BDO’s Healthcare Rx: Elder Care Moves from Hospital to Home

Dear readers,

The flurry of emerging new partnerships and M&A activity over the past few months has shown us that the future of healthcare depends on breaking down silos across the ecosystem to unlock value and improve patient outcomes. To do this, healthcare and life sciences entities alike must capitalize on data, maximize profitability, transform to compete, and innovate patient care—all while managing risk. We call this striving to achieve ‘Shared Care, Shared Value.’

The need to achieve ‘Shared Care, Shared Value’ is perhaps nowhere as urgent than in elder care. Amid a growing aging population, elder care providers must curb overall healthcare costs under government pressure while innovating patient care to meet changing consumer-driven ideas about what senior care looks like.

Our Candid Conversations on Elder Care study tells us that the future of elder care, driven by consumers, is one rooted in empathy. Seniors want to spend their last days outside of the hospital and in the comfort of their own homes. Providers are responding with plans to focus their investment in the areas of home health—and technologies that support it. Models like the Program of All-Inclusive Care for the Elderly (PACE), which maximizes independence and keeps seniors in their own homes for longer, represent the future of elder care, as our own Dr. David Friend, BDO’s resident elder care specialist, explains in the study.

The evolving elder care model has implications beyond traditional healthcare companies, though. Investors—private equity and venture capital alike—along with technology, retail and other industries, could realize new opportunity in the space.

Read on for more!

BDO Knows:

Latest insights from The BDO Center for Healthcare Excellence & Innovation and around the firm.

It’s Time for a Candid Conversation on Elder Care
BDO’s Candid Conversations on Elder Care study (with NEJM Catalyst) discusses how the future of elder care is one rooted in empathy. Providers are moving toward home-based elder care models in preparation for the growing aging population—and they’re looking to technology disruptors to help them do it, while maintaining safety and quality of care.

Read the Full Article

Telemedicine Expansion Warrants Greater Controls to Ensure HIPAA Compliance
As telemedicine reaches its tipping point, healthcare organizations need to apply adequate security controls to enable HIPAA compliance. We outline the NIST SP 800-66 r1 and NIST 800-53 r4 publications, which contain a comprehensive set of controls that healthcare entities—especially those that will need to rely more on technologies that support home health models—can apply when pursuing HIPAA compliance.

Read the Full Article

Vlog: Why Data is Healthcare’s Most Valuable Resource
What ‘secret sauce’ is driving disruptive mergers in healthcare? For starters: data. Our blog explains why—and features BDO’s Dr. David Friend offering his take on a recent data-driven deals with CNBC.

Read the Full Article

Medicare Advantage: The Future Model of Care
What began as an alternative to fee-for-service Medicare plans has now seen its enrollment double in the last nine years. We expect enrollment in these plans to continue growing, partly because of recent steps the current administration has taken to incentivize patient enrollment in these privatized Medicare programs.

Read the Full Article

Prescribed Reading:

Healthcare news and analysis from around the web.

The Hospitalist: CMS Considers Expanding Telemedicine Payments
The July 12 CMS proposal to expand Medicare reimbursement of telemedicine, if it comes to fruition, could mark the tipping point for the mass adoption of telemedicine, especially when it comes to senior care. We expect the adoption of home health models in elder care to quicken in tandem.

BDO’s Quick Takes:

  • For investors: For PE and VC alike, this tipping point presents new opportunity to put capital behind companies that support such models of care, especially needed as the aging population grows.

  • For hospitals: This gives hospitals the opportunity to innovate patient care and improve outcomes, especially in elder care. The expansion of telemedicine reimbursement is also a boon to rural hospitals and health systems and presents them greater opportunity to increase access to care and implement high-value population health management strategies using telemedicine.

  • For long-term care providers: SNFs and LTACs have an opportunity to transform their service offerings—leveraging technology to do it—according to providers’ evolving focus on home health.

Modern Healthcare: Azar Touts New SNF Pay Model for Making Long-Term Care Sustainable
This summer, Health & Human Services Secretary Alex Azar emphasized focus on a proposed rule that would boost skilled nursing facility (SNF) Medicare payments by about $850 million but tether them to patients’ health conditions and care needs instead of volume of services—in line with the move to value-based care.

BDO’s Quick Takes:

  • For investors: This presents opportunity to both seek out SNFs that can best adapt to this outcomes-focused payment model and invest in turnarounds of facilities that need help refocusing service offerings. Investing in SNFs that successfully promote outcomes over quantity of services could yield valuable returns considering the proposed Medicare payment increases.

  • For hospitals: Hospitals participating in value-based contracting should seek out SNFs that are well-aligned with outcomes-based payment models, or risk higher rates of uncompensated care. They should also re-evaluate existing contracts with SNFs to manage risk associated with this potential reimbursement change. If their partner is facing the risk of lower reimbursement rates, they could too.

  • For long-term care providers: This ramps up the urgency for SNFs, already under pressure, to improve quality over quantity of care. It might also further encourage SNFs to lean on innovative—and cost-effective—patient care models like home health, supported by telemedicine. For those able to adjust services accordingly, it could mean new reimbursement opportunity.

Forbes: The Million Dollar Question: What will Amazon Healthcare Look Like?

BDO’s Unified Quick Take: The health venture created by Amazon, Berkshire Hathaway and JPMorgan will aim to reduce wasteful spending in healthcare and improve care for their more than 1 million employees. Although few details are public, one thing is for certain: The initiative will apply a startup mindset to healthcare. We see the venture organizing as a benefit corporation, which would mean the Board’s fiduciary duty would be improving care vs maximizing profits. If the entity organizes as such—and can capitalize on its mass amounts of data to deliver improved patient outcomes and reduced employee costs—it could provide a successful model for other private-sector ventures to follow. In doing so, it would transform the entire healthcare model from profit-driven to outcomes-driven. Implications abound for the health continuum—and investors in the space.


The Center Weighs In…

On innovating patient care for seniors:

  • Telemedicine and digital health tools “have the potential to grant seniors greater independence, lower costs system-wide and provide increased access to doctors, their loved ones and care providers.” – Jim Watson & Chad Beste tell Policy & Medicine

  • As elder care moves from hospital to home amid a growing aging population, providers will invest most in home health and palliative care. Tech companies can compete in senior care by finding the right partners to aid product distribution. – Patrick Pilch tells The Wall Street Journal

  • Seniors want care focused on maximizing quality of life rather than number of days left. They want to spend their last days outside of the hospital and in the comfort of their own homes.” –Steven Shill tells Home Health Care News

On competition and transformation: 

  • What could Walmart gain from potential Humana deal? “The healthcare organization that accurately captures and analyzes the data of … seniors, stands to lead the industry of the future.” – Dr. David friend tells CNBC

  • “There’s the potential for [Amazon-PillPack] to be a very powerful deal, a powerful acquisition.” – Patrick Pilch tells the Boston Herald

  • “Hospitals have to remake themselves and advance to be part of a sustainable economy in … rural communities.” – Dr. Karen Meador tells Modern Healthcare

On a changing U.S.-China investment landscape and implications for maximizing profitability:

  • The senior housing space is still more attractive to private equity firms than SNFs. Unlike SNFs, senior housing facilities aren’t as impacted by the unpredictability of Medicare reimbursement rates. – Steven Shill tells Modern Healthcare

  • The strategy of Chinese investors in senior housing is evolving, with some investors buying stock in companies instead of acquiring assets. – Steven Shill tells Modern Healthcare