Hartford Business Journal

14 Hartford Business Journal • April 8, 2019 • www.HartfordBusiness.com By Matt Pilon mpilon@hartfordbusiness.com O n a recent weekday at Gaylord Specialty Healthcare in Wall- ingford, over a dozen patients were work- ing with therapists in a sunlit room, strengthening their bodies with cutting-edge equipment that support- ed their weight as they walked. Gaylord's patients, who've suffered spinal cord and brain injuries, strokes, infections and other devastating ail- ments, are fighting a long, slow battle to return their lives to normalcy. Meanwhile, Gaylord itself — one of only two long-term acute-care hospi- tals in Connecticut, and a declining number nationwide — is fighting for its own future. Some economists say Gaylord and other niche hospitals like it, which provide weeks or even months of care for patients after they've been dis- charged from an intensive care unit or emergency room, are too costly to the healthcare system and ought to be phased out from Medicare, a crucial payer that doled out $4.5 billion to long-term care hospitals in 2017. Instead, some economists contend patients would be served just as well, and at far less a cost, if they stayed in a regular hospital longer and then transferred to a lower-cost setting, such as a skilled-nursing facility. Federal officials and private health insurers, too, are raising cost concerns about the industry, and beginning to restrict patient access to long-term care facilities, also known as LTCHs (pronounced "el-tack"). Unsurprisingly, the industry has been fighting back, issuing its own research to rebut critics. Gaylord Specialty Healthcare in particular has been on the front lines of the defense, lending its voice to the debate nationally. "LTCHs are important to a healthier, safer healthcare system and are an im- portant resource for our nation's sickest patients," said George Kyri- acou, Gaylord's former CEO, who remains in an ad- visory role at the hospital. "That's where we achieve results that can't be duplicated." Sonja LaBarbera, who succeeded Kyriacou as Gaylord CEO earlier this year, said Medicare is 50 percent of her hospital's business and the loss of that funding would be "devastating" and "catastrophic." She doesn't think it's likely Medi- care and Congress will wipe out LTCHs, but the pressure has grown in the past few years, putting the broader industry on its heels. Both Gaylord and its Connecticut peer, the Hospital for Special Care in New Britain, say they are in relatively good financial health and have been strategic about planning for the future, but recent headwinds have them concerned. Competition and cost There are a variety of facilities and settings available to patients when they leave the hospital but need ad- ditional care. Across the U.S. post-hospital care system, skilled-nursing facilities hold the largest market share, receiving 47 percent of patient discharges in 2017, according to Medicare. In Connecti- cut, skilled-nursing facilities are also the dominant player, with operators including Genesis HealthCare, Athena Health Care Systems and others. The second most common setting for discharged patients in need of further care was home health, at 32 percent. Meanwhile, LTCHs received just 3 percent of discharged patients in 2017, with the remainder going to hospice or inpatient rehab facilities. Because LTCHs provide more com- plex medical care than their competi- tors, their costs are also higher. For example, Medicare paid an average of $38,000 per LTCH inpatient case in 2017, while skilled-nursing facili- ties received approximately $18,000, according to the Medicare Payment Advisory Commission. That cost differential is at the crux What's a long-term acute-care hospital? As their names suggest, long-term acute-care hospitals, or LTCHs, care for chronically critically ill and medically complex patients who need many more days of treatment than a regular hospital can typically pro- vide. LTCH patients stay an average of 25 days or longer. Virtually all of them are transferred to LTCHs from traditional hospitals, like St. Francis Hospital and Medical Center or Hartford Hospital. LTCHs don't have emergency rooms or perform surgeries, but they do have advanced medical capabilities. For example, LTCHs' licenses require them to have higher doctor and nurse staffing requirements than their competi- tors, including skilled-nursing and inpatient-rehabilitation facilities. Value Proposition With their costs under fire, long-term care hospitals push back, pivot Sonja LaBarbera (right), CEO of Gaylord Specialty Healthcare in Wallingford, with her predecessor, George Kyriacou, who is helping defend against attacks on the broader long-term acute-care hospital industry. HBJ PHOTOS | STEVE LASCHEVER

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