Good afternoon, ProviderNation.
During the past four years, Ken Lund headed up a team that survived a 75 percent reduction in daily Medicare reimbursement and transformed Shea Family, an 80-year-old, regional skilled nursing operator, into a full-continuum, post-acute care powerhouse in demand by local accountable care organizations (ACOs) and managed care organizations (MCOs). This article is the first in a series that will chronicle the experience.
I have a signed and dated poster from the grand opening of the Kennedy Presidential Library in 1979 that reads: “One person can make a difference, and everyone should try.” I look at it, read it, and reflect on its deeper meaning daily.
Politics aside, it seems to me we should all aspire to accomplish simple daily tasks and minor miracles that lead to a quantum shift for the betterment of our society. We can no longer trust in or believe in conventional mechanisms, as they are broken and incapable of rational and logical change or repair.
Believing In A Vision
I have an enormous amount of hope and faith in the spirit that resonates in each of us to do well. We are born with it. Most of us in the long term and post-acute care business start our actions with the intent to “do no harm” and with our personal/individual commitment to do right for our residents, in simple ways, every single day. It doesn’t take government intervention; it takes a commitment to an idea or vision.
The road to health care reform has been fraught with plenty of failures—and plenty of us will continue to crash and burn—but it is in failure that we find learning and strength. If reform were easy, we would have made better decisions about Medicare decades ago, when it was first rolled out … around 1966, during the Johnson administration.
For Shea Family, the moment of epiphany came four years ago. Market forces were lining up, and the tipping point had been reached—indicating it was time to take the plunge. The team had a choice to make: Either change fast or watch revenue evaporate.
Few can imagine a 50 to 70 percent cut in skilled rates, but that’s exactly what unfolded in southern California. Today, providers are contractually obliged to demonstrate measurable outcomes in exchange for volume from MCOs and ACO partners.
As a team, we tinkered, experimented, and restructured several times before getting the model right (and to some degree not only are we still at it, we will always be at it). The model we have today has been in operation for the past two years. In future blogs, I will unpack the five innovations that make it work, one by one.
Today Shea Family is demonstrating performance that is two times more effective and efficient than the norm at a county, state, and national level, as follows:
- 75 percent of patients in Shea Family skilled rehab go home in less than two weeks, compared with 35 percent across California.
- More than 50 percent lower readmission rates compared with peers.
- 75 percent of Shea Family Care Centers are Four- to Five-Star rated, as calculated by the Centers for Medicare & Medicaid Services. This compares with just over 33 percent nationwide.
What Went Into The Model
The new model for care requires a coordinated network with aligned values and a breadth of service lines across the full continuum. We borrowed ideas from other industries as we innovated. Referrals from partners flow in because Shea Family was able to eliminate layers of management overhead that the ACO/MCO would have had to absorb. The model also aligns with acute hospitals and managed care payers.
Changing the way business is done resulted in enhanced outcomes, higher satisfaction from participants, and dramatically reduced expenses to payers. Change is always tough, but for this provider, in this very competitive region, survival depended on it.
So when I look up at JFK’s boat on the water I’d like to think he understood how to read the wind, the water, and adapt strategy accordingly. He’s looking not at the sail, but through the sail—an important lesson about balancing short-term needs with moving an organization forward toward a broader horizon. Success for him required anticipating course corrections and staying in front of changes to come.
I would like to think then, just like today in our changing environment, he knew that failure to anticipate and adapt would likely leave him in very rough waters without the right people, a plan, and the resources to get through it.
Our patients, families, employees, partners, our kids, and our country are counting on each of us to do our part. We must not only read the wind and the water but also look deeply into ourselves … to chart a new course.
Ken Lund is among the nation’s leading experts in reform for post-acute care, having implemented a successful model in San Diego County that quickly captured majority share from the three health systems dominating the region: Kaiser Permanente, Sharp Healthcare (a Pioneer ACO), and Scripps. In addition to his current role at Shea Family, Lund heads Nosilla Relyt, a consulting practice, where he has helped fellow chief executives design, execute, and run a variety of programs, including strategic planning processes, vendor/contractor agreements, purchasing programs, key executive recruiting, benefit plan design, operational start-ups, and management training programs.