An aging population and shifting reimbursement models are spurring acute care and post-acute care, or PAC, providers to work more collaboratively. As the percentage of older Americans grows and the incidence of chronic disease increases, new models of care that extend outside of hospitals’ walls and leverage medical advances across nonhospital sites of care will be required. Simultaneously, new value-based payment models incentivize acute care and PAC providers to work together to improve care coordination, quality and cost efficiency.

Responding to these trends, hospitals and health systems increasingly are forming PAC preferred provider networks. These networks are partnerships between hospitals and PAC providers that focus on facilitating smooth transitions between care settings, preventing unnecessary hospital readmissions and optimizing health outcomes for patients. While some hospitals are looking to buy or build PAC services as part of their owned network of services, more organizations are instead looking to align with PAC providers by forming PPNs. Through these networks, hospitals and PAC providers exchange clinical information, align care management protocols and, increasingly, share savings.

Both hospitals and PAC providers can benefit from these partnerships. For hospitals, the networks can provide:

  • Immediate and consistent access to high-quality PAC services, which place patients in the optimal levels of care regardless of payer type.
  • Reductions in readmissions and emergency department visits.
  • Increased hospital throughput, a reduced average length of stay and a more efficient discharge process.

One recent study found that hospitals that established PPNs of skilled nursing facilities, or SNFs, had reductions in hospital readmission rates that were 4.5 percent greater than hospitals that did not establish such PPNs. (See “Reducing Hospital Readmissions Through Preferred Networks of Skilled Nursing Facilities” by John P. McHugh et al. in Health Affairs 36, No. 9: 1591-1598, doi: 10.1377/hlthaff.so17.0211.) Successful hospitals in the study noted the following factors as key to their success:

  • Leveraging existing strong relationships with high-quality SNFs.
  • Having a deep understanding of cost drivers to stimulate partnership discussions.
  • Ensuring the ability to effectively manage patient data across sites.

Mutual benefits for hospitals and PAC providers include:

  • A care coordination and patient management infrastructure that is collaborative and seamlessly connects providers along the care continuum.
  • Joint development of quality improvement initiatives and shared clinical pathways.
  • Consistent patient transfer and clinical protocols and processes.
  • Data integration and data sharing, allowing for a heightened focus on analytics and more targeted interventions.
  • Competitive differentiation, enhanced brand and stronger patient loyalty.
  • Preparation for success in population health and value-based payment initiatives.

The formation of PAC PPNs is complex and requires a clear understanding of referral patterns to PAC providers, PAC financial and quality performance, PAC providers’ capacity and ability to serve patients from certain geographies and varying levels of acuity. Network formation also requires identifying the hospital’s need for PAC services based on its patient demographics, as well as its knowledge of the associated legal and compliance risks. Thoughtful planning is essential to developing a robust network where the hospital and the PAC providers agree to a standardized set of policies and procedures that optimize patient care, both during and after the transition of a patient to the PAC provider.

Getting started

There are some necessary and logical initial steps hospitals should take in evaluating the strategic benefits of forming a PPN.

Step 1: Document organizational objectives for post-acute care. Hospitals should establish a small team of stakeholders — including physician, nursing, discharge planning, care coordination, social work, and other stakeholders — to document the organization’s objectives for working with a group of partners to manage the PAC population. The stakeholders should seek to answer these questions: Why do we need to invest resources in this area and not others? Are we reacting to a changing reimbursement environment? Are we seeking competitive differentiation? Having a clear set of objectives will streamline the formation of a PPN.

Step 2: Conduct a PAC population assessment. Hospitals should develop a data-driven assessment that includes an analysis of all discharges to the PAC setting, including facilities and providers utilized, an analysis of readmissions data and financial metrics of patients discharged to PAC settings. It is likely that most hospitals will find significant variation in these metrics; the results of this exercise can therefore be used as a set of data points for leaders to evaluate potential partners.

Step 3: Conduct a discharge/care-transitions assessment. Hospitals should undergo a thorough and candid self-assessment of their discharge planning and transitions-of-care processes to understand major issues and areas of improvement. A successful partnership starts with these processes and ultimately can fail as a result of poor performance.

Step 4: Potential partner assessment and initial discussions. Hospitals must assess the performance and capabilities of local PAC providers and their potential inclusion in the PPN. This information can be obtained in several ways, including through publicly available quality and financial data and the development of a request for information. Hospitals must also develop a framework for evaluating (and evaluation criteria for selecting) high-quality partners. Once a short list is developed, hospitals should invest the time to work with potential partners to understand their own objectives for the partnership. Holding work sessions and documenting the individual and shared objectives of each organization are critical; they form the basis for a subsequent agreement and set of policies, procedures and partnership requirements.

More to think about

Beyond these initial steps, hospitals must consider defining the terms of PPN participation (e.g., those terms related to discharge planning, patient choice, information-sharing, care coordination and follow-up, and clinical support). Hospitals must also assess the legal and regulatory implications of developing PPNs; develop quality scorecards to measure, report and benchmark outcomes regarding utilization, clinical outcomes, patient experience and other metrics associated network performance; and implement continuous process improvement activities.

Baystate Health in Massachusetts adopted many of these steps in developing its SNF PPN. (See “How to Establish an Accountable Post-Acute Preferred Provider Network,” a presentation by the Institute for Quality Leadership, American Medical Group Association, November 14, 2016.) Driven by a desire to achieve better results in both the Bundled Payments for Care Improvement program and in its ACOs, Baystate formed a SNF network to better manage patient discharges and care between settings. Baystate has seen significantly lower readmission rates from its preferred provider partners than its nonpreferred partners. Highlights of their approach include:

  • A dedicated Director of Post-Acute Care Integration to manage program.
  • The formation of a “Strategic Post-Acute Care Committee” to oversee program development and set strategy and policy.
  • The development of a detailed quality and performance assessment and quality scorecard of SNFs in the region.
  • The development of an interactive tool for discharge planners and patients to choose SNFs, which provides specialized information about preferred providers.
  • Quarterly meetings with SNF partners to share best practices and discuss performance.

PAC providers play a critical role in ensuring patients receive the care they need to recover after a hospital discharge, helping to minimize both readmissions and ED visits. As the population ages, chronic disease rates increase and new reimbursement models are introduced, a growing number of hospitals and health systems are seeking to integrate PAC providers into their care delivery models — most often by creating collaborative PPNs focused on optimal cross-setting patient care. This new integrated model offers powerful benefits including improved care, lower costs and appropriate service utilization

Stephanie Anthony is a director of Manatt Health, the health care consulting branch of Manatt, Phelps, and Phillips LLP, in New York. Alex Morin is a senior manager at Manatt Health in Washington. Carol Raphael is a senior advisor at Manatt Health in New York. 

The opinions expressed by the authors do not necessarily reflect the policy of the American Hospital Association.