The start of a perfect partnership - subacute care and managed care - Subacute Consult - Column

Nursing Homes, Sept, 1994 by Laura Hyatt

No matter what the final outcome of healthcare reform, there are two entities certain to emerge as staples of our healthcare future: subacute care and managed care. Interestingly enough, both work in concert with each other: subacute care that is outcome-focused and cost-efficient care, and managed care that aims to attain for its enrollees effective results at the least expense.

Sounds like the perfect partnership--but how do you introduce managed care payors to your subacute program? The bottom line answer is that you establish your subacute product to meet the demands of the community and the needs of managed care organizations. Some people call this marketing; I prefer to think of it as education. By educating the community about the benefits and flexibility of subacute care, you can begin a dialogue with consumers, payors and other professionals, and hence develop potential clients.

Before you can formulate an action plan that encourages managed care companies to utilize your subacute care program, there are questions that need to be addressed. Some of these include:

1. What are the benefits to the payor? It is important to distinguish your services and define the benefits to those responsible for reimbursement.

2. How to develop a pricing structure? This takes some effort because you must establish your profit margins. In order to accomplish this, it is necessary to determine your overhead costs. Pricing strategy in today's complex market requires flexibility and knowledge to meet the various terms of different types of agreements. This includes capitation, per diem rates, as well as fee-for-service payments.

Conduct an evaluation of what the market will bear. For example, it is important that your subacute program has experienced, well-trained personnel and technologically advanced equipment. However, if your competitor is able to achieve the same patient outcomes with less costly equipment at a $200 a day savings, then most likely the managed care company will choose to refer to the competition.

3. What are the opportunities to form relationships with other types of providers? These relationships are not only important, they are crucial. Just as "no man is an island," no business can function successfully in a vacuum. Your subacute care program needs various levels of care and relationships with key physicians in the community. After all, the point is to meet the needs of the patient with placement in the appropriate level of care throughout the healthcare continuum.

4. Is it necessary to have outcome studies? The answer to this question depends on the requirements of the managed care companies that you do business with. I usually answer this question by saying "maybe not today, but probably tomorrow." More importantly, your program should be modeled to promote functional outcomes through interdisciplinary professional services. Why wait to develop the methodology that will enable you to gather data and track your outcomes?

5. Is the subacute program user friendly? There is no secret to this one. I'm sure you could answer this question better then I. One of the best ways to assess ease of utilization is to try it yourself. First, try going through your admissions process as if you were a patient; then try calling your program as a referral source and then as a payor. This can be an enlightening experience for yourself and for staff responsible for coordinating referrals and admissions. Discuss with these staff members whether or not your initial contact was friendly, professional and informative. How quickly was staff able to respond to your requests for information? What are their abilities to perform assessments and secure verifications and authorizations?

Knowledge and demeanor of subacute personnel can make the difference between failure and success. Marketing is an attitude, not a department, and referrals are made to people, not programs. It is important for managed care payors to feel attended to, and to strengthen those relationships by consistently evaluating and improving your customer service.

These are just some of the preliminary items that will assist you in gathering information necessary to create a strategy for encouraging managed care relationships. Don't be afraid to ask for input from the managed care companies in your community. You will find that you will obtain valuable data and form important alliances with new resources.

In sum, educating your managed care community about the value-added benefits of your subacute care program should be collaborative and cooperative effort, benefitting everyone involved.