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COVID-19 Crisis Underscores Advantages of the Patient-Driven Payment Model

by Bent Philipson | Wed Sep 30 2020

The efficacy of the Patient-Driven Payment Model (PDPM) has never been clearer than now, in the middle of the coronavirus pandemic.

The PDPM, implemented on Oct. 1, 2019, enabled skilled nursing facilities to see a nine percent increase in Medicare reimbursement in the early days of the outbreak, according to analysis conducted in April by Zimmet Healthcare Services Group and Claim Outcomes and Reimbursement Essentials (CORE), a data firm.

Reform was certainly much-needed, given the state of U.S. healthcare. It has long been clear that the average American doesn’t receive the best care possible, despite the nation leading the world in spending in that sector. That has been particularly true of seniors. While the government spent $782 billion on Medicare last year, consistent, high-quality care for those 65 and over was elusive.

The Centers for Medicare and Medicaid Services (CMS), understanding the issue, created the PDPM in hopes of simplifying an overly complex payment method, trimming costs and improving senior care across the country's skilled nursing facilities. 

Pulling the RUG out from under the system

The PDPM is the first radically different reimbursement system in over 20 years, and shifted how the CMS pays skilled nursing facilities for their Medicare patients. Under RUG-IV -- i.e., Resource Utilization Groups Version Four -- Medicare rates were based on the number of therapy minutes provided to any given patient. By contrast, payments are now doled out according to a daily reimbursement rate determined by patient classification.

The new classification is driven by the ICD-10 code (i.e., the International Classification of Diseases, Tenth Revision, Clinical Modification), as well as clinical assessments of each patient’s care needs and co-morbidities. In other words, this payment method is driven by the needs of the patient, not the services rendered. Moreover it takes into account skyrocketing pharmaceutical costs and enables providers to meet the needs of more medically complex patients. It will also make possible improved data collection -- and that in turn will increase the likelihood of patients making informed decisions about the skilled nursing facility that will best meet their needs.

Under RUG-IV, there were just two classifications -- therapy and nursing. That number would have doubled under its first proposed replacement, Resident Classification System 1 (RCS-1), which was similar to the PDPM and would have included physical and occupational therapy (PT/OT), speech-language pathology (SLP), non-therapy ancillary (NTA) and nursing. But before RCS-1 was ever implemented, the CMS announced the adoption of the PDPM in April 2018, which added a fifth classification by dividing physical and occupational therapy.

The implications during the pandemic are obvious. Seldom have so many patients had greater needs than at present. Seldom have those with certain pre-existing conditions been at greater risk.

Improved efficiency

The expectation is that implementation of the PDPM will reduce the paperwork required of providers, since tracking the volume of services, as was required under RUG-IV, was far more complicated. As a result, there are now more opportunities for staff-patient interaction, which has taken on added importance during the pandemic, when the influx of patients has been far greater than usual.

Another necessity (especially now) is greater interoperability between providers. Hospitals require a clearer view of a skilled nursing facility’s ability to care for complex patients -- and those suffering from coronavirus certainly fall into that category -- which goes hand-in-hand with improved record-keeping, and specifically with electronic health records (EHRs), which are already in vogue. 

The result of such changes has come to be viewed as a net positive for the industry. As Genesis CEO George Hager said when the PDPM was unveiled, it allowed those in the industry to better manage “significant cost elements” like that of providing rehabilitation therapy. And indeed the CMS estimated at the time that the measure would result in a system-wide savings of $2 billion over the following decade.

At the same time, there is the matter of increased revenue. Jennifer Leatherbarrow, a senior clinical consultant at Ohio-based Richter Healthcare Consultants, noted that while skilled nursing facilities will make less off patients who require extensive therapy under the PDPM, such facilities will “get paid substantially more” for working with complex patients. 

Hager was also of the opinion that the new measure would reduce existing administrative burdens and regulatory risks. In short, it appeared everybody would win -- patients because care is upgraded, hospitals because greater transparency will lead to greater assurance of releasing patients to a skilled nursing facility where they will receive top-notch care, and the facilities themselves because improved performance will lead to more referrals.

Nearly two years out, there are fears of unintended consequences. One study noted, for instance, the possibility of overreporting and overusing services early in a patient’s stay, leading to outsized reimbursements. There are also concerns about increased litigation, given the fact that skilled nursing facilities are now dealing with more complex patients. But in general, the reviews remain positive. The PDPM has done what it was supposed to do -- address what the above study called “perverse incentives” in the Medicare payment system. 

The PDPM, while not perfect, represents a major step forward for U.S. healthcare, skilled nursing facilities in particular, and the patients they serve. And it really couldn’t have come along at a better time.

The Importance of Healthcare Staff Education (Especially During a Crisis)

By Bent Philipson | Wed Sep 30, 2020

Healthcare staff education can literally be a life-saver, but it’s an initiative that often gets far less attention than it deserves. Unfortunately, that lack of education is to the entire industry’s detriment: preventable medical errors are now a serious public health problem in the United States and contribute substantially to rising healthcare costs, among other issues.

Is it any wonder, really? Medical advancements, technologies and guidelines change at a rapid pace and can significantly alter the way care is provided. If healthcare workers are not in the loop and trained sufficiently, how can we expect them to adapt to a changing landscape and provide the most effective care?

The impact of COVID-19 over the last few months has made the importance of ongoing education abundantly clear. The crisis has completely upended the way healthcare workers have traditionally taken action to prevent themselves against the spread of disease. The National Institute of Health recently launched a website with critical educational resources in an effort to promote training programs to protect high-risk employees. With limited PPE available to healthcare workers, they’re learning to adjust with what’s available to them while still preserving their safety.

Hospitals and healthcare facilities across the world are having to take additional precautionary measures to ensure that staff and patients remain safe. Our network of skilled nursing facilities is no different; we’ve had to follow recommendations from the NY State Department of Health and the CDC and implement changes like requiring staff to wear facemasks at all times, asking our residents to remain in their rooms, and adjusting staff schedules to minimize the risk of exposure. 

Every day is a balancing act for healthcare staff. Their performance, especially during a crisis, is heavily influenced by the structure of the organization’s internal staff education program. Everything from formal orientation to the maintenance of professional skills to their career development is directly tied to their success, but it’s also linked to the proficiency of the organization as a whole. 

When you prioritize education, there are a number of payoffs you’ll see trickle throughout your entire operations. Here are a few of them.

A lower turnover rate

Employee retention is one of the biggest issues currently facing the healthcare sector, especially as we continue to feel the impacts of COVID-19. While the rest of the world is under quarantine, healthcare workers are still manning the frontlines of this pandemic. But underneath the calm, focused demeanor they put on while they’re at work, they are experiencing higher levels of depression and anxiety.

Working in healthcare is a tough job. That should go without saying, but it bears repeating. Rewarding though it may be, it’s easy to become burnt out, especially in today’s climate. Healthcare workers are working long hours and, just like their patients, they’re worried about their own health. Many have chosen to socially distance themselves from their family.

If you want to keep your employees, show them you care by investing in their professional development. Hiring competent people and paying them a competitive salary simply isn’t enough. You also need to show a sense of dedication to your company culture, staff retention programs, and of course, ongoing education. If your employees aren’t finding that at your organization, they may seek it out with one of your competitors.


Creating a positive environment

An organization that prioritizes ongoing education generates a positive, motivated, and energetic workforce. How you continue to mold your company culture during a pandemic looks a bit different, but it’s even more critical now — you just have to get creative. 

Some facilities, when possible, are encouraging their staff to conduct more televisits. You have technology at your disposal, so are you taking full advantage? Train your employees on how to utilize videos and online chat tools to safely interact with patients. Employees want to feel empowered to do their jobs as best they can. That means training them on how to leverage what’s available to them so they can continue providing the best care to their patients while still complying with policies and safety protocols.

This isn’t only felt by staff, either; this translates to patients and residents as well. Compassion matters when it comes to the patient experience. By prioritizing your employees’ professional and personal development, you create an environment that’s welcoming, calming and cheerful. As a patient, wouldn’t you rather your medical provider have that kind of bedside manner instead of the alternative? 

More efficient operations

You can’t have more efficient operations without proper training. If your training structure isn’t sound from day one, you already risk losing the talent you just hired. To return to the point about employee turnover for a moment, not having a good orientation program is cited as one of the top ten reasons why caregivers leave their agencies. Decreasing your turnover rate eliminates the rapid-fire cycle of hiring, acclimating, and training new employees. 

If you’re an innovative facility that’s focused on serving as much of your community as possible, your staff needs to be equipped to handle the constant changes in regulations, policy, and technology. An organization in Boston, for example, started using artificial intelligence and set up a hotline where they could separate patients with less serious symptoms from the small subset of patients that are higher-risk. Of course, that implementation doesn’t happen on its own. Employees had to be trained on how to interact with the new AI software, as well as how to transfer patients to the correct virtual care center or hospital.

When people’s lives are on the line, staff education is no joke. Healthcare workers need to understand how to provide the best care to their patients, whether or not we’re in a crisis. 

The challenges we face today with the global pandemic are more pressing than nearly anything else that has come before. The future is uncertain; the circumstances are complex and stressful. Your healthcare workers are brave and motivated enough to face these challenges daily and ensure that their communities stay healthy and strong. The least we can do is invest in their education and ensure that they have the tools and resources they need to face the future with certainty.

The Importance of Healthcare Staff Education (Especially During a Crisis)
by Bent Philipson | Wed Sep 30 2020


Healthcare is one of the most rapidly evolving industries, and for good reason. While stagnancy within any other industry may curtail a company's competitive advantage, stagnancy within the healthcare sector can be life-changing. It compromises our ability to provide the highest level of care to patients in need.

In order to do right by our patients, the healthcare system must continue to evolve. And while this transformation is necessary, it also poses certain challenges to our existing infrastructure. 

As such, CEOs of healthcare facilities often find the healthcare landscape a difficult one to navigate. For example, virtual care has completely transformed how doctors and patients communicate with one another. The COVID-19 pandemic has put telehealth capabilities to the test, proving all the more how digitized healthcare is revolutionizing the industry. But while all signs point to radical change, the U.S. healthcare system is impeding widespread adoption.

Throw in other age-old issues like talent acquisition, regulation changes, and increasing oversight and it's clear that healthcare leaders face immense pressure influencing change in such a dynamic field. Implementing effective solutions is only possible when leaders fully understand these challenges and how they could impact their organizations. 

Staying on top of technological advancements

Emerging technology is critical to the betterment of our healthcare system. It's not only the most effective solution for better care, but it also lessens the impact healthcare organizations and patients feel when there are complications within the industry. 

The Association of American Medical Colleges (AAMC) predicts that the U.S. will experience a shortage of 122,000 physicians by 2032. COVID-19 is only worsening the impact of this shortage as doctors, nurses, and other healthcare staff who become sick are having to be pulled from their workstations. The larger reason for the shortage isn't because professionals are leaving their positions, though -- it's because the population continues to age at an alarming rate. To account for people living longer lives and making sure everyone has equal access to healthcare, it's currently estimated that the United States would need an additional 95,900 doctors and nurses.

But that's not going to happen overnight, or even within the next decade. This is where we see technology's biggest benefits. As healthcare organizations face staff shortages, virtual care options help pick up some of that slack. Telehealth consultations reduce wait times by 20 percent and allow professionals to more easily treat common health conditions and manage chronic illnesses that require more frequent touchpoints.

Telehealth's benefits are undeniable, so why aren't we seeing it everywhere? Sometimes knowing something is good isn't enough to set it in motion. Healthcare leaders must introduce virtual care into their existing workflow in a way that feels effortless, they must understand how it fits into their bigger organizational goals, and then they must incite user adoption, which is especially difficult to do with older generations. 

Cybersecurity concerns

You can't talk about technology without talking about privacy and security. One of my biggest undertakings as CEO of a New York nursing home has been converting our organization to the cloud. Cloud adoption is a no-brainer, but data security and HIPAA compliance concerns are a real threat.

In 2018, over 471 million patient records in the United States were exposed by cyberattacks. Cloud technology is meant to enhance patient care, but when patient information is compromised, it can have dire consequences. Just a few years ago, healthcare organizations were exposed to the worst cybersecurity attack in history. 

The attack happened after a cyber gang called Shadow Brokers released ransomware called WannaCry and wreaked havoc across the world. More than 20 healthcare organizations were affected; in some instances, doctors and nurses even had to turn patients away and cancel life-saving surgeries. And there are countless examples like this.

The healthcare industry holds some of the most sensitive information available, yet it fails to adequately address information security. When asked about their cybersecurity efforts, over 81 percent of healthcare executives have reported that their organizations experienced some level of attack within the last few years. This hasn't only proven costly for the healthcare system, but it puts patients lives at risk. 

Shifting from volume to value-based care

The healthcare industry is finally recognizing the need to move from volume to value-based care. Fee-for-service has been commonplace for so long, but we're seeing more organizations start to implement fee-for-value structures instead. 

In volume-based care, a successful system is measured by high-profit margins not quality of care. The opposite is true in value-based care, which takes a holistic view of patient health and services. Because healthcare executives have the best interest of their patients in mind, they work to connect their department initiatives and their ongoing staff education to match that end goal. 

Value-based care is the solution to what is wrong with our current healthcare system. It reduces healthcare costs, particularly for those with chronic health conditions, which are influenced by patient outcomes. It also leads to healthier populations. In a world where half the population doesn't have access to essential, life-saving services and 13 percent of Americans — or around 34 million people — know one person who has died from not being able to afford critical medical attention, value-based care is the answer. 

Yet, most monumental change comes with hurdles blocking widespread adoption. Some healthcare CEOs lack the operational wherewithal to implement these initiatives. Value-based care also requires specific technology in order to be successful. Going back to the struggles some healthcare leaders have with technological inclusion, this often becomes another setback. 

We are at the forefront of systematic change. For healthcare executives, riding this sea of change is difficult, but we must. As we move forward, we need to question and challenge the outdated and traditional processes, resources, and procedures that were once revered in the past. There will be hurdles to face every day, but when your focus is on your patients and staff, overcoming these barriers is worth it for the healthcare industry’s future, and theirs.

How Technology Has Senior Care Soaring Into the Cloud

Imagine that you're an elderly diabetic patient in your early 80s. Today you're having a routine checkup with your doctor just to make sure everything is in tip-top shape. But instead of going to a doctor’s office, you simply log on to your computer for a brief consultation. 

With just a few clicks, your doctor uploads all the data from your wearable device so they can take a look at your blood glucose levels and vital signs. Your appointment is over in a matter of minutes. You didn't have to find transportation to the doctor's office, nor did you have to schedule your entire day around the appointment. In fact, all you had to do was open your computer for a routine checkup.

This may sound like a futuristic scene out of a sci-fi movie, but cloud-based technology has made this a present-day reality for seniors. 

The senior care industry has historically been slow to adopt technological advancements such as cloud solutions for a number of reasons, not the least of which concerns data security and HIPAA compliance. To make matters more complicated, a high volume of patient information would need to be converted to the cloud, and we’d be asking significant behavioral changes of a generation not particularly well-known for its technological proficiency.

But an increased fervor in cloud adoption couldn't have come at a better time. With COVID-19 affecting seniors more than any other age group, telehealth has become a prudent alternative for certain in-person doctor visits. Medicare recently expanded their coverage for telemedicine to ensure that seniors are still getting the medical attention they need, while also keeping them safe from avoidable exposure.

Beyond the current pandemic, ten thousand people are also set to turn 65 every day for the next 20 years in the United States alone. Longer lifespans mean an increased need for medical care. One in five boomers has already been diagnosed with diabetes. Over half of their generation has been prescribed pills to lessen the effects of hypertension, which is all the more important because 40 percent of boomers are considered obese. And this list is just the tip of the health-issues iceberg. It's projected that by 2030, 60 percent of the generation will be managing more than one chronic health condition.

Caring for an increasingly aging population will continue to put a strain on senior care unless we embrace new solutions that account for these demographic shifts. Thankfully, that shift is well underway. 

Technology isn't just a young person's game anymore. An increasing number of seniors now own smartphones and various smart devices. Over 17 percent have even started using wearable devices in their everyday lives. Younger generations may covet wearables to track their fitness and weight loss journeys, but the advantages extend far beyond counting calories.

Smart devices can now measure a person's heart rate, blood pressure, body temperature, and oxygen levels. One new gadget can even analyze blood sugar levels without an incision. Others can detect falls in real-time and will send an alert to a call center that will immediately dispatch emergency services to the person's home.

Wearables give seniors peace of mind knowing they're protected if their health would take an abrupt turn for the worse. Gone are the days of countless tests to pinpoint what's causing the health issue, and weeks of having to wait for those test results to come back. With wearables, a physician or nurse can remotely monitor a patient’s vitals from afar, alleviating the strain on the senior care system and minimizing unnecessary, routine appointments. 

Many seniors worry that remote checkups won't allow for the same quality of care, but the evidence indicates otherwise. A recent study shows that telemedicine results in 38 percent fewer hospital admissions, 31 percent fewer readmissions, and over 60 percent of people spend fewer consecutive days in the hospital.

Remote monitoring can also help seniors take control of their own health on a more regular basis. Say someone suffers from a severe heart condition, for example. By monitoring their vitals, a patient’s wearable device can incentivize them to stay away from salty snacks that could have dire consequences. These technologies are so advanced they can even signal whether a heart palpitation is being caused by indigestion or is a sign of something more serious.

It's common for seniors to live more sedentary lifestyles, especially those that struggle with physical ailments or other chronic health conditions. But we know that sedentary lifestyles worsen the majority of health issues, which is why an age and health-appropriate exercise regimen is so important for longevity and stamina. Just as wearables can monitor medical conditions, they can also keep seniors on track with their health and activity levels, providing a much-needed breath of independence.

While cloud technology’s advantages are significant, they are not without challenges. While the U.S. Department of Health & Human Services temporarily loosened HIPAA restrictions to allow greater access to telehealth during the COVID-19 outbreak, it is unclear to what extent that will remain so afterward. Similar uncertainties surround Medicare’s expanded telemedicine coverage.

Also of particular importance is ongoing staff education. In order to provide the best care to patients, nurses and physicians need access to updated policies, procedures, and resources that inform care and treatment options. Thankfully, the cloud also makes staff education easier, serving as a one-stop database for guidelines and changes in treatment, technology, and protocols.

Cloud technology allows healthcare facilities to achieve the holy grail of senior care: it's cost-effective, it allows for operational efficiency, and it encourages better outcomes through patient independence. It is not a replacement for face-to-face care, but it does provide much-needed support to a heavily strained system. The level of care we provide to residents and patients only goes as far as the innovations we choose to enmesh within our operations. If we don't take cloud technologies seriously, we only hurt those we claim to serve.

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