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Subacute Care: Policy Synthesis and Market Area Analysis

Publication Date
Oct 31, 1995

Prepared by Lewin-VHI, Inc.

This study was prepared for the Department of Health and Human Services , Office of the Assistant Secretary for Planning and Evaluation. November 1, 1995

Executive Summary

This study was initiated by the Office of the Assistant Secretary for Planning and Evaluation (ASPE) to address a large set of policy relevant questions on health care issues pertaining to the development of more effective and efficient delivery systems and involving substantial public and private expenditures. As is now widely understood, without some changes made to the current system, Medicare expenditures for post-acute care and for acute care are expected to rise substantially as both the number and proportion of persons over age 65 grows. Over the next 25 years, the elderly population over age 65 is projected to increase from 34 million to more than 50 million. More importantly, the number of persons age 85 and older (those who consume the greatest amount of health care) is expected to grow from 3.3 million in 1990 to 6.7 million in 2020.

It is within this context of rising costs and shifting demographics that "subacute care" is being promoted by many post-acute care providers and others as a cost-effective alternative to inpatient acute hospital care. Proponents argue that subacute care has the potential for public and private savings and possibly improving patient outcomes. The cost-saving arguments are based principally on the fact that per diem costs in a subacute care setting may be as much as 40 to 60 percent less than hospital acute care, but there are many other considerations involved in realizing savings discussed in the study.

Our study of subacute care and these issues involved an extensive literature and document review as well as interviews with knowledgeable experts from around the country (including our Technical Advisory Group). We also visited 19 state-of-the-art subacute care facilities and interviewed home health care providers and numerous other stakeholders in four market areas. Following a short introductory chapter (CHAPTER ONE) the results of the study are presented in six chapters described below.

CHAPTER TWO presents an overview of subacute care focusing on what the term means and estimates of the current and potential volume. The term "subacute care" was in the past used to describe hospitalized patients who failed to meet established criteria for a medically-necessary acute stay, but is now used almost exclusively to refer to patients treated in settings other than acute care beds. There is no single, agreed-upon definition of subacute care, although several health care associations and key accreditation organizations have developed formal definitions, discussed in the report. We found that the term subacute care has come to have two meanings, and that understanding those differences is critical to understanding the entire subacute care phenomenon.

The term "subacute" is increasingly used to describe a set of patients that in the past were described by other terms such as "High-End Medicare Skilled." We concluded from our review of the literature and interviews that when the term "subacute care" is used in practice it nearly always refers to patients whose needs fall somewhere between acute hospital care and "traditional" longer-term nursing facility care. In practice, the care provided to these patients is increasingly being referred to as "subacute care." Thus, the term "subacute care" has come to be used to refer to a level of care -- skilled care for patients with complex needs -- that some nursing facilities, home care providers, and others have been providing for years under a variety of different names (e.g., "high-end skilled care").

In addition, however, there is a growing movement to invent a new type of program called "subacute care" and increasing consensus around elements of the ideal. There is nothing new about SNFs, long-term care hospitals, or rehabilitation facilities caring for the types of patients noted above, except perhaps that such patients (particularly those at the highest level of acuity) may constitute a larger proportion of patients in today's SNFs. But, we also found substantial evidence of a movement to create a new type of program to service those patients, a new approach to care, different from traditional Medicare "high-end" skilled care. Although the new subacute care is evolving through both practice and debate, we believe that at the time of this writing (September, 1995) the core elements of this idealized, prototypical subacute care include those highlighted below.

First, ideal subacute care is an organized program. It is more than "any type of care provided to high-end Medicare patients." Some programs are organized around specific disease categories (e.g., stroke or cancer), others are organized around specific interventions (e.g., pain management or wound care), and some are organized around other more or less homogeneous patient characteristics (e.g., pediatrics or "medically complex"). In general, providers tend to distinguish between "rehabilitation subacute" patients, which include conditions such as hip replacement, spinal cord injuries, and brain injuries. These patients tend to require more rehabilitation services such as physical, occupational, and speech therapies. Conversely, "medical subacute" patients tend to have conditions that require intensive medical and nursing care, but fewer other therapies. This group of patients includes those with cardiovascular diagnoses, cancer, ventilator care, wounds, and IV therapy.

In the ideal, a subacute care program is intensely focused on achieving specified, measurable outcomes. The outcomes or goals may (some say must) vary for each patient (e.g., healing a wound or restoring the patient to a particular level of functioning). Some argue that outcome-oriented programs are nothing new; that, in fact, part of the definition of any medical and nursing care includes preserving and/or restoring some aspect of physical functioning. While true, subacute programs in the ideal stress an intensity of focus on outcomes, as well as achieving outcomes in a particularly efficient and lower cost manner. For example, the American Health Care Association includes "efficient and effective utilization of health care resources" in its short definition of subacute care.

Special resources are also included in the ideal. These generally include physical plant features such as a distinct unit (highly recommended by the National Subacute Care Association [NSCA]), and more and better trained staff (than a "traditional" NF), especially physicians and nurses. The exact degree of physician and licensed nurse involvement required is a matter of some debate, particularly since increasing the involvement of highly-trained staff increases costs.

Finally, ideal subacute care encompasses a set of techniques thought essential to achieving stated goals. These techniques include the use of interdisciplinary teams to plan and provide patient care and case managers, whose jobs involve both resource use monitoring and more traditional care-coordination activities. Care techniques in the ideal also include the use of "care maps" and/or critical pathway protocols, program evaluation based on measure outcomes, and an emphasis on continuous quality improvement.

It is impossible to provide a reliable estimate of the current amount of subacute care nationally due to the evolving definition of subacute care and the lack of data. The absence of a specific, agreed-upon definition of subacute care and the evolving nature of the industry make it impossible to determine with any accuracy or reliability the volume of subacute care. The volume of "ideal" subacute care, as described above, can not be determined from national data sets because the distinguishing characteristics of subacute care are not captured on any of the large national data bases. Researchers' difficulties identifying and collecting data on subacute care providers are not limited to large data bases. Our visits with providers and subsequent efforts to collect data on subacute care patients revealed that even many state-of-the-art subacute providers do not routinely distinguish or collect data separately for their subacute care patients. It was not uncommon to find, for example, state-of-the-art providers who called a portion of a Medicare and/or dually-certified unit the "subacute care" wing or unit, but whose routine data systems did not distinguish those patients from others. Thus, when we asked for something like the average length of stay of subacute patients, many providers could readily produce statistics for all Medicare patients, but (even when they agreed that all their Medicare patients were not "truly" subacute patients) either had to do extra work to develop statistics or were unable to provide data exclusively on subacute patients in a subacute program.

Estimates of the current annual volume of subacute care range from 1.2 million to 8.1 million patient days. The lower number may be a reasonable estimate of subacute care in the first sense of "higher acuity" patients, but both figures substantially overcount the actual volume of subacute care under the second definition. The lower estimate was based on the number of patients receiving three or more hours of nursing care per day delivered in a "separately designed subacute setting" and includes freestanding and hospital-based SNFs only. This estimate excludes rehabilitation hospital and units, long-term hospitals and home health agencies from the definition of subacute care providers. In contrast, the high-end estimate of 8.1 million patient days includes long-term hospitals, but does not exclude patients who require fewer than three hours of nursing care or rehabilitation per day (Ting, 1995), and thus may include some traditional NF patients who are excluded in virtually all formal definitions of subacute care.

CHAPTER THREE examines the growth of subacute care including the key factors currently shaping the industry. The primary financial and organizational factors shaping the development of subacute care nationally include the efforts of managed care providers to find more cost-effective types of care, the implementation of new Medicare payment policies applicable to acute and post acute care providers, and changes in patient preferences. Specific findings include:

The growth of subacute care has been attributed largely to the growth of managed care, though we found that most of the patients in the facilities we visited we paid for by Medicare. In the future, the growth of managed care might foster the development of more subacute care as managed care providers seek less costly alternatives to hospital acute care. In addition, Medicare managed care plans who offer expanded hospital benefits to attract beneficiaries have incentives to shift beneficiaries to SNFs to reduce their risk. Further, given the managed care focus on cost, some SNFs are trying to reduce costs.

Medicare's payment systems for acute care have led to increased demand for post-acute care services for higher acuity patients. The Prospective Payment System (PPS) reimburses hospitals on flat rate by diagnosis and provides hospitals with strong financial incentives to discharge Medicare patients as quickly as possible.

Medicare payment policies for post-acute care have encouraged the growth of subacute providers. The reimbursement of subacute care providers (PPS-exempt hospitals or distinct part units, SNFs, and home health agencies) on a facility-specific, cost-related basis, combined with strong incentives for discharge from acute hospitals under PPS has led to both the strong demand for post-acute care services and an increasing supply of post-acute care providers.

Medicare payment and coverage policies for SNFs contain strong incentives for nursing homes providing traditional long-term care services to offer more skilled care and therapies. In combination with the three year routine cost limit exemption for new providers, a recently streamlined routine cost limit exceptions process, and growing demand among private and Medicare managed care and Medicare fee-for-service for high-end services, nursing home providers are finding it easier to profit by offering more skilled nursing and rehabilitation services.

Medicaid reimbursement has had an indirect impact on subacute care as providers seek increased revenues from other sources. Substantially higher margins provided by managed care and Medicare, compared to Medicaid, are reportedly a driving force in the development of subacute care.

Nursing homes respond to changing patient preferences. Nursing home providers face increased competition from assisted living facilities and other settings that offer care at home or in a home-like environment for patients with minimal nursing needs. In order to remain competitive, nursing home providers are expanding their services to include provision of assisted living and community-based care, and the development of "spoke" services, including therapies, DME, laboratory, and pharmacy services.

Physicians' attitudes about nursing homes may make it more difficult for SNFs to develop subacute programs relative to other post-acute providers. Physician involvement is said to be a core characteristic of subacute care, but Medicare payment policies coupled with increased travel time may make many physicians reluctant to follow their patients to a SNF.

Setting-specific barriers differentially affect the ability of providers to develop subacute programs. Medicare coverage and payment policies present barriers unique to provider type. Long-term hospitals serving subacute patients may have difficulty maintaining the required 25 day average length of stay. Rehabilitation hospitals and units may have difficulty serving subacute patients and still meet the requirement that 75 percent of patients fall within 10 diagnostic categories. Although SNFs have more freedom than long-term or rehabilitation hospitals in the types of patients they can admit, they face the three day hospital stay requirement as well as having to coordinate OBRA and other statutory requirements with a subacute care program.

The growth of publicly-owned, for-profit post-acute care companies also has fostered the shift of many traditional long-term care providers into higher margin subacute care. Large chains are generally better positioned to develop subacute care programs based on their ability to access capital markets, achieve economies of scale and operating efficiency, develop integrated post-acute networks, hire specialized staff, and provide higher margin ancillaries through their own related organizations. In addition, publicly-traded growth companies need to continue to grow profits to maintain their stock prices..

The development and use of accreditation standards are influencing the subacute care industry through the establishment of minimum standards and broadly defined quality guidelines. We acknowledged the following developments:

Two accreditation organizations have established subacute care standards. The Commission of Accreditation of Rehabilitation Facilities (CARF) has established two specific levels of accreditation for inpatient care specifically designed to apply to subacute care. The Joint Commission on Accreditation of Healthcare Organizations (JCAHO) has established general accreditation standards for subacute care.

A small but growing number of SNFs are being accredited by CARF and JCAHO as subacute facilities. Accreditation is likely to be of growing importance in the development of subacute care, but current standards appear to allow a wide range of quality and services under the "accredited" stamp of approval.

The development and use of outcomes measures are influencing the market for subacute services by becoming an increasingly important component of subacute care programs. We found that:

Outcomes are one aspect of quality. Outcomes measures have received more attention as structure and process measures by themselves have become less acceptable as measures of health care quality.

There has been recent increased interest in patient outcomes in all health care modalities. The acceleration of interest in quality also has increased interest in the ability to compare outcomes within similar types of providers and across different types of settings.

Outcome measures specific to subacute care have been developed and/or are being developed. The Functional Independence Measure (FIM) is the best known measure for assessing outcomes for rehabilitation patients and is being used to measure subacute rehabilitation outcomes. Other outcome measures for medical subacute care are in various stages of development and implementation.

We believe that outcome measures will play an important but as yet undetermined role in the development of subacute care. While monitoring quality is costly, the current emphasis on outcomes measurement in this industry might indeed provide strong and effective incentives for continuous quality improvements.

CHAPTER FOUR examines the state-of-the-art in subacute care based on our site visits at 19 facility-based subacute care providers, telephone interviews with four representatives of three national firms specializing in home infusion therapy (so-called "high tech") home health care, six representatives of five "full-service" home health agencies (HHAs), discharge planners, managed care planners, managed care groups, physicians, patient care advocates, state nursing home associations, state hospital associations, state nurses associations, and state Medicaid officials.

The key challenges faced in identifying and comparing subacute care providers are worthy of mention. While all researchers face difficult challenges, we believe that in this case the difficulties we encountered both in finding subacute providers in reportedly better developed markets and in obtaining data on subacute patients are an important part of our findings. These difficulties illustrate to us the very early stage of current industry development.

Facility-based (institutional) subacute care providers, particularly skilled nursing facilities, have been a driving factor in the development of the subacute care phenomenon. The four institutional provider types or "platforms" we studied were nursing facilities (freestanding and hospital-based), rehabilitation hospitals, distinct-part rehabilitation units, and long-term hospitals. We compared these provider types in terms of their different payment incentives, regulations, program capabilities and staffing levels, and distinct cultures. We found that:

There is both competition and cooperation among providers. In some cases, subacute SNF facilities are competing with long-term care and rehabilitation hospitals for discharges. Yet, in other cases providers of different types were engaged in joint ventures and other cooperative activities. On balance, a trend exists in the industry toward greater cooperation across the platforms.

A wide range of patients are treated in facility-based subacute care settings from traditional Medicare skilled to gravely-ill, but clinically stable ventilator patients have also been deemed suitable for this type of care. However, providers tend to disagree on a common set of subacute care patient characteristics.

Patient placement into subacute care is determined by a variety of factors, including the patient's insurer. Specifically, managed care groups are more likely to play a role in determining a patient's discharge destination than other payors.

Subacute patients may be "scattered" across units of subacute care or located in a dedicated wing; unit boundaries frequently do not correspond to Medicare/Medicaid unit boundaries.

As a consequence of the lack of congruence between certification and subacute boundaries, key national data bases provide limited useful information about subacute care. In particular, the inaccuracy of the OSCAR national data suggests that its information on subacute care patients should be interpreted with great caution.

Subacute providers are developing specialized programs for certain types of patients.

The types of conditions treated in different types of subacute care facilities are grossly similar; the severity of illness appeared to vary. In general, patients in all of these provider types could be classified as either "rehabilitation subacute" or "complex medical subacute." In addition, most subacute SNF providers report that patients referred to their facilities were "medically stable."

Medicare is the dominant payor of subacute care. Hospital based subacute SNFs and long-term and rehabilitation hospitals are particularly dominated by Medicare.

Information on prices paid by managed care plans is closely guarded by individual facilities. However, from our interviews with managed care firms, we estimate that the daily rate for a subacute stay ranged from $127 to $450 in Los Angeles, from $500 to $850 in Boston, from $420 to $750 in Ohio, and from $175 to $585 in Miami.

Physician involvement in subacute varies. The observation of a general reluctance of physicians to visit patients in SNFs disputes the common claim that subacute care is physician-directed. In long-term and rehabilitation hospitals, physician participation in patient care appeared to be slightly greater.

Subacute facilities vary in contracting out versus providing in-house therapies and physician services. Providers often have financial incentives to contract out ancillary therapies. Some also contract out physician and nursing services, as well as the services of other specialists.

Case management and tracking, physician involvement, and discharge planning for subacute care patients vary across health plans. However, in general few physicians follow their patients into a subacute facility after an acute care stay. Local HMO's, in contrast to national HMO's, have the best reputation for tracking and physician involvement as patients move into subacute care.

Nurse staffing is greater in subacute care settings than in traditional nursing homes, but varies by facility type. In general, the ratio of RN time compared to LPN and CNA time is greater in subacute SNFs than among traditional nursing homes. However, the majority of nursing associations with which we spoke had concerns about the whether SNFs were staffed appropriately for the acuity of patients being referred and the quality of care provided.

Most subacute patients are discharged home. However, subacute patients are discharged home less frequently than we had anticipated. The average subacute SNF we visited discharged only 57 percent of patients home, a significantly smaller figure than that reported by many subacute providers in interviews.

The average length of stay (ALOS) varies among subacute patients. In particular, ALOS is dependent on the severity of the patient's condition. For some diagnoses, ALOS varies significantly across subacute facilities, while for others, ALOS is similar.

Few facilities currently are collecting data on quality or clinical outcomes. Of the providers who do collect outcome data, the data measure most often used is limited to rehabilitation subacute and it does not adjust for medical severity.

Rehospitalization rates vary across settings. However, long-term hospitals and rehabilitation hospitals have readmission rates that are similar to each other and appear somewhat lower than those of the SNFs.

The role of home health care in the subacute care industry is the subject of much debate. In order to assess what has been increasingly reported as a substitution of home health services for subacute services, we interviewed two types of home health providers: home infusion therapy or "high tech" and "full service" HHAs. In brief, we found that the high tech and the full service HHAs were providing a product that has many of the elements of the prototypical subacute care facility.

High tech home health care firms differ from SNFs in some of their staffing and patient characteristics. However, high tech firms are in fact delivering "subacute care" according to many commonly accepted criteria. Like institutional subacute care, high tech firms specialize in programs of care, develop written protocols,; use outcome measures, employ a highly trained nursing staff, do not extensively involve physicians in directing patient care,; and have been influenced by the growth of managed care.

Full-service HHAs are also providing what is otherwise known as subacute care in the home. These traditional HHAs are said to receive substantial numbers of discharges from subacute facilities, but we were unable to verify this reported trend. In fact, it seems unclear whether many patients referred from SNFs ever actually received home health care requested on their behalf. The fact that subacute facilities report referring patients to HHAs at discharge and that these home health agencies do not report receiving those referrals raises some serious concerns about quality, at both the point of discharge from subacute facilities, and from the point of referral to HHAs.

In response to the growing potential for substitution of home health care for facility-based subacute care, many informants expressed additional quality concerns regarding HHAs. Respondents raised questions about staffing qualifications, the role of managed care in HHAs, access issues for lower-income patients, the perception of a "no care zone" for patients with lower acuity, and the fact that Medicare reimbursement for home infusion therapy remains a barrier to appropriate home infusion therapy as compared to the provision of infusion in an SNF.

CHAPTER FIVE discusses variations in subacute care across four market areas (Los Angeles, Miami, Boston, and Columbus) and focuses on the factors in these markets that affect the local development of subacute care. While the original intent of the market area study was to try to relate the quantity of subacute care to specific market factors, we found it impossible to quantify precisely the amount of subacute care being provided since there is a lack of consensus regarding what the term means, and at present one cannot really tell what the label on a facility means without a somewhat detailed study. Nevertheless, it is our subjective conclusion that activity and apparent quantity of subacute care are greatest in Los Angeles, followed by Miami, Boston, and Columbus, in that order.

The key factors influencing the growth of subacute care in each market area include:

Managed Care: Managed care is said to be the driving force behind the development of the subacute care industry, yet across all markets and platforms included in our study, Medicare fee-for-service is still the dominant payor. Furthermore, while Boston, Los Angeles, and Miami all have similar rates of managed care penetration, only in Los Angeles did we find more than one freestanding SNF subacute care providers with more than a relatively small number of managed care patients. In part, this may be a function of the presence of more aggressive managed care arrangements in Los Angeles, compared to other market areas. More "aggressive" managed care organizations that include capitated payments to physician decision-makers may be more likely to use subacute facilities in order to contain costs. We found that the financial pressure of capitation is another factor that results in increased demand for subacute care. Los Angeles does have more "aggressive" managed care relative to other market areas, as evidenced by the high percentage of both primary care physicians and specialist physicians under capitation. Los Angeles also has relatively more subacute care activity than other market areas.

The Development of Integrated Health Networks. In our market area study, we did not visit different facilities owned by the same corporation. Yet, we believe that the development of integrated health networks will have a significant effect on the development of subacute care in ways that are presently just evolving. For example, in Boston a large portion of hospital-based SNF beds are managed by a corporation that owns a substantial share of the freestanding SNF beds. Also, in Los Angeles, 100 percent of hospitals have an arrangement with a subacute facility and 40 percent of these own their own SNF.

Market Inefficiencies. We had assumed that we would find low hospital use rates in areas with high managed care penetration, but we found that three out of the four market areas have hospital use rates close to the national average and much higher than the managed care "ideal." If market areas face pressure from managed care organizations to lower hospital use rates, there could be an increase in discharges to subacute care facilities. We did find that Los Angeles had the lowest hospital use rates of the four market areas.

Regulatory Barriers. Regulatory barriers including CON requirements and enforcement have a direct impact on the development of subacute care. For example, in Los Angeles, the lack of CON requirements has encouraged the development of subacute care. However, California is reviewing its CON policies, and new regulations may have an effect on any further development of subacute care. As compared with Los Angeles, Boston and Miami have CON requirements and provide less subacute care in SNFs. Ohio has recently changed its CON, and it is unclear what the impact will be on the development of subacute care.

Subacute Facilities' Search for More and Better-Paying Markets. Again, Los Angeles provides a key example of a market area where the subacute phenomenon is partly driven by NFs search for new payors and markets. NFs in Los Angeles have the lowest occupancy of the four market areas, and California Medicaid NF reimbursement is the only one of the four applicable systems that provides no additional Medicaid dollars to facilities that take patients with heavier care needs, except for technology-dependent patients.

CHAPTER SIX analyzes evidence regarding the cost, quality, and effectiveness of subacute care. There is remarkably little evidence that shifting patients sooner from hospitals to subacute care will save money.

A national study of the potential savings to Medicare of subacute care is based on several questionable and critical assumptions. Unless these assumptions proved true, simply moving patients to SNFs could be more costly to Medicare than the current situation. The questionable assumptions concern length of stay and use, estimates of SNF costs, and bed availability.

Preliminary findings from a study comparing costs for Medicare patients in rehabilitation facilities and in SNFs indicate that per diem costs in the studied rehabilitation facilities are substantially higher, but that longer lengths of stay in SNFs canceled out some (but not all) of the cost differences. This study found that direct care resource consumption for rehabilitation facility stroke patients was appreciably higher than for SNF patients in licensed nurse time, therapy time, and physician visits, but that differences in total patient care costs were less than 20 percent.

One small but careful study comparing stroke patients in a rehabilitation facility with those in a SNF found slightly lower lengths of stay for SNF patients and lower total costs, but poorer outcomes.

There are only a handful of empirical studies on quality in subacute care facilities, but they generally find poorer outcomes for patients treated in SNFs compared to those treated in rehabilitation hospitals.

The four available studies comparing outcomes (measured by functional status) for rehabilitation patients in hospitals and SNFs involve a limited number of facilities and none is nationally representative. Three of these similarly conclude that outcomes were better for those treated in hospitals. In one study, researchers found significant differences in a measure of "applied self care" with hospital patients having significantly greater independence. In the second study, rehabilitation patients treated in the subacute SNF had significantly higher death rates and emergency rehospitalizations than patients treated in the hospital when controlling for age. In a third study, researchers found that hospital patients scored higher on functional independence at discharge and in change scores than SNF patients. A fourth study compares rehabilitation patients treated in special subacute units of selected SNFs to a sample of patients treated at general acute-care hospitals. Functional gains were virtually identical, though those treated in SNFs were admitted with lower scores on average. We are not aware of any studies that compare outcomes for medical patients either across subacute platforms or between subacute care and acute care or Medicare SNF care.

Preliminary results of a study using a nationally representative sample comparing rehabilitation in an acute rehabilitation setting to rehabilitation in a subacute skilled nursing setting indicate some differences between settings with respect to both patient conditions and service intensity (higher in hospitals), although case-mix differences did not account for the latter. Researchers found that rehabilitation provided in a SNF is substituting to some extent for rehabilitation in the hospital, but that there are some differences in demographic characteristics, functional status, and disability level between patients in the two types of settings. The higher intensity of direct nursing care, therapy care, and physician care suggests that quality of rehabilitation care may be higher in hospitals than in SNFs.

In CHAPTER SEVEN, we stand back from the detail to present what we believe are the major conclusions from the evidence provided in our report. In summary, our conclusions are:

First, the emerging concept of subacute care is compellingly attractive both in the new attention it brings to some types of patients and in regard to the type of programs envisioned in the ideal. Subacute care is partly about a set of patients and conditions: people with health problems too complex for the skills and services of a traditional nursing facility, but not so unstable or sick that an acute care hospital is needed. To a large extent, these are the same patients who in the not-very-distant past, were called "Medicare high-end skilled," or simply, "heavy care skilled" patients. But some conditions and patients within that old and broad category - the unhealed decubitus patient, the "unweanable" ventilator patient, those "old people" with strokes thought "unlikely" to recover much function - are clearly benefiting just by virtue of the new attention. With new attention, some old problems may prove to have solutions.

In the ideal, subacute care is more than any type of care provided to those and other patients. As we discussed in Chapter Two, prototypical subacute care is an organized program intensely focused on achieving specified measurable outcomes in an efficient and cost-effective manner. Special resources to achieve those goals include more and better trained staff (than in a "traditional" SNF), especially physicians and nurses. Ideal subacute care encompasses a set of techniques thought essential to achieving stated goals. These techniques include the use of interdisciplinary teams to plan and provide care and case managers whose job encompasses both resource use monitoring and more traditional care-coordination activities. Subacute care techniques in the ideal also include the use of critical pathway protocols, and clinical and program evaluation based on measured outcomes. Those elements of care are inherently attractive.

Second, we found subacute care providers that are successfully applying elements of this concept. During the course of our site visits, we saw a number of providers with excellent programs that are filling an important niche in today's health care system. Some providers are clearly caring for some types of patients that were rarely cared for in SNFs in the past. Some providers are successfully applying key elements of the subacute care concept in their programs. Several specific examples are described.

Third, at present, much that is called subacute care is "old wine in new bottles" and marketing of the new concept is ahead of the product . It is important to restate at this point that this study was exploratory . We did not begin the exploration with a fixed notion of subacute care and go forth to count the providers who complied. Instead, it has been the journey itself that has led to an understanding of the concept. Nevertheless, reflecting both on what we saw in the field and have observed in the industry press and other literature, it is clear that much that is called "subacute care" is really just a new name for higher acuity, medically complex patients and/or those requiring more intensive therapies. There is nothing inherently wrong with a shift in terminology, so long as policymakers, public and private-sector payors, providers, and consumers understand what is being described. Some providers may not mean to imply anything else by the use of the term than a reference to patients with somewhat higher care needs (both medical and rehabilitative) than the average. But industry leaders do mean something more, and more is expected if subacute care is to be something other than "old wine in new bottles."

While we did find some state-of-the-art providers practicing key elements of the new subacute care, we also concluded that in many respects "the marketing is ahead of the product," as one provider noted. Some key examples of the undeveloped product include the following:

None of the hospital-based SNFs and only a few of the freestanding SNFs we visited are actually using even those clinical outcomes measures (i.e., the FIM) that are currently available;

Few of the state-of-the-art facilities we visited could easily produce minimal data (e.g., length-of-stay by patient characteristic or program type) for the patients they called subacute. This indicated to us that few have the management and information systems in place needed to track subacute patients, monitor the facility's success, and learn where improvements are required.

Despite the recognized importance of greater involvement of better-trained staff (especially physicians and nurses) to the new subacute care concept and product, we found among the freestanding SNFs we visited (with a few notable exceptions):

Little physician involvement beyond that required by existing Medicare/ Medicaid certification standards

Concerns from those in the community (i.e., hospital discharge planners and health plans) about inadequately-trained staff at subacute providers.

Evidence that facilities were unable to handle some types of patients that were being admitted, leading to rates of rehospitalization and emergency use that raised some concern.

Finally, while long-term hospitals and rehabilitation hospitals do not call themselves "subacute" facilities, they do position themselves as a lower-cost alternative (with specialized programs) to acute care hospitals and market themselves as a cost-effective choice. We believe that we were privileged to see examples of facilities in this segment that are indeed striving to and in many ways achieving many of the goals of the new subacute care movement. But even among those that we visited - justifiably proud of their product - we observed instances where facilities appear to have done substantially less to date than state-of-the-art freestanding SNFs with respect to finding cost savings for payors.

Fourth, while the new subacute care offers considerable promise, realizing that promise poses substantial challenges for both the public and private sector. At heart, the new subacute care promises to provide greater "value" than other forms of care: similar or better quality for lower cost. Some of the challenges we see in realizing that promise are: (1) finding ways to strengthen the quality component of the managed care equation, including clarifying what the Medicare managed care benefit includes when subacute care providers are involved; (2) finding replicable technologies for actually producing better value, not just cheaper care; and (3) developing appropriate payment policies to realize both savings and value.

Finally, we found critical gaps in information needed by both the public and private sectors. As discussed in Chapter Six, very little reliable information is available on the cost savings of subacute care or of specific policy changes proposed to encourage the growth of this industry. Much of the available evidence relies on comparisons of costs per day or on questionable assumptions about use and length of stay. There is also very little evidence on the effect of subacute care on patient outcomes. At a minimum, policymakers require reliable answers to two questions. What is the effect of subacute care on the total cost of the episode of care? What is the effect of subacute care on long-term outcomes for patients?

Finally, public and private payors determined to reduce health care spending should ideally know the likely impact of specific changes before they are implemented. To this end, there is a critical need for carefully evaluated demonstrations designed to assess the likely impact of ideas related to increased use of subacute care. In addition, much that is happening today in the private sector with regard to managed care and much that is likely to be implemented in the near future with regard to public payment policies are real world experiments with uncertain outcomes. There is, at a minimum, a need to set in place the mechanisms that will allow us to understand what, in fact, ultimately results in terms of costs, quality, and access to care.