Care At All Costs

Nursing homes are the second-most regulated industry in the United States, and they serve a population at risk. Nursing-home operator Nexion Health is finding ways to mitigate risk while managing cost as mandated by the Affordable Care Act, all while keeping care its focus

The year after Brian Lee graduated from college, he taught high school in Central America. Later, in law school, he spent a semester providing family law services to low-caste Indians.

His desire then was to serve, and it hasn’t waned since. “I knew I would have a hard time working for a traditional widget company,” he recalls. “I looked for a role where I had the ability to affect people’s lives.” The role that suited him was in the health-care industry. Lee serves as general counsel for Nexion Health, which operates 37 nursing homes with 3,000 residents and 4,000 employees. It’s a satisfying role but not without challenges, given the ever-changing nature of the medical landscape.

The long-term-care field is a difficult environment and has the lowest margins in health care, says Lee. Nexion is heavily dependent on federal and state reimbursements through Medicare and Medicaid, which have taken hits over the last several years as reimbursements have been reduced and inflationary adjustments have failed to keep up with increases in costs.

For example, Texas, where most of Nexion’s facilities are located, pays less than $6 an hour for a nursing home to provide around-the-clock nursing care, meals, and activities for a Medicaid patient. The US Department of Health and Human Services estimates that the same amount of care could cost an average of more than $20 per hour.

Rather than react by increasing funding, many states are searching for ways to pay less. Lee says Texas is seeking to control its health-care costs by moving Medicaid enrollees into privately run managed-care plans. That’s changing the way providers are compensated; it’s no longer fee-for-service. “We have to do a lot with a little, but as a result, we’re the most cost-effective segment of the health-care industry,” says Lee, whose team is so lean it consists of just two people: a paralegal and him.

“We’re the second-most regulated industry in the country, after nuclear power,” he says, “and the regulations keep increasing because they don’t get rid of the old ones when they create new ones.” The company is surveyed by the states in which it operates at least annually, and any violations of compliance are reported. Many times, they’re based not on quality of care, but on a paper trail.

“From the surveyors’ perspective, the facility staff doesn’t just have to turn (as in physically move, in order to prevent sores) a resident every two hours; we have to document it,” says Lee. Perhaps his most memorable citation was for a deficiency in which the facility served the wrong kind of French fries at dinner. “The menu said we’d have steak-cut fries, and instead we provided shoestring fries,” says Lee. “The surveyor took the time to write that up because there was, in his opinion, a potential of harm to a resident who might have eagerly anticipated steak-cut fries.”

Long-term care is a tough business for caregivers, says Lee. It’s very physical, as certified nursing assistants (CNAs) are regularly transferring patients from beds to wheelchairs, helping them walk down halls, and engaging in activities with them.

As a result, there are numerous opportunities for injuries to occur. “Health care, and long-term care in particular, have high rates of occupational injuries,” says Lee. “A lot of times, the cause is an employee trying to do too much, maybe because of the resident’s size, maybe because the resident fidgets a lot. In those cases, a two-person assist may be required, but the CNA who’s dealing with a hungry resident who wants his lunch may try to move him herself and strain her back.”

To mitigate such injuries, Lee is working on an initiative to be more proactive. In compliance with Occupational Safety and Health Administration regulations, he’s assembled safety committees to look at the causes of injuries that have occurred and develop a plan for mitigating them. He’s also created a committee tasked with working closely with nursing-home staff to highlight and repair building hazards.

Litigation is another area of focus for Lee. “We believe we provide quality services, but in the United States, all too often the belief is that if there is a negative outcome, someone must have done something wrong,” he says, “and when something bad happens to a resident, many families blame the facility.” The company seeks to manage litigation in a cost-effective manner, but Nexion is willing to go to the mat when necessary.

There’s no sign that the health-care landscape will stop changing anytime soon, says Lee. For example, the move to electronic health records and their interoperability have been and will continue to be time-consuming.

Still, other changes are developing that could change the industry for the better. Lee believes the government’s increased emphasis on outcomes versus paper trails could be a good thing. “Properly implemented, outcomes-based reimbursement allows our caregivers to focus less on fulfilling sometimes arbitrary documentation requirements, and more on caring for our residents.”