plan [for Medicare], but I don't know that we have done it well enough. Nursing homes are so busy making ends meet that you turn around and five years have gone by.

WILLIAMS: We're constantly watchful on the Medicaid side. The argument is Medicare is subsidizing Medicaid. I'm not saying that's true or false, just that we need to pay a lot more attention to Medicaid.

DEBBIE BERA: Regarding the DRA, I think it's great that [CMS] wants to decrease Medicaid fraud, but, again, I think it could bring some operational burdens and financial problems. It will pose collection issues for some facilities.

RICHARD GRIMES: While private pay individuals have many long-term care options available, Medicaid recipients seeking long-term care have mainly institutional care choices. As our country continues to be confronted with increased Medicaid costs, both the state and federal governments are seeing the value of promoting less restrictive and less costly long-term care settings.

THE FUTURE OF SENIOR LIVING

CARTER: I think the largest issue we face is the demographics of a major tidal wave of boomers aging and requiring health care services. Currently, there are not enough younger people who are interested in gerontology and providing chronic care. I think there is so much more complexity in terms of caring for elders, and they often present such a challenging clinical picture. Younger people are not drawn to that complexity and challenge in providing care.

GRIMES: All individuals, regardless of income, must have the opportunity to receive care in the least restrictive setting of their choice. More technology will mean that people will have the option to remain in their homes longer, or will need fewer staff to provide care.

BERA: As baby boomers enter the nursing homes, they are going to expect more, and they are going to demand it. We'll be looking at more options for long-term care--smaller, less institutional nursing homes that are more homelike, aging in place, and culture change.

WORK FORCE WOES

HEBERT: We continue to be in discussions with the Department of Labor about how we can work with it to enhance work force issues. Certainly immigration will come back to the forefront, and we'll continue to be involved with that debate. We continue to be faced with a lot of challenges with not enough nurses, not enough people to help staff these facilities as we have an aging population.

KLUSCH: The very experienced nurses in their 50s, now leading many of these clinical teams, are beginning to retire. With the nursing shortage being what it is, I just don't think we have enough people percolating through the systems to be able to replace them all.

LEAH KLUSCH: Our requirements are getting more complicated, and our oversight is becoming more specific at the same time. But we're still in the business of caregiving. You can have the best business office in the world--if you don't have good nurses, you're no good.

CAROL MAILER: Ironically, nursing homes find themselves caring for sicker residents and needing more staff at a time when there is a shortage of nurses for hire. Some nursing homes have provided the opportunity for young nurses to see what long-term care is all about by joining with nursing schools to use their facilities in clinical practice training.

FOSTER: No nursing school in the country teaches what nurses need to know to be successful in a nursing home, from completing MDSs and care plans to providing proper documentation. Nursing homes could keep nurses beyond the first month of employment by taking three or four weeks to actually teach them how to work in a long-term care facility.

MAHER: You fall in love with the residents. Working in a nursing home gives nurses the chance to really know their residents, and the culture change going on in nursing homes can make many facilities homey places to work. More people are seeing nursing as an attractive profession where the pay can be good and there is no trouble finding employment.

KELLY SMITH PAPA: What keeps staff in their jobs are competitive pay rates and supervisors whom the employees like. Consistent assignments can reduce staff turnover, create relationships, and allow caregivers to get to know residents' individual needs. [Studies show] they're only practiced in about 10% of the nation's nursing homes, [but] I see that as the future.

ROBERT KRAMER: We've got to have students thinking about long-term care. This industry has to grow its talent. We must attract the best and the brightest.

EHR AND DOCUMENTATION

DELORES GALLAS: I see EHR [electronic health records] as a positive. The drawback to that is people who do not know how to use computers and don't want to know how. I think [administrators] should be preparing all of their staff now, and direct care staff and administrative staff should be taking basic computer classes. I'm 70 years old, and I've had a computer since probably most of you kids were born. Wisconsin has mandated EHR by 2010. I usually tell people, "That's next week!"

IVY TREMMEL: As technology becomes more prevalent in the industry, we recommend a basic skills process staff should go through, such as playing Solitaire so they get used to using the mouse and the mouse control, or writing emails, or writing some documents in a word processor they would normally do by hand. They need to be as hands-on as possible or they're not going to get used to it. Plus, using an electronic learning tool allows them to take control of their own education.

KLUSCH: I have a concern about the cost of the transition between the MDS 2.0, which is driving our reimbursement system, and retooling all of that over to the 3.0 document. I don't think that it's a good utilization of resources when we have a tool that is currently working. We'd like to drive a Jaguar, yes, but we can get to work in our Chevy.

EMERGING LIABILITY ISSUES

JASON LUNDY: Prevention of abuse--particularly resident-on-resident abuse--is more and more of an issue in nursing homes. There are no specific facilities for residents suffering from a mental illness or younger residents who find themselves in nursing homes because of physical disabilities. Some exhibit combative behavior. Regulators expect facilities to prevent resident abuse, but the combative behavior is often totally unforeseeable, making it impossible to guard against.

MICHAEL JORDAN: A stealth issue for 2007 relates to employment law. All facilities face issues from time to time with employee termination and how to properly handle it. People need to take a look at the type of language they're using on termination notices, because in some cases it's not clear or easily understood, and there are some clear issues--particularly respect.

TRENDS IN FINANCING

MICHAEL HARGRAVE: One of the big issues facing [the nursing home industry] is the age of properties. Half the properties out there are old, and over 40% as of the third quarter in 2006 reported the need for some kind of extensive upgrade. The sector requires significant capital--otherwise, you're going to have a lot of old nursing homes out there, and that's not healthy for anybody.

RAY LEWIS: Administrators should be looking for opportunities to expand by adding units. While construction costs per unit can be high, you don't have to add common areas, and there's very little incremental staffing. The profitability on the units can be pretty high. Now is a good time to invest in property. You can get a good return on your invested capital on the ability to push rents and attract more affluent seniors.

KRAMER: There's a lot of capital now, both equity capital and debt financing are available. If you're a good operator and have shown the ability to run multiple communities--well, investors are interested in finding you.

We don't see significant spikes in construction, even though the demand is there in terms of both occupancy rates and valuations. Many companies [are] growing through acquisitions instead of developments. It's not like we're going to see a flood of new-buildings opening up in 2007--and that's a positive thing, became there's more demand without a change in supply.

ROBERT KRAMER: You'll continue to see some major acquisitions and some consolidation, although it's still by and large a very fragmented industry. You're going to see fewer and fewer big portfolios available, and that's why the opportunity is so great for the smaller company.

SARAH SUMNER DUGGAN: On the financing side, we have seen an increase in the number of opportunities for replacement facilities and more opportunities for construction financing. That's providing for higher building costs, though--and there are a lot of obsolete buildings out there that need to be replaced, so it's going to cost a lot to pay for all that.

SENIOR HOUSING

LORRAINE TARNOVE: Definitely the shift to aging-in-place, community-based care is the biggest trend. Nursing homes can be a great solution for a certain patient in a certain point in life. Because they haven't always done the best job being patient-centered, people are moving away from them philosophically. I think there'll be some move back as culture change really takes root.

MARILYN BURLENSKI: Home care and assisted living have put a dent in skilled nursing facility care--but empty nursing home beds do not mean a financial crisis. If nursing homes have an empty bed but are able to flex their staffing--and thus flex their expenses--from a business perspective, they won't have a problem. You don't need 100% occupancy.

KRAMER: The administrator who is going to be challenged is the operator with primarily Medicaid residents in an older building. The average age of nursing homes is 30 years, and that's an old physical plant. Some of those buildings are hard to redo to attract the private payers, just because the fundamental design is so different than what those residents are looking for.

HARGRAVE: Nursing homes that are exploring the idea of combination properties outperform nursing homes [that don't'] on both occupancy and pricing. People are willing to pay a premium for a right not to have to move, and freestanding properties, from a marketing perspective, are at a serious disadvantage compared to the combined properties. There are few companies out there that realize that.

R. BUFORD SEARS: Is it a friendly, nonintrusive place? Far too often, you walk into a nursing home, and the corridors not only give an institutional feel but there are also smells associated with a nursing home that turn off a prospective resident, loved one, or whomever the decision maker is. You have to have to have curb appeal, but you have to have even more when people have a look-see.

FOSTER: I travel all over the country and [marketing your facility] is a big problem everywhere. Nursing homes could benefit from a marketing manager to help sell the facility and fill beds. We need to treat it like what it is--a business.

JULIAN RICH: A number of states are allocating their money for other long-term care services, such as home care and adult day care, to try to keep elderly people in their own homes. That's something we're concerned about, not because of a possible loss of business, but the concern over whether people will get the quality of care they need.

GALIAS: I think owners are missing the boat on things like gift shops, post offices, and coffee shops in facilities. I think there should be small concessions if you want to say it's like a home environment. That would promote independence.

SUMNER DUGGAN: If you have the best staff, you can recruit and maintain [staff], limit your employee turnover, and consistently give quality care in a positive environment. That is still a facility's best weapon to compete.

RICHARD GRIMES: In the future, there will be new models that we have not even thought of yet. Services will be brought to individuals instead of individuals moving to a place where services can be delivered. A slogan in our industry is "The best assisted living has yet to be invented."

Adrienne Trivets and Joanne Finnegan contributed reporting to this article.

MEET OUR EXPERTS

Debbie Bera, public relations trustee, National Association of Activity Professionals, Sevierville, TN

Steven Burke, president, Burke & Associates, LLC, Peabody, MA

Marilyn Burlenski, RN, BSN, president, Burlenski Consulting Associates, LLC, Cheshire, CT

Diane Carter, RN, MSN, CS, president and CEO, American Association of Nurse Assessment Coordinators, Denver

Tessa Chenaille, CHC, CHP, president, Chenaille Compliance Consulting, LLC, Medford, MA

William Dombi, vice president of law, National Association of Home Care and Hospice, Washington, DC

Sarah Sumner Duggan, senior vice president, Capmark Finance inc., Birmingham, AL

Bonnie G. Foster, RN, BSN, MEd, long-term care consultant, Columbia, SC

Cindy Frakes, LNHA, regional director, Medicalodge Post-Acute Care Center, Kansas City, KS

Delores Galias, RN, RHIT, owner, Galias Consulting, Glendale, CA

Richard Grimes, president and CEO, Assisted Living Federation of America, Alexandria, VA

Michael Hargrave, NIC, MAP, sales & marketing director, National Investment Center for the Seniors Housing and Care Industry, Annapolis, MD

David Hebert, senior vice president of policy and government relations, American Healthcare Association, Washington, DC

Michael J. Jordan, JD, Chair, Health Care Litigation Group, Walter and Haverfield, LLP, Cleveland

Leah Klusch, RN, executive director, The Alliance Training Center, Alliance, OH

Robert G. Kramer, president, National Investment Center for the Seniors Housing and Care industry, Annapolis, MD

Nathan Lake, RN, BSN, MSHA, director of clinical product design, American HealthTech, Jackson, MS

Raymond J. Lewis, executive vice president and chief investment officer, Ventas Healthcare Properties, Chicago

Tom Lohuis, RN, BSN, BHA, CEO, Wellspring Institute, Green Bay, WI

Jason T. Lundy, Esq., Associate, Foley and Lardner, LLP, Chicago

Carol Maher, RNC, RAC-C, case mix specialist, HCR Manor Care, Folsom, CA

Dave Mason, vice president for government affairs, American Physical Therapy Association, Alexandria, VA

Larry Minnix, president and CEO, American Association of Homes and Services for the Aging, Washington, DC

Mary Ousley, RN, NHA, principal, Mary Ousley & Associates, LLC, Richmond, KY

Douglas Pace, executive director, National Commission for Quality Long-Term Care, New York 

Julian Rich, president and CEO, Penacook Place Nursing and Rehabilitation Center, Haverhill, MA

R. Buford Sears, senior vice president and manager, health care, government & not-for-profit banking, and commercial marketing, M&T Bank, Buffalo, NY

Rena R. Shephard, MHA, RN, FACDONA, president, RRS Healthcare Consulting Services, San Diego

Larry Slatky, chairman, American College of Health Care Administrators, Alexandria, VA, and senior vice president, A. Holly Patterson Extended Care Facility, Uniondale, NY

Kelly Smith Papa, RN, BSN, clinical educator, McLean Nursing Facility, Simsbury, CT

Lorraine Tarnove, executive director, American Medical Directors Association, Columbia, MD

Ivy Tremmel, director of client education, Achieve Healthcare Technologies, Eden Prairie, MN

Hon. Lyle Williams, executive director, National Association of Subacute/Post-Acute Care, Washington, DC

Marc Zimmet, MBA, Zimmet Healthcare Services Group, LLC, Morganville, NJ