How Hospice Benefits SNF Referral Sources

“There are three kinds of lies: lies, damned lies, and statistics.” – British prime minister Benjamin Disraeli

Last week our Hospice Tools Insights published a well-received article: Tips to Generate More Hospice Referrals

It’s really about being proactive with your referral sources and showing them the benefits and value of hospice to make them more hospice minded rather than being reactive and just being happy to pick up a referral when they are ready.

A number of people reached out for information on the section related to showing stats of the value hospices deliver to SNFs: Here is the snippet from the article:

Don’t just tell referral sources how hospice benefits them and the patients, show them!

B. Prepare graphs on a quarterly basis that show the x number of patients they referred equals y number of re-admissions that did not occur and z number of infections that did not occur. The statistics are out there. Create a template and generating these reports can be a virtually automatic process that requires minimal effort.

This article is designed to provide some general statistics and information that can be structured to show your SNF referral sources the value, both the business metrics and the life extension, hospices provide.

Every state operates differently, some states are pass-through states, others not, some require a shorter bed hold and some have higher bed rate reimbursements. We’re using Illinois here as it is a populous state with a mix of dense urban and spacious rural territory. The numbers are approximations but we try to fall on the conservative side. You can use these numbers and sources, as well as numerous others publicly available, to tailor figures to your specific use-case.

Hospice Delivers Massive Savings to SNFs

Assuming a 300 bed Skilled Nursing Facility (SNF) with a 60/40 mix of short term rehab patients and long term/advanced illness care patients. This ratio leaves us with a population of 120 long term/advanced illness care patients. Using 5% of their patients as appropriate for hospice in a given month means, to maximize savings and life extension benefit and referring to hospice at the appropriate time, a 300 bed facility should be making at least 6 referrals a month. Let’s look at the difference between a 5% (6 patient referrals per month) and 2.5% (3 patients per month)referral rate:

Hospital Bed Rate Costs:

The Illinois Nursing Home Care Act requires a nursing facility to hold a bed for a maximum of ten days when a resident is hospitalized:

• Using a $150 room rate X 5 day hospital stay (half the max required bed hold time) = $750 revenue lost per month per patient hospitalization
• 
• $750 X 3 non-referred but hospice appropriate patients (The ratio between a 5% referral rate & a 2.5% referral rate) hospitalizations = $2250 revenue lost per
•  month for 3 patient hospitalizations.
• $2250 X 12 months = $27,000 annual revenue lost for 3 patient hospitalizations per month.

DME:

Depending on the needs of the patient, co-morbidity, progression stage of the disease, this can vary widely between approx. $10-$30 per day per patient. For the sake of conservative estimates, limiting DME to the basics – mattress, oxygen, chair, and misc pieces (pillows, floor mats, nasal cannula etc.) We’ll use the average DME cost per day of $15.

• $15 per day X 30 Days = $450 per month lost DME expense per patient
• $450 X 3 non-referred but hospice appropriate patients = $1350 lost revenue savings
• $1350 X 12 month = $16,200 per year lost revenue savings of DME savings for 3 patients per month
• $27,000 bed savings + $16,200 DME savings = $43,200 savings for 3 patients over 1 year.

But this number is extremely low as the above chart is calculating 3 patients over the course of 1 year rather than layering 3 patients in month 1, plus another 3 in month 2, plus another 3 in month 3 minus 1 patient death etc.

The actual number should be based on moving from a 2.5% referral rate to a 5% referral rate as a rolling and

growing number showing the the compound savings over the course of a year.

In this chart we calculate 3 patients added per month and at month 6 through month 12 we drop to adding 1 patient per month to account for 2 patient deaths from the 1st and then following months for a savings based on hospitalization bed hold savings and DME for a total savings of: $421,200 over 1 year

Further, these savings do not take into account additional savings in the form of labor with hospice CNA, Nurses, Social Workers, Chaplains, Volunteers etc. As well as other ancillary savings from products & services the hospice agencies provide.

This information may not mean much to the floor nurse in a facility, but will make a serious impact when meeting with an administrator and working to make the facility more hospice minded.

Hospice Cuts System Costs

There are few other healthcare programs that generate as much savings and deliver care like hospice. The business savings continue with a positive spillover effect for the rest of the patients in a hospice minded SNF and for healthcare at large.

“Increasing hospice services can reduce hospital admissions among all residents of a nursing home, including those not enrolled in hospice, according to findings recently published in the Journal of the American Medical Directors Association (JAMDA).” “For every 10% increase in “hospice penetration” at a given facility, the risk of hospitalization decreases 5.1% for non-hospice residents and 4.8% for hospice-enrolled residents, the investigators determined.”

“For the new study, published in JAMA, the researchers used data on nearly 40,000 Medicare patients with poor-prognosis cancers who died in 2011. Half the group chose hospice, and half didn’t. The hospice and non-hospice patients were matched by age, sex, place of residence, survival and how many healthcare services they were using. Non-hospice patients had more hospitalizations, more stays in intensive care units, and more invasive procedures compared to patients who opted for hospice, the researchers found.”

“Those receiving hospice care, compared with matched control patients not receiving hospice care, had significantly lower rates of hospitalization, intensive care unit admission, and invasive procedures at the end of life.”

Hospice Adds Value

“Family members believe that nursing home hospice improves quality of care for symptoms, reduces hospitalizations, and adds value and services for dying nursing home residents.”

The reaction families have in terms of rating hospice minded SNFs as having better quality care is clear when we recognize that:

Hospice Extends Life

• “Patients with terminal lung cancer who began receiving palliative care immediately upon diagnosis not only were happier, more mobile and in less pain as the end neared — but they also lived nearly three months longer.” 
• “In an earlier study looking at patients with 16 of the most common terminal diagnoses, researchers found that hospice patients lived longer. On average, this ranged from 20 days for those with a diagnosis of gallbladder cancer to 69 days for the cohort of breast cancer patients“
• “A 2007 study that looked at Medicare beneficiaries with some of the most common diagnoses leading to death, found that patients who received hospice services lived on average, 29 days longer than those who did not receive hospice care.”

As we can see, across the board, in terms of dollars, labor, general healthcare, life extension, and perception of operations, hospice delivers massive value to SNF referral sources.  The statistics presented here are by no means comprehensive. There are numerous sites where you can find numbers that may be more applicable to your specific agency and referral sources. The goal here is to provide insights into how to organize some of these benefits and present them to your referral sources, especially administration, to make them more hospice minded and generate more referrals.

 Hospice Tools is the powerful and affordable EMR built for hospice & palliative agencies that delivers a competitive advantage & peace of mind.

Get smooth operations with simple chart management, improved compliance, revenue management and more!

Click the Demo Tab to check out our video library or try out Hospice Tools yourself with our No-Risk Free-Trial!

More Insights from the Hospice Tools Blog         Start Your Free Hospice Tools Trial