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Accounting for personal care.

These needed services can make or break the assisted living community financially. A review of the options.

As the assisted living business has grown and matured, the complexity of its service delivery and billing methods has also evolved. While there is a wide array of service delivery methods employed by assisted living communities, most derive from one of four basic methods, each with its own advantages and disadvantages:

1) Home Health Option

This segregates the basic service package from the personal care component. The developer or manager provides the basic service package, such as meal service, housekeeping, maintenance, laundry, activities and transportation, and subcontracts out the personal care component through a Medicare-certified home health agency. This allows the residents of the community to have access to personal care services and permits them to use their purchasing power as a community. This option is naturally attractive to home health agencies, because they can deliver a wide array of services, many of which are Medicare-reimbursable, to a captive audience, without the expense and inconvenience of travel time.

The home health option enables the community to deliver a much higher level of care than would be possible under assisted living regulations in most states. This is because the residents are contracting with the home health agency for this care. It is not delivered by the management of the community directly as a component of the community service package included in the monthly service fee.

The involvement of a Medicare-certified home health agency can benefit both residents and ownership. Residents can utilize Medicare benefits that they would perhaps otherwise be paying for separately, potentially relieving those residents who may be experiencing financial pressure as their healthcare needs accelerate. Meanwhile, the community can benefit from reduced turnover, stabilization of the assisted living population, avoidance of nursing care transfers, control of the continuity of care and differential billing structures.

This concept is very attractive to owners looking to defray expensive nursing costs, particularly during the ramp-up period, until stabilized occupancy is reached. During the start-up phase of the operation, occupancy is continually changing, which makes it difficult for management to optimize staffing at the most efficient level. Also, by contracting with a single Medicare-certified home health agency, owners and managers can have some influence and control over the personal care service delivery.

Without this arrangement, an assisted living community will be subject to the risks of having many different home health agencies delivering Medicare services to its residents with little or no control by management over the quality of these services or qualifications of personnel. This has medicolegal implications, as well, because if a medication error or resident abuse incident occurs at the hands of a home health staff person, the community may be exposed to the resulting liability and inevitable bad public relations. In one East Coast assisted living community, no less than 15 different home health agencies were delivering services to its residents, creating a real vulnerability for the community in terms of control and quality assurance.

On the downside, by contracting out the personal care component of the service package, the community relinquishes any operating margins that could be reasonably expected through the delivery of these services with its own staff. Under most circumstances, the delivery of personal care services by a community's own employees is more efficient than if accomplished through a home health agency. Efficiently operated, a personal care delivery component offered by the assisted living community with its own staffing should produce a 70 to 80% margin in loaded costs. Obviously, state licensure requirements must be observed - they vary from state to state - and operators should take care not to exceed them.

Another disadvantage of this home health option is realized after the community has been open and the resident acuity profile increases to become predominantly skilled. It then becomes difficult for the community to attract residents other than nursing home candidates, thereby limiting its marketability.

2) Service Levels Option

Most assisted living communities include some level of personal care in their basic monthly service package. The amount of this service can range from 30 to 90 minutes of assistance per day with activities of daily living (ADLs), with an overall average for most communities of about 45 minutes. For most residents, this amount of service works well, and for those who need extra personal care, the community can provide it more economically than an outside agency. Be aware, too, that some home health agencies will seek to provide private services that are not reimbursed by Medicare and bill the resident separately.

Personal care services normally include bathing, dressing, escort service, tray delivery, medication reminders, additional housekeeping, personal laundry, dementia support, orientation and cueing, grooming, scheduled toileting and safety checks. Upon admission, residents' personal care needs are assessed and a personal care service plan is created to deliver those services. Under the service level program, residents are reevaluated periodically as their needs change and assigned to a different service level if necessary. These levels are often referred to as level 1, 2, 3, etc., or by progressive terms such as basic, intermediate, enhanced and comprehensive.

Usually premiums for each higher level of service are based upon additional personal care time required per day by the resident, translated to a monthly rate. For example, an assisted living community that includes 45 minutes per day of personal care in the basic monthly service package may charge an additional $120 per month for their intermediate level, which provides up to 60 minutes per day ($16 per hour aide cost divided by 4 = $4 per 15-minute increment x 30 days per month = $120). This can continue for each 15-minute increment to $240 additional per month for 75 minutes, $360 additional for 90 minutes, and so forth. Any significant change in resident status that requires an increase in care on a long-term basis, or significant increase on a short-term basis, triggers a service plan review with the resident and family.

While this system works fine for residents who normally utilize 45 minutes per day of personal care or less, some providers have found that it can be extremely difficult to convince families and residents that they need to move up to the next service level and incur the additional expense. Residents and families will often attempt to convince management that their need for additional services is due to a temporary setback and therefore no rate adjustment is justified. Many residents will have a tendency to request escort service or to be catered to personally in ways that never get accounted for to trigger a service plan review. As a final negative factor, because the monthly service fee is adjusted with increasing levels of service, a service plan review that comes at the same time as a lease renewal and normal rent increase can prove to be a very tough sell.

Staffing the service level option can also bring challenges, as it is difficult to quantify exactly the number of service hours per shift actually delivered. Personal care aides are constantly being pulled in many different directions to service residents on demand. Management will find that some basic level residents will require more care on an intermittent basis, while higher service level residents continually demand special attention because they are paying more.

3) Point System Option (ADL Acuity Guide)

The point system is normally determined by a baseline assessment tool used to classify each resident's needs. A numerical score is determined based upon progressively higher levels of staff intervention, each assigned a point value, usually 1-5. The higher the point value, the higher the acuity level. The final score is derived by adding the acuity points from each service category, then dividing by the number of categories, usually 10. Thus:

Category: Bathing and Dressing

1 Point: Independent in bathing and dressing.

2 Points: Requires assistance only in transferring into and out of bath, and can bathe self.

3 Points: Requires assistance in bathing and dressing but does most of the work.

4 Points: Requires considerable assistance with bathing and dressing.

5 Points: Completely dependent upon staff for bathing and dressing.

Resident acuity scores for all categories are added together and averaged. Each acuity level is generally assigned an additional monthly fee, such as $200 or $300. Acuity levels of 4 or 5 can demonstrate a need for nursing home care and trigger discharge planning. Assessments are conducted upon admission and periodically thereafter on a scheduled basis. If the personal care director waits until an obvious reassessment is needed, chances are that the personal care aides are already providing the higher levels of service without recovery of the additional costs. Consequently, significant amounts of care are "given away," and the staffing of the unit is always short.

Like the service level option, the point system leaves significant room for interpretation. Residents and family will contend that the point system is based upon conjecture and can vary widely from week to week, depending on how the resident may be feeling. Management needs to constantly stay on top of regularly scheduled assessments for every resident and resell the increase in fee structure many times throughout the lease term. In addition, the time needed for performing activities of daily living can vary widely among residents. One resident may require 20 minutes to bathe and get dressed for breakfast, while another will need 45 minutes to do all this with assistance. There is simply no way to directly correlate nursing time expended to each resident and fully recover the cost.

4) Actual Care Option

Under this system, residents are allocated a daily time limit for personal care, such as 45 minutes, included in their monthly service fee; any additional care is billed in arrears for the actual care delivered. Upon admission, residents are assessed and a personal service (care) plan is developed. The service plan measures the amount of personal care the resident needs during a seven-day period, normally Sunday through Saturday. The plan itemizes each daily assignment such as bathing, dressing, daily housekeeping, personal laundry, dementia support, daily orientation and cueing, and grooming; it also includes other recurrent activities such as scheduled toileting, escort or tray service for breakfast, lunch or dinner; and morning, noon or night medication reminders.

An initial seven-day time study is performed by the personal care aides assigned to the resident. The total number of minutes are added up for the week and, if the total exceeds 315 minutes per week (45 minutes per day for seven days), the excess is billed separately to the resident's account each month. The time study is repeated for this resident only if one or more of the following apply: 1-the resident returns from the hospital after a short stay; 2) the resident's physician alters the resident's major medication or treatment regimen; 3) the resident's overall personal care needs either increase or decrease; or 4) the resident experiences a cognitive decline. If any of these exists, a care conference occurs involving the personal care director, aides, family and physician to update the personal service plan, if appropriate.

Another advantage: Personal care assistants normally account for every minute of their day during the time study, allowing this to also be used to monitor performance. In sum, all possible interactions between personal care assistants and residents are documented.

For a revised service plan, another time study is completed as the services are delivered during the first week. The total time that exceeds the allotment in the monthly service fee is then billed separately-for example, at 35 cents per minute ($21 per hour). This approach is very beneficial to the resident and families, because it allows for the fact that on certain days a resident may need more than 45 minutes of service (e.g., when assistance in bathing is required), while on other days of the week, the service needed is considerably less. Residents are charged only for the care that exceeds 315 minutes per week, even if they need one hour or more on any given day.

Because delivery times for the same service will vary widely among residents, this system allows management to recover the actual cost for actual time of service delivered rather than, say, a fiat fee for bathing (as in the service levels option discussed above). Also, upon completion of all time studies, management has an accurate tally of the total staff hours actually required to deliver services so that the most efficient level of staffing can be scheduled or budgeted. An accurate tally of the total service time by category can also be an effective method to quantify the overall acuity of the community's resident population.

Under this approach, each personal care assistant is assigned specific residents and has a daily schedule transposed from the weekly service plan. This will include the time of delivery, apartment number, resident name, assignment detail with check-off boxes, and minutes allocated to perform the service. This way, the personal care assistant's entire day is scheduled, and the assistants are expected to complete their assignments before clocking out.

It is not unusual for this approach to reach 90% efficiency in service delivery. Some companies have developed this system into a science, using personal computers to develop the personal service plan, schedule each resident, assign a staff person to the residents and generate a billing statement, personal information sheet, medication record and acuity report. Programs such as these can also be used to optimize staffing and manage the overall profitability of the ancillary care delivery system.

Importantly, the actual service times and additional billing amount based on the time study are discussed with the family or resident, thus paving the way for consensus before the billing statement is received. If the resident or family feels that the additional billing amount is objectionable, then management can ask them which services they would like to be deleted from the plan and discuss the implications of this. If the family has been involved in the care planning process from admission to discharge, they should be prepared to understand their options and the cost of alternatives.

Management of staff cost is as important in assisted living as it is in home health care. A home health agency would not remain in business very long supporting staff that did not have billable hours. The personal care department must be operated as if it were a separate home health agency, so that all minutes of staff time scheduled are either billable or attributable to and covered by the monthly service fee. Whether the care delivered in the assisted living community is included in the monthly service fee or is billed additionally, it all counts and must be balanced against the total revenue recoverable from residents. Any margin of profitability can be very quickly erased with inefficient management and utilization of unaccounted-for in-house staff time.

Benjamin Pearce is the senior vice-president of operations for A*D*S Senior Housing, Newton, MA. He serves on the Board of Directors of the Assisted Living Federation of America, Massachusetts Assisted Living Facilities Association and the National Association for Senior Living Industries. Over the past 15 years, he has overseen operations and marketing for 69 senior living communities in 17 states. This article is adapted from his book Operations Management and Marketing for Assisted Living, Congregate and Continuing Care Retirement Communities, due shortly from Johns Hopkins University Press.
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Title Annotation:assisted living service delivery
Author:Pearce, Benjamin
Publication:Nursing Homes
Article Type:Cover Story
Date:Mar 1, 1998
Previous Article:Assisted living meets managed care.
Next Article:10 unexpected trends in assisted living.

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