The Critical Role of Hospitalists for Successful Hospital‐SNF Integration Hospitalists and Hospital/SNF Integration

In 2015, the Centers for Medicare and Medicaid Services (CMS) tied 42% of Medicare payments to a value-based model of care.1 Many of these models are designed to expand the scope of hospitals’ accountability to include care provided to patients postdischarge (eg, readmission penalties, bundled payments, accountable care organizations). With such a significant change in organizational incentives, one would expect to see activity as it relates to hospital-skilled nursing facility (SNF) integration, potentially including shared risk among providers.2,3 Hospitals can choose from several different strategies when contemplating SNF integration, such as vertical integration with SNFs, which would involve acquiring and owning SNFs. However, despite the high level of incentive alignment and financial integration achieved through SNF acquisition, this strategy has not been widely adopted. Perhaps this is because hospitals can often attain a shorter length of stay and lower readmission rates without taking on the additional risk of owning a facility, except under particular market conditions.4 Hospitals can alternatively pursue virtual integration by developing preferred provider networks through contractual relationships or other formal processes, attempting to direct patients to SNF providers that have met predefined criteria, as described by Conway and colleagues in this issue of the Journal of Hospital Medicine®.5 While hospitals have adopted this form of integration more widely than vertical integration, only those with additional financial motivations, such as those employing bundled payments, engaged in accountable care organizations (ACOs) or forward-thinking organizations preparing for looming global models of payment, have implemented such action. Finally, hospitals can focus on relational coordination through informal person-to-person communication and transition management. Given the high number of patients discharged to SNFs, the strategies above are not mutually exclusive, and enhanced relational coordination is most likely going to occur regardless of the type of—and perhaps even without—organizational-level integration. For those hospitals choosing not to pursue integration with SNFs, there are several reasons to maintain the status quo. First, hospitals have different interpretations of provider choice (“beneficiary freedom to choose”), whereby many do not believe they can provide information to patients outside of facility names and addresses. As such, they will refrain from developing a SNF network due to their interpretation of hazy federal rules.6 Second, it is possible that the incremental benefit of establishing a network is viewed by many hospitals as not worth the cost, measured by the time and effort required and the potential risk of not adhering to choice requirements. This could be especially true for hospitals without additional financial motivations, such as participation in an ACO or bundled payment program. As the landscape continues to evolve, more successful systems will embrace a more concordant partnership with local and regional SNF providers, and several market factors will support the trend. First, the Medicare Payment Advisory Commission (MedPAC) is discussing the idea of choice in the context of postacute discharge, potentially leading to hospitals relaxing their strict interpretations of choice and the level of information provided to patients.7 Second, the evidence supports better patient outcomes when hospitals develop SNF networks.8,9 Finally, continued penetration of value-based payment models combined with CMS decisions regarding choice will continue to provide the additional motivation hospitals may need to change the cost-benefit calculation in favor of developing a network.