What Nursing Home Operators, Home Health Providers Are Saying About SNF-to-Home Diversion

Back-and-forth shifts in patient volume between skilled nursing facilities (SNFs) and in-home care providers have been happening for years.

Yet health care policymakers and executives are now examining such shifts — and the potential advantages of delivering care inside an individual’s home instead of a facility — more closely due to the ongoing COVID-19 pandemic. And so far, two things are clear.

First, there appears to be no general consensus as to whether the current SNF-to-home diversion wave linked to the coronavirus and short-stay Medicare patients will turn into a permanent trend. Home health providers and post-acute care data experts are confident it will, but SNF stakeholders aren’t so sure.

In the past, home health, hospice and personal care services powerhouse Amedisys Inc. (Nasdaq: AMED) has estimated that anywhere from 10% to 15% of SNF patients fall into the “jump-ball business” category, meaning they could safely be cared for in the home instead of a facility following a hospital discharge.

“SNF diversion — which we distinguish from the futuristic SNF-at-home [model], which is more down the road — is real,” Amedisys COO Chris Gerard said during the company’s third quarter earnings call in October. “It’s happening right now.”

Many of Amedisys’ peers have echoed those views, including fellow home health giant LHC Group Inc. (Nasdaq: LHCG). In addition to more hospital-based referrals, LHC Group reports it has actually seen more physician-driven referrals since the COVID-19 began, too.

“We are also seeing more physicians referring directly to home health from their offices or virtual visits,” LHC Group Chairman and CEO Keith Myers said during a November earnings call. “We believe these institutional and community trends that are being put in place are durable and contribute to a significant organic growth tailwind for us going forward.”

Data from care coordination platform CarePort supports the idea that SNF-to-home diversion is, indeed, happening.

After suffering sudden and sharp volume drops in spring, home health agencies as a group were running above their pre-pandemic totals by October, with many caring for more patients than ever before. In contrast, discharges to SNFs were only at 83% of historic volume at that time.

Omega Healthcare Investors (NYSE: OHI) acknowledged this clear trend toward sending post-acute patients to home health during the COVID-19 pandemic last week during its fourth quarter earnings call. Top executives from the real estate investment trust (REIT), however, predicted that patterns would return to normal once the crisis eases.

“You’ve got a lot of folks going into home health who are COVID-recovery patients, so as COVID goes away, it’ll just be something that we have to watch to see if there’s continued increase there,” Megan Krull, Omega’s senior vice president of operations, said during the call. “I think it’ll likely move back into the SNF industry.”

Similarly, CEO Taylor Pickett described coronavirus-related shifts in the flow of post-acute care patients as an extension of forces that had existed prior to 2020 — not some new, permanent change likely to last forever.

“This is nothing new,” Pickett said on the Q4 call. “The trend of moving towards home health as much as possible has been going on for years. And so to the extent the pandemic perhaps accelerated some marginal patients, I don’t think that’s problematic.”

Some SNF operators are already seeing a slow return to volume normalcy. The Ensign Group Inc. (Nasdaq: ENSG), for example, noted that its Medicare volumes have improved substantially over the past six months during a Feb. 5 earnings call.

From the second to third quarter of last year, Medicare days for Ensign’s same-store and transitioning portfolio increased by 7.2%, for example. Same-store and transitioning portfolio Medicare days again increased — by 10.8% — between Q3 and Q4.

“The increase in Medicare census continues to be the result of our operators’ efforts to take on higher-acuity patients, including many COVID-positive admissions, in an effort to ensure that hospitals have the needed capacity to deal with the most critically ill patients,” Ensign CEO Barry Port said during the call.

Past studies have found that most individuals leaving the hospital prefer to receive their post-acute care services in their homes and communities. Several studies have additionally highlighted home health providers’ ability to cut costs and reduce avoidable rehospitalizations.

But SNFs aren’t going away anytime soon, especially with operators believing their patient volumes will return once coronavirus-related challenges are lessened. For home health providers, only time will tell if this current pandemic-driven diversion bump is permanent.

For context, there were more than 15,000 SNF providers and more than 11,500 home health agencies operating in the U.S. in 2018, according to the Medicare Payment Advisory Commission (MedPAC). The home health industry’s share of 2018 Medicare spending was about $17.9 billion, while the SNF space’s share totaled $28.5 billion.

In terms of cost, the base payment for a home health episode that same year was about $3,040 per episode, according to MedPAC. The base payment for a SNF stay in 2018 was between $421 and $436 per day, with the average length of stay being 25 days.

Apart from straightforward, jump-ball SNF-to-home diversion, it’s also becoming increasingly clear that there’s some confusion regarding the type of care that can be quickly and cost-effectively shifted into the home.

Nursing homes broadly care for two groups of individuals. There are short-stay Medicare patients associated with double-digit margins, then there are long-stay Medicaid residents associated with negative margins in most states.

While a big chunk of the former group can be nearly seamlessly cared for by home health providers, individuals in the latter often require 24/7, hands-on, longitudinal care. Shifting more Medicaid residents from nursing homes into the community will require a complete rethinking of long-term care services — and new, targeted reimbursement mechanisms to match.

To this end, some home-based care organizations have begun developing innovative SNF-at-home programs that meld intermittent home health services with more regular personal care services and constant remote patient monitoring.

Additionally, some state governments have recently pitched creative measures to free up resources and shift more care into the home.

In Ohio, for instance, Gov. Mike DeWine reportedly proposed a $50 million fund that would allow the state to buy back bed licenses from nursing care providers in the state. The buy-back program would seek to take about 5,000 nursing home beds off the market at a proposed price of $10,000 apiece, according to the Dayton Daily News.

Today, just 15% of U.S. seniors 80 or older receive long-term care at home. In Switzerland, Denmark, Mexico and Sweden, that figure is above 30%, in comparison.

Even with a future rebalancing of long-term care toward the home, facility-based care will likely remain critical, experts point out.

“[There] will always be some individuals that require nursing home services,” Harvard professor and researcher David Grabowski wrote in a recent publication. “Sometimes it is economics: Some individuals lack a home to receive care in the community. Sometimes it is social: Many older adults are isolated and lonely in the community. Finally, sometimes it is care-related: As cognitive issues arise, individuals and their families are increasingly more likely to favor institutional settings.”