There's room at the inn.

Kathleen M. Griffin, PhD, is national director of post-acute and senior services with Health Dimensions Consulting Group, Benedictine Health System.

Boost sagging census by augmenting your subacute program

FOR MANY NURSING FACILITIES IN THE 1980S AND EARLY 90S, subacute care provided an opportunity to generate extra revenues from beds that may otherwise have lain empty. But prospective payment's lower rates have chased many long term care providers out of the business of providing short-term Medicare-funded stays. Meanwhile, occupancy rates have gone south in many areas. Texas, for instance, is struggling with occupancies below 80 percent, according to Arthur Anderson. Between 1994 and 1996, occupancy rates in Colorado dipped from 90 percent to 84 percent; in Maine, rates fell from 95 percent to 89 percent.

In response to this problem, astute owners are riding the horse in the direction it is going--toward a broad range of postacute care, supportive living, or both. Before deciding how you should respond, consider the factors related to dwindling census.

For starters, managed care has reduced lengths of stay for skilled nursing. Despite the withdrawal of Medicare HMOs from certain markets, enrollment continues to increase, with a projected 13.5 million by 2005, up from 6.5 million in 1999.

At the same time, other long term care sectors are growing. Home health care is taking on patients traditionally seen in nursing homes. Notwithstanding prospective payment, home health expenditures are anticipated to grow by 25 percent between 2000 and 2010. Assisted living, the boom industry of the 1990s, is being blamed for much of the occupancy decline in nursing facilities, with justification. Assisted living owners eager to fill vacant units have broadened admission criteria and services to accommodate elderly persons with Alzheimer's disease, other types of dementia, and incontinence--the same individuals who formerly were nursing facility residents.

Medicaid waivers and state programs for dual eligibles in Oregon, Arizona, Minnesota, Colorado, Wisconsin, and Maine are also having an effect, directing nursing home candidates to assisted living facilities or providing services that permit these individuals to continue to live at home.

And though the growth in the elderly population continues, it has slowed somewhat in the 1990s because of the relatively small number of babies born during the Great Depression of the 1930s.

Residents have evolved for the most part into two categories: those in need of subacute care and those with Alzheimer's disease or other types of dementia. Established subacute providers with reasonable transition payment rates see their referrals growing as others leave the subacute business. In addition to increasing the size of their subacute units, many are pursuing initiatives that complement their subacute programs. These include the following:

* Outpatient rehabilitation. Subacute patients discharged home find great benefit in a short-term therapy program, particularly when the patient sees the same therapist who treated him as an inpatient. The four to eight weeks of outpatient therapies covered under Medicare's new $1,500 annual cap on Part B therapies make an outpatient rehabilitation program worthwhile if the facility has an adequate number of Medicare discharges to home.

* Home health. A home health agency needs a fairly large volume of patients. Therefore, subacute providers that are not part of a chain, network, or other large organization rarely make forays into home health.

* Rehabilitation hospital. Some providers affiliated with acute hospitals have developed satellite acute rehabilitation units in the nursing facility. This allows subacute providers with strong rehabilitation programs can leverage services and increase the per diem payment. Such units must meet applicable state building codes. Moreover, a prospective payment system for acute rehabilitation is scheduled to begin October 1, 2000. It is likely, however, that the PPS payment will approximate an updated version of the 1996 average per diem of $710 for rehabilitation units as reported by the Medicare Payment Advisory Commission.

* Assisted living. Facilities with dementia programs and other specialty services may want to offer assisted living. Many states have created several levels of licensure. In states where residential care is an option, with private or semiprivate rooms and shared living spaces as opposed to apartments, facilities may want to convert one or more wings.

* Adult day. The hype of adult day as a referral source for long term care was found by most to be an empty promise. But for assisted living providers, adult day has proven to be an excellent way of introducing families to their services.

But take heart. If you can weather the occupancy crisis for a few more years, you should do well in the future. The General Accounting Office has estimated that the number of nursing facility residents will rise from 1.8 million today to some 3 million by 2020.