Managing financial pressures with subacute care - Special Section: Subacute Care

Healthcare Financial Management, Oct, 1995 by Steven M. Rousso

Many healthcare organizations have found that converting acute care beds to subacute care beds has enabled them to control costs, enhance payments, and better serve patients along the full continuum of care.

Conversion to subacute care, however, requires careful planning and sufficient resources. Healthcare executives contemplating converting an acute care unit to a subacute care unit must determine the cost of conversion, the types of services to be offered, licensing requirements, the types of patients to be served, and reimbursement implications.

Over the past several years, healthcare organizations and systems have been converting acute care beds to subacute care beds and skilled nursing care beds at a rapid rate. Hospitals also have been building new subacute care units, leasing and purchasing subacute care nursing facilities, forming joint ventures with subacute care providers, and forming limited partnerships with medical groups for the purpose of acquiring skilled nursing and other subacute care facilities. (Skilled nursing is a form of subacute care, somewhat less intensive than other forms of subacute care, that has special licensing requirements. Most units and facilities dedicated to subacute care are licensed as skilled nursing beds.)

One cause for the growth of subacute care is declining inpatient utilization. As the acute care census has decreased, entire floors of hospitals have been vacated and closed. Because of the high fixed costs associated with empty beds, healthcare executives have been seeking to fill these beds through programs that help build integrated delivery systems. One such program is subacute care.

In addition, managed care and capitation have made converting acute care beds to subacute care beds attractive to healthcare executives because of the cost savings associated with treating patients, as appropriate, at a less intensive and less expensive level of care than traditional acute care.

Under the Medicare prospective payment system, treating patients in the least intensive appropriate setting, such as a subacute care unit, also is financially advantageous for providers.

The aging population is another cause for the growth of subacute care because many patients who may benefit from treatment in subacute care facilities are elderly. The U.S. Census Bureau estimates that by the year 2000, the country's population will include approximately 35 million people age 65 or older; 40 million people will fall in that age group by the year 2010. (In comparison, the census figure for this group was 31.5 million in 1990.) Among older Americans, the fastest growing segment is the 85-and-older group--the group most likely to require treatment in skilled nursing facilities and subacute care facilities.

Other causes for the growth of subacute care include:

* Technological advances that have made it possible to care for patients in settings other than hospitals;

* Pressure from payers to develop alternative delivery models;

* Payment policies that limit costs but provide exceptions to those limits; and

* Subacute care costs that are 20 to 60 percent below acute care costs.

Types of subacute care

Subacute care units can offer many different types of services, including intravenous therapy, total parenteral nutrition, tube feeding, rehabilitation, tracheostomy care, chemotherapy, radiation therapy, and hemodialysis. Conditions treated can include head injury, spinal cord injury, special types of wounds, acquired immune deficiency syndrome, ventilator dependency, Alzheimer's disease, dysphagia, and neurovascular diseases.

This diversity of services and patient types helps explain why no definition of subacute care has been universally accepted. However, some methods of defining types of subacute care units have emerged. One method is to indicate the level or duration of care that the patients of a subacute care unit require. Some terms commonly used to distinguish the level or duration of care are "short term," "intermediate," "long term," "transitional," and "chronic."

Subacute care units also may be defined by the type of diagnoses treated, discharge location (eg, home or a traditional nursing facility), number of physician visits, and even payer category.

Understanding the different types of subacute care is important not just from a clinical perspective, but also from reimbursement and financial-planning perspectives. For example, a patient with complex medical problems who requires seven to eight nursing hours per patient day may cost more to treat than a patient who needs rehabilitative care and requires five nursing hours and two to three therapy hours per patient day. In this example, nursing hours required by the patient with complex medical problems are subject to Medicare's routine cost limit, while the therapy hours required by the patient receiving rehabilitative care are not subject to this limit.

Healthcare executives must consider the facility's clinical strengths, physicians' interests, potential patient populations for the subacute care unit, and reimbursement limitations when determining the type of subacute care unit to develop.