Dr. Edward Chow, Health Commission President, and Members of the Health Commission

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1 San Francisco Department of Public Health Barbara A. Garcia, MPA Director of Health City and County of San Francisco Edwin M. Lee Mayor Office of Policy and Planning MEMORANDUM DATE: September 1, 2017 TO: THROUGH: THROUGH: FROM: RE: Dr. Edward Chow, Health Commission President, and Members of the Health Commission Barbara A. Garcia, MPA, Director of Health Colleen Chawla, Deputy Director of Health/Director of Policy & Planning Sneha Patil, Senior Health Program Planner, Office of Policy & Planning Proposition Q CPMC St. Luke s Skilled Nursing Facility Unit Closure This memo is a follow-up to the Health Commission s first Proposition Q hearing regarding the closure of CPMC St. Luke s Skilled Nursing and Subacute Unit held on August 15, Specifically, this memo provides additional information, as requested by the Commission, on the following topics: I. Skilled nursing bed rates and population projections; II. Medi-Cal reimbursement rates for skilled nursing facilities, including subacute care; III. Kindred facilities in San Francisco; and IV. San Francisco hospital discharges out-of-county I. SKILLED NURSING FACILITY BED RATE The closure of CPMC St. Luke s Skilled Nursing and Subacute Unit will result in an overall reduction of skilled nursing beds in San Francisco. In evaluating San Francisco s capacity for facility-based skilled nursing care, one measure that may be used is the current skilled nursing facility (SNF) bed rate. The federal Centers for Medicare & Medicaid Services publishes the Annual Nursing Home Data Compendium 1, which uses a SNF bed rate to compare the availability of SNF beds nationwide. The Compendium calculates the number of skilled nursing beds in proportion to the population of adults 65 and older, which is considered the population most likely to use skilled nursing beds. The SNF bed rate is calculated as follows: SNF Bed Rate = Number of skilled nursing beds Number of adults 65 and older per 1,000 1 CMS Annual Nursing Home Data Compendium, 2015:

2 The Compendium shows that Western states, including California, have the lowest SNF bed rates ( /1, population) compared to parts of the mid-west, which have the highest ( /1, population). Currently, San Francisco has a total of 2,439 skilled nursing beds and approximately 119,177 adults over 65, which means that there are 20 skilled nursing beds for every 1,000 adults 65 and older (Exhibit 1). Looking ahead to 2030, if San Francisco s bed supply remains the same and the city s population ages as projected by the California Department of Finance, and the number of residents 65 and older increases, the bed rate would decrease to 12 beds per 1,000 adults 65 and older. Exhibit 1: Skilled Nursing Facility Bed Rate, San Francisco and California County SNF Beds Population 65+ Population 65+ As % of Total Pop SNF Bed Rate (SNF Beds Per 1, Population) San Francisco , ,177 14% 20 2,439 (If number of SNF San Francisco 2030 beds remains 204,168 21% 12 constant) Source: American Community Survey Year Estimate, California Department of Finance Population Projections, 2016 If San Francisco wanted to maintain the current proportion of 20 beds per 1,000 adults 65 and older as the population ages, by 2030, the city would need an increase of 1,644 beds over the current supply. This projection is based on the following three assumptions: 1) San Francisco s population ages as projected, 2) the number of skilled nursing beds remains constant over the next 13 years, and 3) San Francisco wants to maintain its current bed rate. These assumptions are discussed in more detail below. Assumption 1: San Francisco s population ages as projected The California Department of Finance projects that San Francisco s population 65 and older will increase to 204,168 by This represents an increase of 84,991 persons from today (Exhibit 2). While the absolute size of this population is expected to continue growing, the rate of increase will begin to slow between 2020 and Exhibit 2. San Francisco Population Projections, Year Total Population 904, , ,738 1,015,352 1,047,902 Population , , , , ,427 % of Population % 19.16% 20.80% 22.46% 24.09% % Increase of Adults 65+ from Previous 5 Years 14.36% 12.66% 11.71% 10.68% 10.62% Source: California Department of Finance,

3 Population projections are updated yearly and use historical demographic data such as births, deaths, and migration patterns to project demographics into the future 2. The San Francisco Department of Public Health s Community Health Needs Assessment and the San Francisco Department of Aging and Adult Services both rely on the California Department of Finance data when estimating the growth of San Francisco s senior population. Assumption 2: The number of skilled nursing beds remains the same in the next 13 years Currently, San Francisco has a total of 2,439 beds. While there is no way to predict changes to the capacity of SNF beds in San Francisco, the San Francisco Department of Public Health is not currently aware of any new skilled nursing facilities being planned. Given the historic trend of declining skilled nursing beds in the city, the high cost of doing business and the high value of land in San Francisco, we have used a static estimate for this calculation. If the number of beds in San Francisco remains static while our population ages, the SNF bed rate per 1,000 adults 65 and older will decrease by 40 percent to 12 beds per 1,000 adults 65 and older. Assumption 3: San Francisco wants to maintain the current bed rate No indicators currently exist to specify the number of skilled nursing beds that should be available to meet population size. However, looking at a skilled nursing bed rate is one method to enable relative comparisons in policy and planning for skilled nursing facilities. 3 If San Francisco wanted to maintain a bed rate of 20 beds per 1,000 adults 65 and older as our city ages, the city would need an additional 1,644 SNF beds in As there is no literature about a city s recommended bed rate, the number 1,644 SNF beds is not meant to suggest that a bed rate of 20 is a standard or preferred rate, but rather illustrates the impact of a growing senior population. Currently, it is uncertain whether all adults needing skilled nursing care are able to access this level of care, particularly adults needing long-term custodial care. Challenges in accessing skilled nursing care will only continue to increase as San Francisco s population ages. As provided in the memo to the Commission on August 11, 2017, San Francisco s bed rate is similar to some Bay Area counties but lower than California s rate. And, as noted above, California s rate is lower than nearly every other state in the U.S. outside of those in the West. Other Bay Area counties bed rates range from 15 to 28 beds per 1,000 adults 65+. San Francisco s bed rate falls in the middle however, five out of eight Bay Area counties have bed rates that are similar to or below San Francisco s bed rate suggesting that the capacity of facilities in other Bay Area counties is also strained. 2 California Department of Finance Population Projections: 3 The Journal of Nursing Home Research: 3

4 Exhibit 3. Bay Area and California Skilled Nursing Bed Rate per 1,000 Adults 65+ County Number of Facilities SNF Beds % Population 65+ Beds Per 1, Population Alameda 68 5,352 12% 28 Santa Clara 52 5,148 12% 23 Marin 14 1,038 19% 21 Sonoma 20 1,660 16% 21 San Francisco 21 2,439 14% 20 Contra Costa 32 3,000 14% 20 Napa % 16 Solano % 15 San Mateo 13 1,576 14% 15 California 2, ,608 12% 24 Source: Office of Statewide Health Planning and Development, 2015; American Community Survey year estimates II. SKILLED NURSING FACILITY REIMBURSEMENT Patients who stay in skilled nursing facilities are typically covered by Medicare, Medi-Cal, or a combination of Medicare and Medi-Cal. Health insurance plays an important part in patient access to care by determining how long a patient is eligible to receive services before they must pay out-of-pocket. Medicare covers short stays (up to 100 days) in a skilled nursing facility while Medi-Cal provides coverage for the entire duration of a patient s stay in a skilled nursing facility. Exhibit 4. Insurance Coverage of Skilled Nursing Facility Stays Level of Care Medicare Medi-Cal Private Health Plan SNF subacute Days days Entire stay is covered Varies SNF short-term care SNF long-term care Days days Entire stay is covered Varies No coverage Entire stay is covered No coverage In general, Medi-Cal reimbursement rates for skilled nursing care are lower than Medicare reimbursement rates (Exhibit 5). Medi-Cal subacute reimbursement rates are higher than Medi-Cal general skilled nursing rates given the higher levels of staffing and care provided to subacute patients. 4

5 Exhibit 5. Estimated Skilled Nursing Facility Daily Reimbursement Rates 4 General Skilled Nursing Subacute Care Setting Medi-Cal Medicare Hospital-Based Skilled Nursing Bed ~$300-$500/day Freestanding Skilled Nursing Bed ~$200-$300/day ~$500-$900/day Hospital-Based Subacute Skilled Nursing ~$890-$933/day Bed Freestanding Subacute Skilled Nursing Bed ~$400-$600/day >$900/day Source: California Department of Health Care Services Medicare reimburses hospital-based and freestanding facilities full cost for providing SNF care, with the exception of patient coinsurance for days Payment is determined by number of days, minutes of therapy and the level of services provided. Skilled nursing facilities submit data on patient clinical status and services during first several days of admission, and facilities are paid by a per diem rate by Medicare based on resource use. This data determines the patient s categorization into a resource use group with an associated daily payment rate. Overall, reimbursement for patients receiving rehabilitation services is higher than that for medically complex patients. III. KINDRED FACILITIES IN SAN FRANCISCO Kindred Healthcare owns five freestanding skilled nursing facilities and provides 598 SNF beds in San Francisco. As of September 1 st, 2017 Kindred s five facilities will be run by three new operators (Exhibit 6). Exhibit 6. Kindred Skilled Nursing Facility Transitions to New Ownership Facility Beds Patient Payer Source on December 31 st, 2015 Kindred Victorian Medi-Cal -8 Medicare New Operator Providence Group Kindred 19 th Avenue Medi-Cal -9 Medicare -1 Managed Care -1 Self-Pay -5 Other Kindred Golden Gate Medi-Cal -8 Medicare -1 Managed Care -3 Self-Pay Kindred Tunnell Medi-Cal -30 Medicare -14 Managed Care -15 Private Insurance -4 self-pay -4 Other Kindred Lawton Medicare, -16 Managed Care - 5 self-pay Source: California Office of Statewide Health Planning and Health Development, 2015 Aspen Generations 4 Department of Health Care Services Long-Term Care Reimbursement: 5

6 On December 31 st, patients (71 percent) of the 553 patients in San Francisco Kindred facilities were covered by Medi-Cal Fee-for-Service. At this time, each operator is planning to maintain the current number of beds at each facility. Some operators have indicated that they plan to increase the proportion of Medicare patients, reflecting the industry-wide trend discussed in the Health Commission memo dated August 11, IV. DISCHARGES TO OUT-OF-COUNTY SKILLED NURSING FACILITES The 2016 Post-Acute Care Project Report found that San Francisco hospitals make approximately 7,000 discharges per year to skilled nursing facilities for San Francisco residents. However, information about the location of these skilled nursing facilities is not publicly available and is not reported to the Office of Statewide Health Planning and Development. The San Francisco Department of Public Health is requesting discharge data about placement in out-ofcounty skilled nursing facilities from all San Francisco hospitals. Due to the time required for each hospital to provide this information, this data will not be available for the Commission s hearing on September 5 th. The Department of Public Health will provide this information to the Commission at a later date this fall. In Fiscal Year 2016/2017 Zuckerberg San Francisco General (ZSFG) made 1,118 discharges to skilled nursing facilities. Of all discharges made to skilled nursing facilities outside of Laguna Honda Hospital for San Francisco residents, 6 percent of discharges were made to facilities out-of-county. Additional data is provided below. In Fiscal Year 2016/2017 ZSFG made: 291 discharges to Laguna Honda Hospital 827 discharges to other SNFs of these discharges (83 percent) were San Francisco residents o 746 (90 percent) discharges to in-county SNFs o 81 (10 percent) discharges to out-of-county SNFs. Of the 81 patients discharged from ZSFG to out-of-county SNFs, 40 were San Francisco residents. This equates to 6 percent of all San Francisco resident discharges to skilled nursing facilities from ZSFG. V. POST-ACUTE CARE COLLABORATIVE In connection to the planned closure of St. Luke s subacute unit, the Post-Acute Care Collaborative (PACC) held a special meeting on August 23, 2017 to engage PACC members in a planning discussion regarding San Francisco s future subacute care needs. The PACC Co-Chairs, Kelly Hiramoto Director of Transitions at the San Francisco Department of Public Health and Daniel Ruth, Chief Executive Officer of the Jewish Home have submitted a letter to the Health Commission describing the PACC s positional statement and shortterm options to address subacute care. VI. ADDITIONAL INFORMATION REQUESTED The Commission has also requested information regarding CPMC s licensed and staff beds present day and looking ahead to the future in CPMC will be including this information in their presentation to the Commission on September 5,