An alliance takes off - collaboration of Health Dimensions and The Evangelical Lutheran Good Samaritan Society

Nursing Homes, April, 1998

No doubt many nursing home administrators have heard by now of the "alliance" concept - long-term care providers grouping together to organize their facilities for managed care contracts. A recent case in point is The Access Alliance, for which my firm combined with The Evangelical Lutheran Good Samaritan Society to ready our Minnesota nursing facilities for a unique experiment in public program financing. Minnesota is one of the states pioneering organizing long-term care along managed care principles. We now have a perspective on the future of long-term care, and perhaps some of what we see will benefit providers elsewhere who are contemplating alliances.

The Access Alliance - which began as a joint venture and is now in the process of becoming a limited liability corporation - consists of approximately 30 nursing homes owned by Health Dimensions and 50 nursing homes owned by the Evangelical Lutheran Good Samaritan Society in Minnesota. Both our organizations reach beyond that state - Health Dimensions owns another 15 facilities in six states, and consults with and helps develop healthcare organizations in all 50 states, while the Evangelical Lutheran Good Samaritan Society, based in Sioux Falls, SD, owns some 250 nursing homes overall.

The specific incentive to form an alliance in Minnesota was the state's new Senior Health Options plan, which in essence pulls together all Medicaid/Medicare long-term care funding into a managed care capitation, under contract with HMOs and horizontal provider groupings called Community Integrated Service Networks (CISNs). (For a further description of this program, see November/December 1996 Nursing Homes, p. 28). The Access Alliance, in turn, receives a subcapitation from the Minneapolis-based HMO Medica (a subsidiary of the Allina Health System), to deliver long-term care services at all levels to its subscribers.

This means that we have had to demonstrate to the HMO that we are able to deliver services including home health care, assisted living, skilled nursing care and chronic care, and do so at-risk under the subcapitation. Developing such a network obviously takes considerable time and effort - for example, in selecting and contracting with organizations at the various levels, a task that, for us, has been eased by the fact that we own most of the organizations involved. In fact, one thing that distinguishes The Access Alliance from many others is that its emphasis is on supporting the facilities we own, rather than on contracting services out.

The alliance is governed by a managing committee, comprising representatives of the two founding organizations. Each organization put up money to found the alliance, and income is distributed equally between them. Each organization manages its own facilities as it sees fit but shares two functions deemed critical to working with managed care: quality assurance and case management. We have developed a combined system for quality monitoring and improvement, as well as outcomes measurements, and our case management department has developed protocols for assessing, referring and monitoring residents throughout the network. Both of these systems were "musts" to assure the HMO that we could provide complete and high-quality services under our contract, which has just begun covering dual-eligible residents in Minnesota's Scott County.

Structured in this manner, the Access Alliance has been able to take on additional opportunities, as well. For example, we have proposed providing post-acute services for Allina Health Systems; Allina is looking for a post-acute network that can mesh with its quality assurance and case management systems to ensure that patients being discharged to post-acute care receive continuing high-quality care. As an alliance, we are able to offer better-structured systems, and greater geographic access, than we ever could have as individual entities.

We have also responded to the state Department of Human Services' request for new and creative proposals to pay for long-term care and have suggested three options: 1) the Senior Health Options approach, 2) a telemedicine pilot project and 3) a multifacility network, and are awaiting the state's response.

Although alliances open up many possibilities in this way, they may not be for everyone and certainly shouldn't be undertaken without considerable expert advice. People with expertise in managing nursing facilities may not necessarily be familiar with such alliance-related concepts as capitated reimbursement, actuarial analysis and care system design. Nor should any group of facilities even begin to seriously consider an alliance until anti-trust considerations are taken into account. Antitrust is a huge issue for alliances - indeed, the first thing we do, in our consultant's role, is to engage an attorney to review the specific issues involved and train the providers on them. This training in itself is something the Federal Department of Justice looks for in addressing a case, and often sees it as a mitigating factor. You don't want to have your alliance "ready to go" and suddenly find yourself in legal hot water.