LeadingAge Magazine · March/April 2012 • Volume 02 • Number 02

Mother of Invention: Mission-Driven Providers Do More with Less in a Down Economy

March 13, 2012 | by Eva Quintos Tennant

As aging services continues to feel the pinch of reimbursement cuts and the threat to occupancy rates, mission-driven providers find ways to do more with less in order to keep their commitment to provide quality, affordable long-term care to their low- to moderate-income residents.

Christie Hinrichs, president and CEO of Lincoln, NE-based Tabitha Health Care Services, says, “We’ve always lived that financial roller coaster as long as I can remember.”

Tabitha serves 2,500 people, 75 percent Medicare or Medicaid recipients, and employs 1,000. Hinrichs says “the luxury of a dedicated foundation to help finance our work has allowed us to say ‘yes’ when others have chosen to say ‘no.’”

Even in the face of one of the lowest reimbursement rates in the country and a recession, Tabitha opened four new communities: two additional Green House projects, a community of assisted living and memory care suites, and the Journey House, Lincoln's only freestanding Medicare-certified hospice.

Established over a century ago as an orphanage, Tabitha enjoys a reputation as a pillar in the Lincoln community. However, Hinrichs says, “being old sometimes has with it the connotation of just that, ‘being old.’ We’re always evolving. Status quo is never part of the deal.”

The 20 percent cut to Medicare skilled nursing services will cost Tabitha about $1 million. At the same time it faces significant decreases in adult day, hospice and Medicaid reimbursements.

Engaging the community to embrace a shared mission is critical to staying on top of your commitment, Hinrichs says. “Getting out there and telling our story. Letting them know our outcomes. Letting them know where our challenges are. We are really good about securing community support, both from a donor standpoint and a provider of choice standpoint.” An example is Tabitha’s Meals-on-Wheels program, when demand began to outpace financial resources. The program was saved, thanks to a $51,000 estate donation coupled with funding from the Tabitha Foundation.

According to Hinrichs, when Tabitha identifies a need, “we simply do all we can to meet that need.” Tabitha operates Nebraska's longest serving Medicare-certified home health agency in 19 counties (18 of them rural). It also has a well-established telehealth program and operates a private duty home care agency in 29 counties (28 rural) as well as hospice operations in 26 counties (25 rural). For residents of HUD-subsidized housing, Tabitha provides sophisticated case management to help elders navigate a complex health care environment.

At Tabitha, it’s not only about the balance sheet; it is also about creating an engaged and empowered culture in which employees share a vision of person-centered care. Tabitha’s “LIVE to Succeed” culture encourages staff to: Love your job. Invite optimism. Vision success. Embrace the mission.

“This has been a five-year journey for us,” says Hinrichs. “We want to position Tabitha as the answer for elder care. We want to truly be experts in finding the solutions.”

Located in Seattle, Northaven is a stand-alone community with a 198-unit HUD senior housing apartment building and a 60-unit assisted living residence with a 63 percent Medicaid population. It has identified nontraditional funding partners as an effective approach to meeting community needs. Administrator Darlene Storti says identifying funding opportunities through the Northaven Foundation has become a top priority in the last five to six years.

Despite the challenges of a down economy, Storti remains positive: “I feel confident that we can weather this. It probably won’t be business as usual. We’re looking to partner and find ways to work with for-profits in our neighborhood.” She expects this new approach could include hospitals and other long-term care providers.

“We’ve pushed the envelope a lot of times,” adds Storti. “We’ve had to be more aggressive in recent years [in] telling our story and tapping into someone else’s passion to help us achieve our goal to provide quality and compassionate affordable housing.”

This has sometimes meant reaching out to nontraditional donors. As an example, Northaven recently received a grant from Boeing to construct two treatment rooms for acupuncture, massage therapy, foot care and chiropractic care.

A new medical van with a chair lift operates five days a week for both programs through another donation.

As a result of its outreach, Northaven also received a commitment from the Native American Tulalip Tribes, operators of a large resort and casino in northern Washington, to double its annual gift to the community.

“Some things work, and some things don’t,” says Storti. “But we remain flexible.” Although Northaven has not had to cut staff hours, employees are encouraged to come up with fiscal-minded solutions. When the director of resident services left for medical reasons, the director of maintenance and director of food services suggested they absorb pieces of the job instead of rehiring for the position. “I challenge my staff to be proactive with ideas, and then tell them to go for it,” says Storti.

Northaven is also in the midst of refinancing with HUD and anticipates completing the process by the end of March. “There are a lot of unknowns,” says Storti. “This has not gone smoothly. It’s a source of challenge and frustration.”

Undeterred, she advises, “Don’t get mired down in the politics and the bureaucracy. If everyone can be at the table, put aside our differences, and focus on who we’re serving and what that means, we can continue making a difference in people’s lives.”

Amid the financial priorities, person-centered care remains Northaven’s focus. “We’ve been very innovative in providing services in a HUD environment,” Storti says. “We have an incredible meal program. We have a wellness program that includes an RN,” and provide housekeeping and transportation. “We do more informal case management, but keep pretty close tabs on our HUD residents,” helping coordinate outside services and encouraging them to participate actively in their health care. “We have a very strong resident council and they have a voice in their own well-being. That’s what sets us apart.”

Frank Bassett says the marketing language he uses to describe Livingston County Center for Nursing and Rehabilitation, a 266-bed nursing home in Mt. Morris, NY, says it all: “Not your typical kind of nursing home. Expect to be amazed.”

For Bassett, Livingston’s director of long-term care, this has not always been the case, and shattering the perception of a publicly sponsored nursing home as “the provider of last resort” has become a deeply ingrained passion. A registered nurse, he joined Livingston County in 1992, after having worked at a for-profit entity in another state for four years establishing subacute care facilities.

“The irony is I grew up in Livingston County, and had visited those nursing homes as a child,” Bassett says. “They were typical. They were not welcoming, not inviting. Given their survey performance [at the time], it was not something to be proud of. I thought this was an incredible opportunity to come home and change what those nursing homes of my childhood memory were to me.”

Today, Livingston is considered a provider of choice, with services that include adult day health care, transitional and outpatient rehabilitation, nursing home care, memory care, bariatric care, respite and hospice care.

Livingston adopted a person-centered model of care, opening a newly built nursing center in 2005. The family unit model is designed with six neighborhoods: five serving chronic care needs, and one providing short-term subacute needs. Residents were empowered to have a dynamic role in the decision-making well in advance of moving into the new center. Each neighborhood has its own calendar of activities, food committee and resident council.

“Over the years, we’ve been a bit unorthodox,” says Bassett. Livingston was losing money on medical services, for example. Outsourcing to another entity saved over $100,000. Pharmacy outsourcing saved $240,000. Privatized dining services resulted in significant cost savings as well.

Through sound fiscal management, the Livingston center has been able to demonstrate that it not only meets the county’s need for affordable long-term care but also that it is a viable, sustainable business model and a powerful player in the local economy.

Citing a report from LeadingAge New York, Livingston issued a press release, which got coverage from local media, pointing out that the center contributes $52.7 million to the region annually and is a major employer, directly and indirectly supporting 411 local jobs.

To succeed in this changing environment, an organization must take a close look at how it is operating, says Bassett. “Are you too resource-intense? Do you have an established payer? Know the difference between under-reimbursed versus no means of reimbursement.”

Last year, shortly after he was hired into the newly created position of chief financial officer, Kevin Harrington found himself serving as interim executive director for Friends House, a stand-alone CCRC in Sandy Spring, MD, after the departure of the community’s executive director. The challenge for Harrington was to meet the changing needs of the community while maintaining a healthy financial balance sheet, drawing on his 20-year background in accounting for for-profit senior housing communities.

A faith-based community founded on Quaker ideals, Friends House was in the midst of a long-range planning process when Harrington came on board. Serving approximately 300 residents with 190 full-time and part-time employees, the campus consists of independent living (private pay cottages and HUD apartments), assisted living, skilled nursing, and dementia care.

Despite Friends House’s healthy occupancy rate, Harrington knows he needs to focus on long-term sustainability. Immediately after taking the reins, “I was concerned with the way Friends House was set up,” he says. “With 131 independent living units, 82 skilled nursing and 21 assisted living, the ratio was not where we needed it to be.” It was critical to step up efforts to ensure the organization’s future viability.

Friends House decided to revise its long-range strategic plan in June 2011 and engaged a consultant to assist the staff and board as they develop the plan. Critical components of this new vision are to double the number of independent living residences without losing the community’s pastoral setting, increase assisted living and grow Friends House’s moderate-income base.

“We’re a single-site community. [We’re] not a large chain that has other purchasing power or other leverage of economies of scale,” Harrington adds. Friends House belongs to a group called FSA Friends Services for the Aging, which regularly holds meetings and peer group networking sessions to share experiences, costs, ideas and best practices. Through this connection, Friends House was able to significantly reduce its health insurance costs.

Harrington says with Medicaid, “We lost $10 per day in reimbursements while our costs didn’t go away.” Looking for other forms of revenue, Friends House opened part of its skilled nursing building to rehabilitation services, reaching out to nearby hospitals and orthopedic surgeons. “We changed how we do our marketing to generate that. And we were able to improve our bottom line in nursing.”

The Friends House payer mix includes a small number of private pay residents and a larger Medicare and Medicaid component. It has made a conscious effort not to lock into just one type of payer. This is especially important when Medicaid rates rarely cover expenses. In 13 months, Harrington says, Friends House has been able to broaden and balance its payer mix. Daily flash reports now update and monitor the payer mix in each area of the continuum at Friend's House. This data will be useful in informing the long-range strategy.

What keeps Harrington up at night is the question, “Can we bring in younger residents to secure our future?” His concern is that Friends House doesn’t yet have the infrastructure necessary to attract baby boomers, whose expectations will drive the direction the community must go.

“We need to renovate and rebuild our community. We’re close to 45 years old,” Harrington says. “Right now, we know we have to grow. Are the future residents going to have the same wants and needs of the people who have been here for the last 15 years? We need to strike a balance between these.”

The common thread in each of these distinct, mission-driven organizations is their commitment to serve their community with the highest quality of care possible despite a changing and continually challenging financial environment. As Livingston County’s Bassett says, “We don’t get it right every day. We’re not at the end of the yellow brick road. This is a journey.”