LeadingAge

A recent Ziegler CFO HotlineSM survey focused on the topic of Healthcare IT, which gained insight into the implementation of information technologies being utilized in the healthcare sector, particularly in the post-acute spectrum. Questions also assessed usage among staff and residents. Nearly 180 senior living Chief Financial Officers (CFO) participated in the poll; roughly 60% were from single-site organizations and 40% represented multi-site providers. 

The initial question asked was about the adoption of EMR/EHR (Electronic Medical Records/Electronic Health Records) in their assisted living or skilled nursing levels of care. Overall, nearly 8 out of 10 indicated that they have adopted an EMR/EHR system. The percentage for multi-site respondents was slightly higher at 85.7%.  

When asked who the vendor is for the EMR system, the largest proportion, nearly 37% indicated that they utilize AOD. HealthMEDX was second, mentioned by roughly 2 out of 10 of the respondents. Those who responded "other" mentioned vendors such as American Data, MatrixCare, Optimus and SigmaCare. Of those who reported having only an EMR system in assisted living or skilled nursing, several indicated that it is integrated with the local hospital EMR. Fewer than 6% reported this type of integration with their local hospital.

The survey also asked about wireless infrastructures on the campus. Approximately 9 out of 10 respondents indicated that they have installed a wireless infrastructure on their campus. When broken out separately by type of organization, the multi-site providers were more likely to have campus-wide wireless than single-site providers. 

Additional questions were asked about resident and staff usage of various technology devices. When asked about staff use of mobile devices for work-related items, 77.4% of the respondents indicated that their staff does use mobile technologies.

To access the full copy of the survey results and review additional survey findings, please click here .

This article by Lisa McCracken, Senior Vice President of Senior Living Research & Development, Ziegler, was printed with permission.

According to CliftonLarsonAllen, the ICD-10 implementation is here. If your organization has not completed preparations, there is no time to waste. Organizations should evaluate all documentation in their electronic medical record (EMR) systems and work with vendors to upgrade the EMR documentation content and process as soon as possible.

Work with vendors

For many organizations, the only support they receive from EMR vendors comes from the ICD-9 to ICD-10 mapping tools (i.e., the crosswalk) the vendor provides and the training on how to use the crosswalk to correlate ICD-9 codes to ICD-10 codes. The process relies on educating the providers to choose the correct ICD-10 codes from those available in the crosswalk when they have multiple options.

Providers must realize, however, that there are many other EMR components that need to be updated to meet the increased documentation specificity requirements in order to migrate to ICD-10.

Providers should speak with their EMR vendors to understand how they have updated their EMR database structure because many pre-ICD-10 databases don’t have structured fields to record data for the new required fields. This conversation should include whether the fields are discreet or structured.

For billing purposes, providers should also verify with their vendor that fields required by their specialty can be captured as structured fields within the EMR database.

Understanding payer requirements to approve procedures

Government and commercial payers routinely require clinical information, including supporting diagnoses, to approve or pre-authorize a significant number of surgeries, procedures, or diagnostic studies. Providers may find that approvals now need more specific documentation. Many ICD-9 diagnosis codes now have several corresponding ICD-10 diagnosis codes that go into greater specificity.

The figure demonstrates the specificity of ICD-10 compared to ICD-9 and highlights the importance of the inclusion of structured data for all decision points. Click here to view more information.

From a payer’s perspective, some of these more specific ICD-10 codes may support a procedure, while others may not. Approval policies are generally available from payers, so providers should research the requirements for their common procedures and adjust their templates to capture the information required for payer approval. If templates are not adjusted, providers may face a significant increase in denials and a decrease in income.

Best practices incorporated into EMRs

As the sophistication of EMRs increases, more support tools for documentation, clinical decision, and best practices will be incorporated into the design of EMRs or “attached” to EMRs to provide greater consistency and focused clinical guidance.

Many tools use diagnosis information as part of their internal algorithms, and vendors are increasingly expanding their clinical rules engines. Many EMR vendors are incorporating voice recognition (VR) to activate components of documentation templates. Providers are using combined VR and natural language processing (NLP) tools in a number of ways in order to:

• Reduce errors in reports
• Assist with clinical and peer reviews
• Find appropriate treatment plans based on identified diagnoses if the recommended treatment plans are not initially chosen

Changes to diagnosis codes and increased specificity may require changes to existing VR-NLP algorithms. Because the VR-NLP and other support tools are tightly tied to EMR templates, providers should evaluate templates and work with vendors to make the required changes.

Revisions to EMR documentation

Providers routinely use patient portals to meet “meaningful use” communication requirements and streamline patient intake. Patient questionnaires available through these portals collect a significant amount of information, including details that accurately diagnose patients and assign corresponding ICD-10 diagnosis codes.

These questionnaires help ensure that the correct updated templates are selected for the visit or procedure. It is imperative that questionnaires are updated to collect data with the appropriate amount of detail.

Most EMR documentation capture tools have sections that include the reason for the visit, a review of systems, the examination, and the treatment or care plan. Each part of the template should be evaluated to determine if it needs to be updated. For instance, the “reason for the visit” section should capture information such as laterality, specific body location, and whether the issue is chronic or acute.

Templates should also be modified to capture the information needed for the care plan component. Information entered about the patient prior to the care plan templates will impact the selection of order sets and specific care plan sub-templates.

Long-term care (LTC) facilities have unique reporting requirements and should make sure all resident assessment instruments (RAI), intake forms, and documentation templates are updated to reflect the increased specificity of the ICD-10 diagnosis codes. Information captured on the RAI must support and flow to a “Therapy Evaluation and Plan of Care” or the “Section I Active Diagnoses” of the minimum data set (MDS 3.0). In addition to ICD-10 changes, LTC facilities’ documentation will need to support the new UB-04 form for billing multiple third party payers that went into effect October 1.

Procedure templates often use information collected previously and recorded in the EMR. Information required for completing procedure templates and for payer approval of the desired procedures must to be built into the intake questionnaire and procedure consult templates. Providers should map the information requirements for all components of services provided, as well as identify when the information was or will be collected to ensure that templates are adjusted appropriately.

Talk to your vendor

Providers should speak with their EMR vendors to understand how they have updated their EMR database structure, because many pre-ICD-10 databases don’t have structured fields to record data for the new required fields. This conversation should include whether the fields are discreet or structured. For billing purposes, providers should also verify with their vendor that fields required by their specialty can be captured as structured fields within the EMR database.

How we can help

CLA can help with the transition to ICD-10 in several ways. We provide staff education, clinical documentation improvement reviews, assistance with modifications to documentation elements, and organizational readiness assessments. Most organizations will start to see the impact from ICD-10 on their payments in late October or November. We can assess the financial impact of this important transition on your organization and help facilitate discussions with your banker for lines of credit.

This article was written by Tony Werner, Manager, HealthCare (http://claconnect.com/Health-Care/ICD-10-Requires-Changes-to-EMR-Documen...), and is used here with permission.

Continuing Care
Retirement Community (CCRC) providers have a number of resources available to
them when looking to benchmark against their peers, according to Ziegler. Two industry
benchmarking reports were issued in September for providers to access and, in
the near future, the 2015 Financial Ratios & Trend Analysis of
CARF-CCAC Accredited Organizations will be released. Each report is
slightly different in the types of communities being profiled, but they all
provide valuable insight into the overall financial health of the sector.

Each year, Ziegler Research releases a reported entitled Financial Ratio Medians for Not-for-Profit
Entrance Fee Continuing Care Retirement Communities, which is based
on fiscal year-end (FYE) audits of not-for-profit CCRCs. This year’s report
(based on 2014 audits) provides data for 97 not-for-profit communities across 19
different ratios. The ratio medians that were calculated demonstrate relatively
solid credit characteristics of the studied group of borrowers.

The
report reveals that the medians for the ratios calculated for FYE 2011, 2012,
and 2013 show consistent improvement. The ratios calculated for FYE 2014 show
possible stabilization from FYE 2013.

Most of the changes, both
positive and negative, are immaterially small year-over-year. The 2 most
significant year-over-year changes were decreases in the Cash in Unrestricted
Net Assets Margin (CUNAM) and Net Operating Margin (NOM), which likely points
to operating expenses rising faster than operating revenues during the fiscal
year.

However, more stable results in the Operating Ratio (OR),
Operating Margin (OM), and Total Excess Margin (TEM) show that borrowers may be
making up for this shortfall in other ways. Because the intermediate
profitability measures show stability, the decrease in CUNAM is likely tied to
large non-cash items such as losses from bond refundings, changes in swap
valuations, and/or pension obligations.

The 2015 Median Ratios for Nonprofit Continuing Care
Retirement Communities was
issued by Fitch Ratings and is an annual report of investment-grade CCRCs for
audited fiscal year 2014.

For the 3rd consecutive year, Fitch’s
rating outlook for the sector is stable, with the fiscal 2014 medians providing
further evidence of the sector’s credit position. Within the “A” and “BBB”
rating categories, median ratios stayed mostly unchanged, with median
profitability ratios in the “A” rating category showing slightly better
improvement relative to the “BBB” rating category.

Median capital
spending across all rating categories showed a sharp increase in 2014 relative
to 2013 and key liquidity metrics (including Days Cash on Hand [DCOH], Cushion,  and Cash to Debt) were mostly unchanged year-over-year. Another sign of the
health of the sector is the fact that during 2014, upgrades outpaced downgrades
at a ratio of 7:1. During 2014, Fitch upgraded the ratings on seven CCRCs,
downgraded one, and had 70 rating affirmations.

This article was
printed with permission.

Background

Wellspring Lutheran Services (Wellspring) was founded in 1893. The organization provides skilled nursing and assisted living in 5 locations in Michigan: 

• Monroe
• Frankenmuth 
• Livonia
• Saginaw
• Fairview 

Additionally, Wellspring provides certified home healthcare and hospice services within greater Saginaw County and home and community based services to older adults residing in Frankenmuth, Alpena, and Saginaw, as well as various child and family services.

 

Wellspring’s Obligated Group consists of the parent corporation and 5 other entities. These entities include:

• Lutheran Home Care Agency
• LHM Asset Management
• AuSable Valley Continuing Care Retirement Community
• Aging Enriched Services
• Lutheran Home Care Personal Assistance

The Obligated Group consists of more than 720 units across the spectrum of care.

 

Wellspring had approximately $25.9 million of outstanding bank loans to refinance. In addition, $8.85 million of new money would be used for renovation projects and deferred maintenance, $3.8 million for a skilled nursing community acquisition and $5 million for the creation of a liquidity support fund.

Challenge

From the beginning of the process, HJ Sims and Wellspring worked towards a financing structure that met the goals of the organization. These goals were:

1. Create a long-term financing plan;
2. Address refinancing needs for existing commercial loans;
3. Reduce interest rate and refinancing risk;
4. Generate additional liquidity for the Obligated Group;
5. Provide initial capital to fund certain improvements at the communities of the Obligated Group;
6. Expand its missions through strategic acquisition opportunities; and
7. Create financial flexibility to support and grow Wellspring’s mission.

Sims, Wellspring, and bond counsel reviewed the outstanding debt to define the tax status of each previous financing. In addition to the tax status, the financing needed to incorporate new money for renovations and deferred maintenance, a liquidity support fund and the acquisition of a nearby skilled nursing community.

Given these conditions, it was determined that taxable bank loan with tax-exempt bonds would be the most effective plan of finance.

Execution

Working with Wellspring, Sims created a detailed request for financing package that was sent to regional and national banks. After hosting a site visit, several competitive term sheets were received, and Sims worked with the banks to structure a partnership that would finance both the taxable and tax-exempt components.

Two regional banks provided the financing, with the lead bank covering the $31.1 million taxable loan and the other bank purchasing $13.5 million of tax-exempt bonds.

While interest rates were favorable for both term sheets, swaps were put in place to provide fixed rates on both financings to mitigate Wellspring’s variable interest rate risk and provide a solid financial foundation for future capital needs and growth. In order to preserve financial flexibility and still take advantage of low interest rates, creative swap structures were utilized.

For both financings, 10 year swaps were put in place with a 5 year cancellation option. In addition, the new money for construction would not be swapped until drawn on, allowing Wellspring to take advantage of the current low interest rate environment.

Results

The $44.6 million total taxable bank loan and Series 2015 bond issue closed on October 29, 2015. Specific benefits of the refinancing include:

• Refinancing of Existing Commercial Debt – The refinancing of existing debt into two different tax structures allowed Wellspring to take advantage of lower interest rates on its tax-exempt debt and to lower its current bank loan rates. In addition, the low cost of the bank financing creates and preserves additional debt capacity for future growth opportunities;
• Liquidity Support – As part of the new money in the financing, Wellspring was able to establish a $5 million operating reserve fund to enhance the organization’s liquidity position;
• Flexible swap structures – Swaps were used for both structures, but were made flexible to allow for a cancellation, without penalty, any time after five years providing for future financial flexibility;
• Funding for a strategic acquisition – $3.8 million of the new money was funded by the tax-exempt bonds to acquire a skilled nursing community and expand Wellspring’s mission; and
• Provided Proceeds for Capital Improvements – $8.85 million of the new money will be used to fund renovation projects at several of the communities within the Obligated Group.

For more information, please contact Aaron Rulnick at arulnick@hjsims.com or 301-424-9135 or Izzy Sims at esims@hjsims.com or 512-519-5002.

This article was reprinted with permission from HJ Sims.