In this episode of The Disrupted Podcast, Scott Middleton joins us from California, where he’s attending a conference on senior living and value-based care. Scott shares eye-opening insights about how the senior housing industry is evolving, the financial incentives shaping care models, and the risks and rewards of Medicare Advantage plans in assisted living communities. We dive into the critical issue of checks and balances in healthcare, discussing how some facilities are taking on the financial responsibility of residents’ care and what that means for patient outcomes. Scott also reveals how Your Health is pioneering a patient-centered model that prioritizes quality care over cost-cutting measures, ensuring seniors get the best possible treatment—without financial conflicts of interest. This conversation is a must-listen for healthcare leaders, senior living operators, and anyone invested in the future of elder care. Tune in to explore the business of aging, the ethics of healthcare incentives, and the future of senior living.
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Welcome to the Disruptive Podcast. My name is Jamie and we're here with Scott Middleton today and Scott, you are not in South Carolina. You are a long way from home.(0:13) Yeah, I'm out in California at a conference this week and Jamie was asking me what it was about and I said, well, wait a minute, let's get into it in the podcast. (0:21) So the conference is about senior housing, senior living and value-based care. (0:27) And so I was so intrigued about this because I'm wanting to know what is the senior living industry thinking and doing and where are they moving? (0:36) And the senior living, it was interesting, there was another big dynamic talking about the baby boomers that are getting, that are really getting to the age of needing that senior living and senior status.(0:48) So they actually, if the industry wide look at 80 is the average age is when people are entering into an assisted living, independent living type facility. (1:01) So that's the number. And then they're looking at the fact that people are aging, you know, there's more people over 80, but they also kind of discounted the fact that there's also healthier people.(1:13) So the, like I met a gal yesterday, we were chatting and talking and she was 71 years old. I literally thought she was about 62. (1:23) You know, maybe at that point, but you know, so there's, it's just people are living longer.They're also going to live healthier as we move on. (1:33) But one of the value-based part was for these operators and the owners of these buildings was, well, how do we get our money out of value-based? (1:41) A lot of, they said, you know, we're providing a lot of value to people. We've got nurses, we've got CNAs, we've got people who are taking care of those folks.(1:50) And if we can keep them out of the hospital and save money, how should we be rewarded? (1:55) And so there was a lot of different options. I was able to go to a seminar where that's all we talked about. We sat around the table and kind of discussed various items about it.(2:06) But I will say that, so here's the option. There was one assisted living group that runs like a hundred buildings. They started their own Medicare Advantage plan.(2:19) So everybody who moves into the building signs up for their, like instead of Humana, they're signing up for their Advantage plan. (2:28) And so the facility then, every month, gets the full amount of the premium that Medicare would pay on behalf of that patient, which of the courts is based on your risk score. (2:40) And they're saying their risk scores in most of these buildings were between 2.25 and 2.5. (2:47) So then I'm sitting here thinking, okay, when I move grandma or mom into this building, they are now the sole person who's responsible for that person's care and financially on the hook for it.(3:05) So if mama goes to the emergency room and then decides to have surgery, then the facility loses money or does the facility convince mama to go on hospice so that we don't spend as much money and mama dies. (3:22) And that scared me because, you know, I'm a man of, maybe it's just from an accounting background, but one thing I can remember out of hearing in my accounting classes was checks and balances, checks and balances. (3:35) And everywhere along the line, you want to know that if something is, you know, that there's somebody, there's some way that I'm looking at it on the other side to confirm that whatever I'm doing is correct.(3:49) And that's what scared me there. I put mama in a building. She's on their insurance.They're having to pay if she goes to the hospital. They're having to pay everything out there. Are they going to skimp on what they do? (4:01) Yeah.Yeah. Because when I think of the, you know, a senior living industry, I mean, to me, it's always just really been real estate. You know, you buy a room, but this is a lot more complicated kind of a scenario.(4:18) Right. Well, then I talked to another group and what they did is they partnered with the physician's practice group. The physician's practice comes in.And to me, we are a lot of the checks and balances sometimes behind where somebody lives. (4:31) Because as a physician's group, we're coming in and monitoring and looking to see what's going on and that that should end at the patients. Our patients are getting the care they need.And if they're not, then we're that check against the balance of the facility not doing their job. (4:45) And so I think that's important. So this other group partnered with it.And what they did is they said, we're just going to give you a percentage of our savings. So at the end of the year, we give you something back. Again, it does put the incentive towards the owner and the builder or the other property.Don't send, don't send my mama out because it's going to be very costly if we do. (5:09) And so while you do have a little bit of check because the doctor and the nurse practitioner and the physician's hands coming in, you really don't have that full of connect. And so I thought that was interesting.And so I was telling them our model and I said, but here's the thing about our model. We go in and we tell a facility that we're going to provide additional support for the patients. (5:38) So based on that rascal and what we need, we'll put in a CNA.We'll put in a nurse. We'll put in a social worker. We'll put in whatever we need that can assist and help your team take care of the patient.But now it's a check and balance. (5:54) There's a fine financial incentive in that, hey, the more people we have on your health services, then the more staff they can provide in the building. Because we can only provide the staff based on chronic care management or community health initiatives and social determinants of health.(6:13) But we can add more and more. I remember years ago, I was the one who started the fact that if you had, I think it was six or nine, I can't remember the number, a certain number of people on hospice, then our hospice would then put in a CNA in the building all day. (6:32) And we may do it eight hours a day, but then we moved to, we're going to do it 12 hours a day because guess what? The hospice patients really need help at every meal time, right? So they need to be there at seven in the morning until probably seven at night.So that was a big help. And it worked. (6:48) We had really good ways to then have more people on our hospice instead of having in the building five different hospices.And that way we have sometimes a full-time nurse and a full-time couple of CNAs that were in the building. And that seemed to help and promote better quality of care. And that's what we're trying to do with this program.(7:08) So our goal here is we put the CNAs or the nurses in the building and we're definitely going to have a higher quality of care for those patients. And it does provide that checks and balance. (7:20) Yeah.Because you really need a primary care provider to make these decisions because, I mean, the facility is just going to make a financial decision, not a health decision because the nurse can't nurse there. They can only send them to the hospital. (7:35) The CNAs can't really do much.They're really not equipped to make medical decisions. They're just not. So they almost have to partner.(7:53) Yeah. And some people may come back and say, but Scott, wait a minute. Your doctor's a nurse practitioner.So you're incentivized to keep that person out of the hospital as well. (8:03) Someone else can do something about it. (8:05) The wrong decision.But here's the master behind that. We did not put any incentives toward our providers in negativity about people going to the hospital. (8:14) Right.(8:15) So we don't penalize them and we don't bonus them based on cost savings. We bonus them the way their compensation is about how much they bill and the services they particularly provide. (8:26) But it's also about that rascor to make sure they diagnose the patient correctly.So we put our own checks and balances in our own company to ensure that we would never have a provider making a wrong decision for a patient. (8:40) Now, what I do penalize them for, if the patient goes to the hospital and then comes home and goes back before you took care of them, I am going to be upset. And I think there's a penalty.(8:53) Yeah. (8:56) So encouraging how do you incentivize everybody to make sure that they're always do the best, you know, for what sort of patient. (9:03) Yeah.Well, your health provider can actually do something about it. They can. Hey, you're not feeling well.Well, let's see why you're not feeling well. Let's let's run some labs. Let's do.(9:12) You know, let's get an x-ray. Let's get a chest x-ray. Let's do.Let's see what's actually going on and they can make a medical decision. A facility can't make a medical decision. (9:23) Right.And and and that's the that's the bad part is if you are the facility is the Medicare program or the one that's running the program, then that does put them in the financial decision round. (9:37) You know, we saw that with the PACE program. It's a it's an active daycare program for Medicare and Medicaid patients where they are capitated again.PACE gets the full amount of credit for the patient for all of their health care spend. (9:51) And that includes what if they were happen to be in the nursing home. Right.So they may get five, four to six thousand dollars a month and they pay for everything, you know, out of that. (10:00) But their incentive is because they are the insurer at the hospital calls and says, hey, can we run this test? They can say no. (10:09) So that's the other scary part at the end of the day about being a Medicare quote advantage plan, you know, is is that they have the ability to say no.(10:20) They also, on the other hand, have the ability to say yes. And sometimes like when we call a human and say, hey, we need a few more days in the nursing home and they'll go, no, you know, we're not going to pay for it. (10:31) It's it's troublesome, you know, when that happens.(10:34) But on the other hand, they have to have certain standards because we also know if the if I have an empty bed and I'm a nursing home operator, I'm going to let them stay in there as long as I can. (10:45) Yeah, that's my incentive. Yeah.Right. Right. And I think the difference there, Scott, is you've always said and I've heard you say this on this podcast.(10:54) You're just asking your providers to make the very best decision based on what that patient needs at that time. Right. (11:05) Yeah.And and and the penalties for them are always going to be if you didn't know it because you didn't see them. (11:12) And where I have to go back is there's kind of no excuse as we move forward with our new model because what our model is going to do is talking to somebody about it the other day by having the visiting nurse, the community health worker, the nurse practitioner all going to the houses. (11:30) We're also now talking about hiring social workers that will go back to the homes.We'll need some of our social workers sitting beside the doctors doing advanced care planning. (11:39) We can cook and remote work remotely, but we had social workers out there the same. So every every area, every region has those four different every patient has those four different people that may come see them.(11:53) Right. So, you know, how, you know, how years ago we did a study and we said, hey, we don't know why. But if we put a nurse practitioner going to an assisted living building three times a week, Monday, Wednesday, Friday.(12:04) That's where we saw the fewest people going back or going to the hospital, fewer hospitalization. So I'm sitting here thinking, okay, when we have patients coming out of the hospital into our nursing home, our providers were seeing them every day, just like they were in the hospital to make sure they were well. (12:22) But now we're sending patients.They should have gone to a nursing home. They're going home. How do we assure we need to see them every day? And so that's the model I've been trying to figure out how to pay for.(12:32) Because I know if we see them every day, we'll keep them out of the hospital. So now the nice thing is our teams are going to start working on schedules so that, you know, a nurse practitioner has has 200 patients. (12:44) And so you divide her 200 patients in the four or five regions, depending on how many days a week she works so that she just goes to see, you know, 20% of her patients on Monday.(12:57) And then she goes to a different area on Tuesday, different area on Wednesday. So if we know the nurse practitioner schedule, then we also do the same. The visiting nurse, she has this schedule.So let's just take a little podunk town in North South Carolina. (13:11) How about that? Because I used to be a youth minister there. In North South Carolina, they had a little convenience store and you drive out five miles to the grocery store.It's out in nowhere. But I bet you that we have probably 30 patients that are in and around North South Carolina. (13:27) So guess what? That means that on Monday, the visiting nurse might go to North.And so she would see eight to 10 of her patients each week. So she'd be able to get to them most once a month, right? (13:40) So she goes to North on Monday. And on Tuesday, the visit, or let's just say the community health worker goes.So she goes out there and delivers meds. She does a pharmacy consult with the pharmacist. (13:52) So now we've got the nurse went out to see her or the nurse practitioner.We've got the pharmacist seeing them. The next thing you know, the social worker's coming out on Wednesday as a patient who's coming right out of the hospital. Social worker goes out on Wednesday.(14:06) She does a visit with one of our licensed counselors who does an anxiety and depression screening. And then the last day, the visiting nurse goes out on Thursday so that there's always somebody at least four days a week sitting there in North South Carolina. (14:23) That means every patient could get seen on any day if there was a crisis situation because somebody would be there.That's the model we're trying to build. So we're always there for the patients. It doesn't matter where they live.Because people don't want to go to assisted living in nursing homes. I know they have to sometimes, but we don't want to. (14:43) How do we help you stay in your house as long as you can? And that's what your help is about.(14:47) Yeah, I mean, who doesn't want that? I mean, and I think it's more than ever, it's achievable with the correct proactive care, the constantly seeing your primary care provider, not the emergency room, although that has its place. But primary care is where it's at. And it's how people can live longer, but live better.(15:13) Well, you know, and going always back to the people who are providing your care where their incentives are lying, just like we talked about earlier. And so I thought about the fact that you run to Minute Clinic or to an urgent care. The incentive for those people right there is not anything about your long-term health because they know they're only going to see you once.They're just trying to take care of your immediate concern. But how many times has that immediate concern got other issues going on that we failed to see? (15:41) Because we haven't gone to regularly to our primary care provider. And then when you go to a primary care provider that may be owned by a hospital system, what's their incentive? Well, they're being told they have to refer to specialty as much as they can.Specialty then refers on to hospitalizations and surgeries. So everybody has to look at the incentive. And I think that that's what we should always be looking at.And I want us as a company to always lay that out with people. (16:11) If somebody asks, well, what's your incentive to do this? We've done everything we can in our company to center those incentives around what we know is best for the organization. You know, the expectations of risk because we do so many patients.We know what the risk score should be. And so if we have a provider who's way low or a region that's way low, we know they may just not be looking at it very well. (16:38) And inevitably, you know, where it's low is where we haven't had doctors that that we're seeing those patients regularly.I think it makes a huge difference in the life and health and the care of the patients out there. Right. Yeah.One hundred percent. Scott, what else are you learning at this conference? (16:56) So, yeah, I think what we're all learning, too, is that nobody has the system. Like I sat down at a table with a young woman and she's a software engineer.Of course, you know, I'm trying to hire her. I don't think she was quite as young as I think, because at some point, she was she's a director with Apple, the Apple Company, and she does their health care programming. (17:21) And so she's over the guys that do whatever they're doing with health care right now.And I thought, oh, let me be open. But anyway, I was sitting there and I showed her our power to report and I pulled it up and she was like, oh, my gosh, her jaw drop. (17:35) And she said, where did you get this? And I said, we made it.I said, we have software engineers and people. And she was, this is incredible about the information that we have available is just out of the world. And she said, where are you getting it from? (17:53) And when I told her it's like 43 different sources, you know, between like things like bamboo and WellSky and the Medicare data and all that kind of stuff.And she was she was flipping out. And I said, it all goes into I know just enough to be dangerous. (18:07) And so I said, it all goes into Snowflake is all I know.And then if it's dispersed down here. But anyway, that was exciting to know. (18:14) I did find one other primary care group out there that's going in just to assist the ladies and nursing homes.And I did find out that that there's a company called Coronas and they're pretty big in our area because they're in. (18:27) We kind of see them a little bit as a competition for assisted ladies and nursing homes. Sure.But Coronas is a doctor's practice that was working in South Carolina. Well, guess what? They're in an A-plan. (18:39) And so they're going to be converting all of their patients that are in Coronas into their insurance, you know, down the road.So it'll be interesting to see how that relationship is because will they then give money or resources back to the facility? (18:57) So I'm going to tell folks, if you're using Coronas, Coronas is paying the facility back somewhere, you know, and they can. They can give some kind of incentives or something back. Or do they give staffing? (19:10) So I'll just say to make us different from Coronas.If, you know, some of our people are out there thinking about like, you know, some of our marketers like, well, Scott, we got to compete against them. (19:20) Well, while Coronas may give the owners and operators, you know, either rebates back or something like that. And in terms of incentive on value base, what we're going to do is offer patients care.(19:35) We're going to offer the CNAs and the nurses that will be in those facilities to really help and take care of the patient better. So at the end of the day, I think our model may work. Not that Coronas people are great.I mean, they're good providers. (19:46) I know a lot of them. We've hired a lot of theirs and they've hired a lot of ours over the years.And I just think again, it ties it back to look at the incentives. Always look at where the incentives drive you, where the incentives are driving the people that you're doing business for. (20:03) You know, because you walk into that dress store and you put the dress on that's two sizes too small in there and the gal behind the counter needs a sale today because she needs permission to pay her child's tuition to school next week, right? (20:18) And she said, yeah, that looks great on you.But let me show you one that's better and to give you the more expensive dress, right? You know, you know that. We all know that when we go into a store and when we're shopping. (20:30) But we don't think about that in healthcare.People are amazed at how many of my friends said they called a particular person about when I'm going on Medicare, who do I use? And they always call this guy. (20:42) And they said he was so nice and he spent all this time. And I said, well, yeah, because he's going to make, you know, basically $25 a month for the rest of his life off of you.(20:52) And they were like, what? Then I said, yeah, when he sold you that policy, he got him up some out, but it's roughly works out about $25 for every month for that you live for the next 25 or 30 years as long as you're buying it through it. (21:09) But you initiated it through him. So of course he's very interested in that.But again, most people don't think about the incentives. (21:16) And we've got to get whether you're in the living or nursing home or whether you're going to a specialist or doctor, how do they make their money? Ask it. Yeah.All right. (21:27) Scott, this has been great. That's the sermon.That's the sermon for the week. Well, Scott, travel safe. I know.I know it's rough being out in San Diego. And that's it's such a horrible place, you know? (21:40) Well, I think the weather's better back home. (21:45) I'm in Greenville, so it's probably a little warmer in Columbia and it's 60 degrees here.So that's not too bad. (21:51) That's not bad. Yeah.Yeah. All right. Well, listen, have a great weekend and hopefully everybody starts thinking and questioning.Well, we're in the inside. All right. Exactly.Thanks, Scott. Have a great one.