Rehab finds a good fit by developing a long-term acute care hospital

Patients go from ICU or cardiac care unit to designated floor

Just as home care agencies had to adapt to a changing environment or go out of business in recent years, rehab facilities will have to do the same in the health care world that exists post-Balanced Budget Act (BBA) of 1997. It’s time to form innovative business alliances and move into new service areas to follow the flow of Medicare reimbursement dollars. At least that’s what one 92-year-old rehab hospital has done by starting a long-term acute care hospital (LTACH) within a separate acute care hospital in its city.

The LTACH, while not a new concept, became a much more appealing health care business after the BBA devastated subacute care units and home health agencies. When Medicare reimbursement became less available for subacute and home health care, acute care hospitals were left with the problem of finding a place to refer patients who need long-term acute care. "There has been a tremendous amount of interest in the last couple of years by not-for-profit hospitals looking to discharge their acute care, their intensive care, and their cardiac care patients faster," explains Sally Gammon, president and chief executive officer of Good Shep herd, which owns Good Shepherd Rehab Hospital in Allentown, PA. Good Shepherd owns inpatient and outpatient rehab facilities, as well as several other health care businesses, all in Pennsylvania.

What is rehab’s role?

Acute care hospitals cannot discharge those patients unless there is a suitable referral option, Gammon notes. So where does a rehab facility fit into this picture?

The Health Care Financing Administration in Baltimore established regulations for LTACHs that basically prohibit acute care hospitals from owning or controlling an LTACH within its own facility. The LTACH may be established on the acute care hospital’s property, and it may use some of the hospital’s services, but it has to be owned by a separate business. Because rehab hospitals already have much of the staff and infrastructure necessary to operate an LTACH, they are a natural fit to own one, Gammon and other experts say.

"For rehab facilities — and specifically those who provide a rehab continuum of care — it provides another level of care for patients in the post-acute continuum," says Linda Dean, owner and president of Deadon, a health care consulting company in Irving, TX. Dean is a partner in Healthcare Plus Management of Pennsylvania, which was hired by Good Shepherd to start up and provide oversight to the LTACH.

The rehab industry is not what it used to be: Rehab patients no longer stay for months after catastrophic illnesses, Dean notes. "Most people who stay for longer periods of time are on ventilators and have complex needs and are not ready for rehab services," she says.

LTACHs fill that niche between acute care and rehab care because those facilities help patients recover in an acute care setting while they still receive some rehab services. LTACHs provide care to patients who are chronically ill or are potential candidates for rehabilitation. Those patients are too sick to be housed in a subacute facility, and they are expected to need acute care for more than three weeks. The LTACH patients are discharged and sent to a rehab facility when they are ready for several hours of daily rehab therapy, Dean says.

Good Shepherd first considered forming an LTACH business about two years ago when several local acute care hospitals approached the health care system and asked if Good Shepherd might be interested in starting an LTACH inside its hospitals. After conducting research and finding an expert to start the LTACH, Good Shepherd formed Good Shepherd Specialty Hospital-Allen-town, which has leased a floor and is licensed for 32 beds within Lehigh Valley Hospital of Allen town, PA. Lehigh is the area’s leading trauma center with about 150 intensive care unit beds.

Lehigh administrators had done their own analysis of the ICU length of stay and decided there was a large number of patients with greater than 20 days in ICU. LTACH patients must have an average length of stay of 25 days or more.

When patients stay for weeks in ICU beds, it is more challenging to bring in new patients, including surgery patients. "We never denied a patient in our hospital because of these beds, but it might have taken a little bit longer to get them in," says Terry Capuano, RN, MSN, senior vice president for clinical services at Lehigh Valley Hospital.

Having an LTACH available for referrals allows Lehigh to use its critical care beds in a more efficient way by reducing the length of stay in intensive care, Capuano adds. "And it also places patients in an environment in which their needs can be met because our focus in critical care is on stabilizing patients, and once we stabilize, the focus needs to be on rehabilitating, and that’s what an LTACH can do," she says.

Before the LTACH opened earlier this year, Lehigh Valley Hospital occasionally had peak census times when the critical care beds were full. The hospital had to make accommodations to take care of new patients.

"We would open overflow areas and staff them," Capuano says. "With the LTACH, we’ll probably not have the need to open up overflow areas as frequently as we have had to before."

While Good Shepherd didn’t start the LTACH solely to make money, Gammon says, it estimates the LTACH will become profitable by its second year of business. The start-up costs include $1.2 million for the architectural design, renovations, and upgrades on the LTACH’s floor and about $400,000 for furniture and equipment.

The leased floor had been a medical-surgical unit within Lehigh Valley Hospital. It was no longer needed because the declining length of stay for surgery patients has resulted in a surplus of beds for patients who don’t have critical care needs, Capuano says.

Good Shepherd administrators, who plan to open more LTACHs in their area, decided to offer this level of care for two reasons, Gammon says. (See story on how to form an LTACH, at right.) "One, we believe it is the first step in the post-acute care process, so as soon as a patient is ready to be discharged from an acute care bed, we start to look at what the patient’s recovery requirements are," she says.

Secondly, it’s a business strategy that will enable Good Shepherd to maintain a healthy relationship with acute care hospitals that discharge to its rehab hospitals and other post-acute care facilities, Gammon adds.

The LTACH, which opened earlier this year, admits very sick patients who are within the first stages of post-acute care management. (For details on LTACH levels of care, see p. 44.) LTACHs could become yet another level of care along the health care continuum, Gammon explains. "Our post-acute care system is such that it will take people right when they’re ready to start recovery and a program to get back into life," she adds. "We have different levels of care so we can put people with different levels of medical complexity in the facility where they can get the most benefit."