LTC Bullet: LTC Allegory Strikes a Chord with Providers

Tuesday, May 27, 2003


LTC Comment: A provider-side editor ran a condensed version of our allegory of "The Elephant, The Blind Men, and Long-Term Care" by his readers and received some "Amen's." LTC insurers and providers share common goals and should communicate and cooperate more. More after the ***news.***

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*** Isn't it time to cut nursing homes a break? Here's more evidence that the recommendation in our LTC Comment below is desperately needed: "Market Outlook Worsens for Nursing Facilities, CMS Finds. BALTIMORE, MD -- 05/22/2003 -- (Eli Digital) The Centers for Medicare & Medicaid Services has examined the market for nursing facilities and has diagnosed serious problems. In an update released this week, CMS analysts found that investor sentiment is mostly negative due to uncertainties over Medicare and Medicaid rates and concerns about the rising cost of liability insurance. Companies' profit margins declined after the October 2002 sunset of $1 billion in temporary Medicare rate add-ons, with three large chains filing for bankruptcy in the past six months. Furthermore, access to capital remains very limited for the sector and especially difficult for nonprofit facilities. American Health Care Association President and CEO Dr. Charles Roadman notes that the report's warning that the effects of government spending reductions may not yet be fully realized 'underscores the fact [that] seniors' access to quality long-term care is increasingly jeopardized.' To view a copy of the report in PDF format, click here. " Source: LTC Daily Analysis Briefs, May 22, 2003, prepared by for,

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LTC Comment: Service delivery and financing are the two key elements of the long-term care industry. Providers cannot be expected to deliver high-quality care without adequate reimbursement. Yet government pays for most long-term care at often less than the cost of providing the care. When providers are losing money on every patient, they can't make up for it in volume! Hence, LTC providers desperately need a reliable source of market-rate private payers. That is exactly what LTC insurers are in the business of trying to provide. Here's what we propose: LTC providers and insurers should combine their lobbying resources and push for public policy to target Medicaid to the genuinely needy, unleash the tremendous pent up potential of home equity to generate immediate private-pay LTC financing, and use the Medicaid savings to fund tax incentives for LTC insurance that will guarantee more private LTC financing in the future. This tactic is simple in concept and eminently doable, especially now that CMS' Tom Scully is tuned into the importance of home equity conversion (HEC) for funding long-term care. For proof, watch Scully's speech at a recent conference emphasizing HEC: go to the following URL, scroll down to "Perspectives from the CMS," and click on "video:" . We can save long-term care before it's too late, but only if LTC providers and insurers lift their sights from short-term survival long-enough to focus some of their efforts on changing the perverse incentives in public policy that cause excessive dependency on publicly financed long-term care. Otherwise, LTC providers and insurers will both continue sliding down the slippery slope of the past few years.

Editorial Director John O'Connor published the following column in the May 2 issue of McKnight's Long-Term Care News. The piece is based on our March 12, 2003 LTC Bullet titled "The Elephant, The Blind Men and Long-Term Care." You can read the full-length original at . McKnight's is one of the premier trade journals of the long-term care provider industry. To learn more, go to . We encourage LTC Bullets readers to subscribe to the excellent McKnight's Long-Term Care News publication as a way to follow the challenges and rapid changes facing America's long-term care service delivery system. Annual subscriptions are $44.95. To subscribe, call (800) 558-1703.

Here's O'Connor's column:

What elephant? Feels like a tree to me. Many LTC groups content to push own agenda, while ignoring other views.

Pull quote: "You can't blame players for seeing long-term care through their lenses. But self-interest should not ignore the bigger picture."

David Brinkley once wrote a book called "Everyone Is Entitled to My Opinion." The title aptly describes the views many long-term care stakeholders seem to embrace.

Steve Moses, president of the Center for Long-Term Care Financing, revealed the prevalence of this dangerous stance in a recent essay ("The Elephant, the Blind Men and Long-Term Care") that builds on the parable of three blind men. They touch different parts of an elephant - and wrongly conclude what they are dealing with.

Moses notes that various long-term care players are similarly inadequate in their assessments:

To the government, long-term care appears as a gigantic fiscal problem.

To the public, long-term care generally remains a non-issue, because government usually pays.

To nursing homes, long-term care is a battle for higher government reimbursements.

To senior advocates, long-term care is a government benefit-seeking enterprise.

To financiers, long-term care is a good (or lately, bad) investment choice.

Finally, to insurers, long-term care is a golden opportunity tempered by disappointing results due to competition from free or subsidized government-paid care.

You can't blame players for seeing long-term care through their lenses. But narrow self-interest should not ignore the bigger picture, or the need to cooperate for mutual benefit.

Working together helps unify and strengthen us, and it is at the heart of many undertakings that have made us a great nation. We have historically rallied together when hard work needed to be done: whether sending troops into battle, tackling life-threatening ailments, or constructing highways to connect us better.

But most long-term care players do not yet appear to have a sense of shared purpose. And that will be a needed prerequisite if we are going to focus our efforts on improving long-term care.

We have much to learn about the big picture. Perhaps the proverbial blind men can help open our eyes.

Tagline: To view Steve Moses' essay, visit .