California Hospice Network (CHN) is a pioneer in the growing practice of nonprofit providers banding together in regional collaboratives for mutual support and to gain a competitive edge.
Though each CHN member remains a distinct, independent organization, the partnership enables the hospices to share best practices and improve efficiency through cost sharing and shared services.
Among the goals of the collaboration is to reduce overhead costs, improve the members’ bargaining position with payers and health plans and smooth the transition into value-based payment models, such as Medicare Advantage.
Hospice News spoke with CHN CEO Michael Milward about the ways nonprofit providers are adapting to the changing payment landscape, industry-wide staffing shortages and building sustainable models to compete with larger for-profit players in the space.
Last week we saw that the Medicare Advantage hospice carve-in is doubling in size in terms of participation in 2022. How do you see the demonstration affecting hospice providers, particularly in the nonprofit space?
I was particularly interested to see that United Healthcare and Aetna have come aboard in year two, and I noticed that our friends at Kaiser in Southern California remain the only California site. But we’ve known for years now that the ways we would be reimbursed and by whom would be changing. The conversation about the carve-in is hardly new. While we still can’t be sure about exactly how these changes will look, there seems to be no question that there will be changes.
The question is really: How can the not-for-profit, community-based hospices continue to prepare to be the best partners possible? As Bob Dylan famously said, “It doesn’t take a weatherman to figure out which way the wind blows.” The challenges of increasing costs, changing and declining reimbursement, and ever-growing competition are not new.
As we’ve watched the changing weather we understood that it was more important than ever for not-for-profit hospices to come together to prepare for the opportunities and the challenges ahead. What we’re seeing in the demonstration project is just this reality playing out. We knew that we had to solve for sustainability and relevance to be at the table with the payers in this coming world. We know that we have to give payers a good reason to work with us.
These are the key objectives around which we formed CHN — to be able to offer payers the abilities of measuring and benchmarking quality and value. We know that they want to work with hospices that are caring for many lives over a broad geographical footprint. They want to work with hospice providers who are getting upstream, providing palliative care to those with serious and advanced illness. We need to show how effective we are at keeping people at home, out of the hospital and out of the emergency room.
Sustainability is another challenge for us as the payer world changes around us. Before, the not-for-profit, community-based hospice has been its own separate cost center — not a very efficient business model. Our indirect, non-patient-facing costs are far too high. We see numbers that range in the 28 to 30% of revenue.
We operate on very thin margins, and plan rates in the demonstration project are running at 12 to 15% less than fee-for-service reimbursement. In order for us to be competitive in this coming payer world, we’re going to have to find a way to reduce our indirect costs, so that we can move more resources toward the front of the house. So the key objectives of coming together to form CHN remain as important as ever — to streamline costs, increase operational efficiencies, expand their geographic reach and our service lines. We are also increasing our ability to measure and benchmark quality and value. These are all going to be essential attributes that we need to show the payers now and in the future.
We are seeing more nonprofits band together and collaboratives similar to CHN in various geographic regions. How does joining forces in this way strengthen hospices ability to compete?
We’re seeing this across the country. The National Partnership for Hospice Innovation gathered a bunch of nonprofit hospice network leaders to look at what we are doing and to discuss how we might work more effectively together. CHN was at the table and very glad to be a part of that conversation. CHN is working very effectively with Ohio’s hospice and the National Hospice Cooperative, and Northstar Solutions in Michigan. We are continuing to talk about how we can work together to leverage scale and volume even more effectively so we can streamline costs and create operational efficiencies.
One of the attributes of CHN and of networking with our colleagues across the country has to do with sharing best practices and talents. We have remarkably talented people at every level of our organizations and in CHN. We can share that talent and share best practices and integrate the quality of care more fully. These partnerships and networks allow us that opportunity.
If we can offer larger geographic coverage to payers, that’s going to work to our advantage. The integration of our best practices and talent allows us to work together to accomplish the highest quality that we can offer. That helps us differentiate ourselves in terms of being competitive. Payers want their beneficiaries to have high quality care, we can offer that. There are huge opportunities for us that are networked together to collect and measure data so that we could benchmark value and quality. These are really important and more easily accomplished when we’re working together.
My understanding is that CHN has ambitions to go statewide and integrate a wider range of nonprofit providers. What are some of the ways that you’re pursuing that growth?
We are having really good conversations with leaders in the not-for-profit hospice community in California. We’re doing webinars. We’re speaking with boards. We are open to how we can serve the advanced illness and seriously ill population.
Population health is a real conversation, and we have a remarkably effective model in hospice interdisciplinary care. Home-based care is something that we believe we can really take into the advanced illness space with other nonprofits. We have to be open to working with others, such as those in our community PACE programs, for instance, that are also working with the same population. I think this is where the puck is going.
We offer a menu of cost-saving opportunities to hospices in California. We’ve increased our quality as well. These are all ways in which we are reaching out to the not-for-profit hospice community in California to help them understand that coming together really does offer a competitive edge.
We have really designed a model that advantages the collective but also allows as much autonomy as possible for each of our members, because we know that their unique value in the community is their stock and trade. Our patients and families don’t know who does our billing, they just know that neighbors are showing up at the bedside caring for their loved ones.
We want to preserve and protect the community based not-for-profit, at the same time allowing them the opportunity to come together. Our ambition is big, and it is statewide.
Could you provide some color on how the workforce shortages are affecting the nonprofit hospice sector?
Workforce shortages are ubiquitous in this day and age and not just in health care, but in many sectors across the country. It’s not a uniquely nonprofit hospice challenge. I also think it’s fair to say that in the nonprofit hospice space, we’ve never been able to compete compensation-wise with the bigger hospitals and health systems.
Our challenge has always been how do we attract and retain quality staff. In our stock and trade, this has always been our ability to offer a great place to work, the chance to offer some flexibility to work with a mission-driven team, to be part of something bigger than yourself to spend quality time at the bedside. We attract people who want to work for an organization with deep roots in the community, where you proudly wear your badge in the grocery store.
These are intangibles, but they’re important to many of our employees. CHN members have very high employment engagement scores. We are seeing residency programs being formed at some of our member organizations where first-year nurses are brought in, and they see a year of high quality immersion experience, so that they hit the ground running in their second year.
We’re seeing mentoring programs, and we’re having really earnest conversations about how we can attract these folks to work for our organizations. We have to double down on those values that we offer employees. We are seeing some pretty substantial hiring on bonuses being offered, but that’s challenging for not-for-profit hospices with small margins.
What do you think are some of the most significant pressures on nonprofit providers in 2021 and looking ahead to 2022?
Sustainability and relevance remain really important challenges. Changes in the space demand that we look different. These include increasing costs, declining reimbursement, changing reimbursement models, increasing and growing competition.
When I’m asked about where I see our member hospices 10 or 20 years from now, I say I hope that we very much look the same to the communities we serve, and to our patients and families, that we are offering the same superb end of life and palliative care. And then I would say, and in order for us to do this, we have to be completely different.
These challenges remain. We need to be at the table with payers. We need to offer them value and high quality, and we need to be sure that consumers know that this is what we offer as well.
Companies featured in this article:
