LTC Bullet: Triathlon Conclusions and Recommendations

Friday August 24, 2001


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As promised in a recent LTC Bullet (Let the Race Begin, August 3, 2001), what follows are the Conclusions and Recommendations from the Center for Long-Term Care Financing's recent LTC Triathlon study. (You can find the full report online at This study, published December 7, 2001, concluded that more communication, cooperation and coordination between the private-sector financiers, providers and insurers of long-term care would benefit all three of these components and also redound to the benefit of their mutual clients.

As you will see below, the report recommended that top-level representatives of these groups meet to discuss their differences and common interests. On August 20, 2001, coincident with the 15th Annual Private Long-Term Care Insurance Conference in Miami, FL, the Center for Long-Term Care Financing convened the first of a series of LTC Summit Conferences. These "Summits" are invitation-only, executive-level, small-group, three-hour intensive discussion sessions bringing together America's leading financiers, providers and insurers of long-term care. We'll report to you on this first meeting in an LTC Bullet next month. Then, reports on future Summit meetings will follow after they occur in October (coincident with the American Health Care Association's annual convention) and in February, 2002 (coincident with the Assisted Living Federation of America's CEO Forum). Stay tuned.

Triathlon Conclusions and Recommendations

We are now prepared to answer the questions that this study set out to address. First: How do the private sector stakeholders (Financiers, Providers and Insurers) account for the country's problems of long-term care service delivery and financing? With very few exceptions, our respondents laid the primary responsibility for nursing home bankruptcies and quality of care deficiencies upon Medicaid and Medicare. These programs pay too little and expect too much, they say. Furthermore, public financing has forced providers to serve the government first instead of consumers to the detriment of all three. Several respondents acknowledged, however, that some providers got into trouble primarily because of poor management. Either, they tried to exploit Medicare excessively, as in the case of some nursing homes and home health care agencies, or they seduced investors with unrealistic and unrealized promises, as in the case of some assisted living facilities. All agree, however, that more private financing and less dependency on Medicaid, Medicare or other public financing sources would be a boon to consumers and providers. The question remains, how can the goal of increased private financing be achieved when the tendency to depend on public financing remains so strong?

Second, what do the Triathlon stakeholders know about each other's businesses? The answer is "very little." Specifically, most Insurers had little knowledge of the Providers' travails and practically no understanding of the causes. Conversely, Financiers and Providers knew little about private long-term care insurance or the conditions that inhibit its sale. Many representatives of each of the three groups acknowledged the value and importance of understanding each other's businesses better. Unfortunately, the unique exigencies and competitive interests of each business tend to pull them apart into separate "silos." The lack of communication between these silos solidifies and exacerbates ignorance and misunderstanding, which in turn discourage further attempts at communication. This cycle is hard to break, because the three groups perceive their interests so differently.

Third, how do the Financiers, Providers and Insurers perceive their interests and what kinds of misunderstanding or distrust pull them apart? In general, respondents focused on their differences, not their common interests. All three groups said they have "different, non-intersecting stakeholders," "separate profit centers," and no "long-term vision" because they are "constantly responding to crisis and change in their own arenas of interest." No one thinks beyond the "initial deal" or "outside the box," were common statements. Each group feels the others do not understand their business, yet they often acknowledge they themselves do not understand the others' businesses.

The common evaluation of financiers is that they care about little besides short-term profitability and "running the numbers," so they have abandoned long-term care in spite of the demographic imperative to repair that market. Similarly, providers are seen to be under such immediate financial duress that they remain focused on the past—fighting for more Medicaid and Medicare reimbursement and against excessive government regulation—instead of looking to the future by finding new sources of full-pay private financing for a huge, new, on-coming generation of residents and patients. Insurers, who should be showing the others why and how long-term care insurance can answer their needs now and in the future, show little interest in or understanding of the service delivery system, offer little more than "pie in sky by and by," and remain on "cruise control." That is how the three private sector groups see each other.

Consequently, mistrust and distrust abound. Once burned, financiers are twice cautious about any claims or promises coming from the provider community. Neither of the other groups thinks the insurers have offered products yet, or are serious about designing ones in the future, that could provide them relief in the short-, near-, or even long-terms. Insurers, on the other hand, figure that providers (directly) and financiers (indirectly) only want to find some new deep pockets to replace the government's recently padlocked treasure chest. Thus, circumstances weigh against communication now and cooperation in the future between these groups.

Fourth, are their basic interests primarily and fundamentally in conflict or is there really an underlying basis for agreement? The differences and tensions described above between these groups are real and deep. Nevertheless, most of our respondents shared numerous common opinions and interests. They tend to see government as the problem, not the solution. They favor private financing, including long-term care insurance, if properly designed and marketed. They would like to see scarce public resources targeted more narrowly to the needy through effective means testing. They would like to see quality of care ensured by competitive market pressures instead of heavy government regulation. Some strongly favor, others vehemently oppose, publicly financed long-term care vouchers, but nearly all want to see consumers re-empowered to demand choice, access, and quality. They believe that conditions in the long-term care financial markets and the service delivery system have reached an unprecedented nadir. They sense, however, that because of the current crisis, the stage is set for creative, or even radical, new approaches to long-term care to be seriously considered. Thus, despite their differences, the Financiers, Providers and Insurers we interviewed recognized that they share even more basic common interests.

Fifth, could these groups benefit from more communication and how might cooperation among them occur? With very few exceptions, respondents thought more communication was a very good idea and that cooperation, although extremely challenging and difficult, was a highly worthy goal. To get progress started toward these objectives, they suggested that each group support more conferences, publications, and speeches that bridge between all three sectors. They said they all need to develop and support more "translators" who understand both the conflicting superficial interests and the underlying common interests of all three groups and can therefore foster more understanding and cooperation between them. Many warned, however, against pollyannaish expectations. They urged the need to keep the focus of any initiative always on the self-interest of each individual industry, company, and consumer. Only if every sector of the long-term care market stands to win from change will change be able to overcome the inertia of entrenched interests that thrive on the status quo.

Finally, then, is it possible for long-term care financiers, providers and insurers to work together more effectively toward their common interests and the interests of their common clients? That is the big question that remains to be answered and that cries out to be addressed. This study only identified and elucidated the problem; it does not contain a solution. To find a solution, the financiers, providers and insurers of long-term care will have to confer, compromise, plan, and mobilize.

They should …

* Come together in meetings that cross-cut their areas of specialization,

* Pursue a better understanding of each other's businesses and challenges,

* Formally identify and promulgate their common perspective on long-term care problems,

* Develop a compelling public policy proposal that would enhance their business interests and improve long-term care for everyone, and

* Join forces and mobilize to encourage private financing of long-term care as a means to save scarce public resources for the needy.

To help get this process started, the Center for Long-Term Care Financing hopes to sponsor an "LTC Summit" conference in 2001 at which leading financiers, providers and insurers can communicate with each other and recommend coalition-building efforts to be led by their respective trade associations. Whether or not we convene the "LTC Summit" will depend on the level of interest and support expressed by all three components of the LTC Triathlon. Little progress can be made without a groundswell of interest in working together, which this report may help to build. For this reason, we urge everyone who reads this study and sees merit in its findings to help the Center for Long-Term Care Financing distribute the report to as many readers as possible among the financiers, providers and insurers of long-term care.

[Note: As described in the introduction above, the Center for LTC Financing is convening a series of mini-"LTC Summits" over the next six months to gauge interest in the Triathlon study’s recommendations and to determine the feasibility of a major "LTC Summit" in the future.]