Building a Better SNF

Health systems are re-examining their post-acute care strategies and SNF partnerships.

After steadily migrating out of the skilled nursing facility (SNF) market over the past decade, health systems are re-examining their post-acute care (PAC) strategies and the potential value of SNF partnerships. This renewed consideration is directly tied to health systems' growing accountability for the quality and cost of services delivered across the care continuum, including the need to improve care continuity, reduce readmissions and improve patient and family satisfaction.

Aside from discharges to home, SNFs are the most common post-acute destination, representing 19 percent of PAC transfers. Partnerships with freestanding SNFs provide an effective option for hospitals to improve PAC quality and efficiency without the financial risk of ownership.

Readmission penalties and a shift toward bundled payment for full episodes of care will require hospitals to more actively oversee the services their patients receive after transfer to a SNF. Congestive heart failure and pneumonia, two of the three conditions for which readmission penalties began in 2012, are among the top 10 diagnostic-related groups for SNF admissions. Additionally, joint replacements likely will be among the first procedures to be reimbursed through bundled payments that include PAC, given their high volumes and expenditures among Medicare patients.

New Care Pathways

Cost per case, length of stay and readmission rates vary significantly across SNFs. Even compared with other PAC sites, SNFs have notoriously high risk-adjusted readmission rates.

The most effective health system-SNF relationships will have both the right partnership structure and care delivery model to avoid readmission penalties and improve PAC. To begin, there are seven major building blocks that can optimize the role SNFs play within a system of care (clinical alignment and resource effectiveness). How an individual system prioritizes these building blocks will depend on its service portfolio and local market dynamics.

  • Care pathways: Ensure that hospitals and SNFs work together to develop evidence-based protocols that standardize and optimize care across acute and PAC settings.
  • Care coordination: Form cross-continuum teams that cover both PAC and acute care sites to identify and address problems in care transitions, using coordinators to bridge both settings.
  • Quality rehabilitation: Ensure that inpatient discharge planners are familiar with the therapy staff and technology available at area SNFs to select destinations that best meet patients' rehabilitation needs.
  • Alignment strategy: Inventory area PAC facilities to determine SNF supply and alternate PAC options. Identify top performers in quality metrics to help patients make educated SNF choices. This may include the decision to create a formal SNF network.
  • Handoffs/communication: Engage hospital physicians to increase their accountability for handoffs and any subsequent readmissions. Better link patients' primary care physicians with emergency department physicians to avert avoidable admissions. Create comprehensive medication and personalized care records for all patients.
  • Information technology: Explore software applications that enable discharge planners to search electronically for area SNFs that best match patients' care needs. Automate data sharing with SNF medical directors on key quality metrics.
  • Transfers/access: Utilize a standardized transfer form, formalize a referral system with area SNFs and facilitate real-time information on bed availability.

Future Considerations

A number of variables must be considered when determining how SNFs factor into your system's ability to optimize care across the continuum and respond to changing market conditions and payment models.

Begin by determining your organization's short- and long-term strategy for working with -- and possibly within -- the PAC sector (i.e., partnership, ownership, conversion to becoming a PAC provider). Along with this, evaluate whether your organization intends to pursue bundled payment projects or risk-sharing models that will include PAC services.

Next, assess your current case mix of patients discharged to SNFs to determine the demand for rehabilitation services vs. medically complex services. Hold regular forums for collaboration between hospital and SNF medical directors, as well as chief nursing officers and PAC nursing staff. Forums should include the sharing of data on potentially avoidable admissions and readmissions and root cause analyses for problematic trends.

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Finally, consider cultural and operational barriers to the adoption of standardized care pathways and information systems that span acute care and PAC settings.

As SNF payments and regulations continue to evolve, hospital and health system leaders will need to assess the best PAC position for their institutions. Over the long-term, this may mean reconsidering system ownership of SNFs or even pursuing an integrated PAC option, such as the Continuing Care Hospital concept the Centers for Medicare & Medicaid Services plans to pilot.

Regardless of your decision, remember that a patient-centric, rather than a site- focused strategy, ultimately best supports the health system, as well as the community it serves.


Complete Medicare claims data, 2008
Sg2 Analytics Database, 2011
Sg2 Analysis, 2011
Agency for Healthcare Research and Quality
Medical "Extensivists" Care for High-Acuity Patients Across Settings, Leading to Reduced Hospital Use. October 2010; MedPAC.
Skilled nursing facilities: the need for reform. In: Report to the Congress: Promoting Greater Efficiency in Medicare. June 2007. 

Sg2 Resources

Sg2 Publication: Linking Skilled Nursing Facilities to Systems of CARE
Sg2 Web Seminar: Effectively Managing Readmissions: 5 Key Questions
Sg2 Expert Insight: Improving Post-Acute Partnership Performance

Julie Schulz is a consultant with Sg2, a healthcare intelligence, analytics and consulting company.


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