Mark Parkinson

Scott Tittle

I'd like to welcome to our most recent episode of Versed podcast my former boss, longtime mentor, and even longer time friend and AHCA/NCAL's CEO and President Mark Parkinson. Mark, welcome to our podcast.

Mark Parkinson

Hey, thanks Scott. Great to be here. I never felt like I was your boss, but it was great to work together.

Scott

Well, those were really interesting times and I really appreciate the opportunity to come out to DC and work with you and the team on behalf of the sector. And we're gonna talk about some of those things today we got a chance to work on. But I really wanna thank you for being here.

Mark

Sure.

Scott

And we don't have a lot of time today. I'd like to use these episodes pretty short. So I wanna kind of jump right in, but I do wanna ask you a question just to start off with our listeners. I've never asked you this, so I've just, I'll be curious for me personally, but also for our listeners. You know, we're coming up on the three year anniversary of Covid March of 2023 here. And I want you to think back to that weekend in March of 2020, maybe a couple days before, when the country started, realize that Covid was gonna be a significant issue for our country. But also from your perspective, where were you exactly when you realized this was gonna be a significant issue for our sector?

Mark

I know exactly where I was. I was in Las Vegas. We were hosting our regional multi council, which are people that owned between 10 and 40 buildings. And Robin Dale, who at that time was our state exec in Washington State, called in to tell us what had happened at Kirkland and how challenging it was. And of course I knew about Covid, we all did. But it was that moment in hearing him discuss what had happened in the facility and really telling us what a great facility Kirkland was. Five star facility with a really great track record, great management, et cetera. That's when it hit me, that this could end up in what I thought at the time might be hundreds of buildings. It ended up being in, you know, every building in the country. But it was really that moment in Vegas. And that was the last in-person meeting we had for like a year and a half.

Scott

So that was probably during the end of that week, kind of that Thursday, Friday before that weekend. And then

Mark

It was, it was like the last week of February, maybe the first week of March of 2020.

Scott

Yeah. Interesting to think back to those times for me, it was a couple days later you may remember NCAL hosts an in-house general counsel roundtable every year at the HLA spring meeting, which is focused all on long-term care in the law. And I was on that Monday morning was in a meeting with all of our members at the time and the general counsels of the largest assisted living operators in the country, many of whom were from the Pacific Northwest and Marcus fellow lawyers. This was just a fascinating discussion among really smart people that were on the operational side, the legal side, trying to issue spot covid going forward and to be really fascinating to get that group of people back together again to think about where we were then early questions like when you have a positive case, who do you have to notify?

Scott

What are local and public health officials saying about this? Do you have to quarantine, wear CMS on? So really some fascinating legal questions at the time, but I've always wanted to ask you that question exactly where you were and, and thinking back. So let's just jump forward kind of where we are today. I mean, a lot of the country as we know, has moved on to our sector, you know, certainly not impacted the same way it has been over covid, but still very much present in our buildings. Where are we in terms of covid positivity rates, mortality, and the all important question of sniff census?

Mark

Sure. There's still a ton of covid out there. If you look at the graphs, there's almost as much covid in nursing homes and in the general population as there was in the spring of 2020 when we thought we were at our worst. We weren't at our worst. Of course, we peaked out towards the end of 2020 in terms of mortality, in terms of total cases. We just peaked out recently with the omnicon variant. But there's still a lot of Covid out there. The really good news is that very few people are going to the hospital and even fewer are dying. So the mortality rates are basically at all time lows. The hospitalization rates are basically at all time lows. Unfortunately for the sector, the business challenges continue and, and it's twofold. It's the census and its workforce. On the census side, we're about 60% back in recovery in our pre pandemic census.

But their recovery is really slow. At the pace that we were at in 2022, it will take all of 2023 and maybe even a little bit into 2024 to get back to pre-pandemic census. On the workforce side, it's hard to know if we'll ever get back where we were, because this has never happened before. You know, we had 1.5 million workers in buildings before the pandemic. We have 210,000 less workers right now. Every other part of the healthcare spectrum has recovered its workforce. There's more people working in doctor's offices, in home health, in hospice, and in hospitals today than there was before the pandemic, but 210,000 less in nursing homes. So we don't know, it has recovered a little bit. We were at one point down 240,000 workers, but I think the loss of workers is the longest term challenge that we'll have coming out of this.

Scott

Yeah. And we're gonna talk about President Biden's minimum staffing ratio proposal here in a little bit, which certainly has impacted all by all those numbers. But again, for our listeners, I kinda want it interesting to have a bookend discussion about where we were three years ago and where we are today. And great to hear you think that there was some census recovery on the sniff side, albeit slower than everybody would hope and expect. But Mark, let's just, we got, just got through the midterm elections and, and and the, and really the follow on the elections, which is the speaker election on the house. Kinda where are we in the leadership of the House and Senate and what are your thoughts about any challenges or opportunities for the sector on Capitol Hill this year?

Mark

Yeah, I think the sector has never been in better shape with our relationships on Capitol Hill, on both the Republican and Democratic side Senate and House. We've got people that have spent time in nursing homes that have toured our buildings, that have had long relationships with members and providers. And that, I think, get it. I think we're in good shape on the hill. And because there's a divided government now with the, ours having the house and the Ds having the Senate, very little will happen on Capitol Hill. They'll be fortunate if they can just pass the bills to keep the government open, let alone, you know, all the other things that it would be either good or bad for them to do. So I don't think very much will happen up on the hill for the next couple of years. We'll get through the 2024 election, see who the president is, see who controls the house and the Senate, and then go from there.

Very little on the hill. But there will be a ton of activity from the administration. What presidents do, what governors do when they can no longer get things done in their legislative bodies is they start trying to do everything administratively.

Mark

That's what the Biden administration is doing. They kind of forget that there are three branches of government and they just kind of run off and try to do everything on their own. The minimum staffing requirements a perfect example. They tried to get it done through Congress, they couldn't. So they said, okay, we'll just do it on our own. So our challenge in DC is not on the hill. Our challenges with the administration.

Scott

Yeah. So I wanna ask you about the minimum staff show in just a minute cause I know you've got an update on that. But one thought I know our listeners are certainly an investment side wanna know is in any additional relief coming from Capitol Hill, it sounds like likely not. I mean, we've gotten so much money as the sector through the provider relief fund and a lot of money is at the state level now. Is that right? So, so say little about where are some opportunities still for the sector in, in pulling down some federal estate stimulus money?

Mark

You know, we feel like we have three chances. So the three things that we're working on for 2023 are first to keep the public health emergency going as long as possible. There are still about 10 states that have Medicaid add-ons that are tied to extension of the PHE. It's now extended till April 11th. I think most folks in town think that that's it. We're gonna keep lobbying to try to keep it going longer. The, the longer it goes, the better for the sector. The second is our Medicare rate, a core function of AHCA is to make sure that we get a market basket increase every year. That rule will come out around May one. We feel confident that we're in good shape. There are people, you know, trying to shoot at us and asking for Medicare reductions. We don't, we think we can fight that often.

Mark

There'll be a Medicare increase again this year. And then thirdly, it's our work with the states, as you indicated, it's the states that by and large are still flush with cash. Some of them have money that they have to spend on Covid or else it's gonna go back to the federal government. So we've been working closer than ever with our 50 state execs to try to access those funds. It's been hit and miss, but in most states there's been some pretty good relief provided, and we're really doubling down our efforts in 2023 in the states.

Scott

Yeah, and we've highlighted some of our past interview guests. Some of the work has been done in the states, Wisconsin, Pennsylvania, and say the least.

Mark

Been super.

Scott

Yeah, on the public health.

Mark

Really a lot of great wins. Just, just about everywhere. Unfortunately, a handful of states not yet.

Scott

Yeah, on the public health emergency, I've heard you say that that is one of the most significant programs or really the most significant efforts that the federal government could continue forward to really help the sector not only financially but also through regulatory relief and three day stay.

Mark

Exactly.

Scott

Any work that could be done from the advocacy that we could help with to extend it one more time or through or is this likely it.

Mark

Well, we've done, you know, that's been our philosophy every quarter. So, you know, there are people that thought this would just, this would end, you know, in the middle of last year. And so every quarter we've been saying, just one more quarter, let's keep pushing it, blah, blah, blah. The administration will make this decision. They said 60 days in advance of April 11th. So the really key date is February 11th. Any contact to CMS and HHS just saying, hey, keep this thing going is helpful. They're gonna make the decision primarily based upon the data, how much covid is out there in the general population. But we will continue to advocate and we've had it, you know, we've continued to have ads on the air in DC encouraging them to continue the public health emergency. The hospitals agreed with us on this. So we've been working with those associations and we'll push it really hard until February 11th and then we'll find out then if they'll extend it anymore. Again, almost a hundred percent of the consultants in DC think this thing ends in April. But, because of the amount of money involved for our providers, we're continuing to push it.

Scott

I've certainly read too, a lot of state Medicaid directors just recognize they're not ready either for all these unwinding plans. I mean, there's some significant number that you put out in the survey. 20-25 states just indicate they're not ready to unwind the PHE just yet, so. Hopefully there's more work to be done there. Mark, we've kind of talked a little bit about the minimum staffing ratio proposal. And you've got an update for our listeners. Maybe share a little bit about what you know now and what maybe we could expect to be released here sometime soon.

Mark

What we now know is that it's gonna be released with our payment rule. So it will come out around May 1. We haven't been clear on the timing before. It's probably the single worst public policy idea that I've ever seen in my very long life in public policy. We just don't have the workers and even if the workers were out there, we don't have the funding to pay for them. Despite that, the administration seems very committed to doing this. There's an echo chamber that they are surrounded by of advocates who don't understand what we do. Other people that want nursing homes closed, various groups that have done studies on the sector and they're just listening and talking to each other. What we have to make sure is that they hear from other voices. So we are initiating a campaign right now to encourage people to contact CMS and HHS before the rule comes out. We hope to generate thousands of emails and, and letters before the rule comes out. We'll be pushing it after the rule comes out. We'll be pushing it after the final rule, if the rule is not good. So it's, it's all hands on deck, but it's a policy. It just, it cannot work. The workers aren't there.

Scott

Yeah. And just to quote a couple numbers, I know you put out your association just for the holidays, almost just shy of 200,000 additional staff members would likely be needed on the front lines to comply with the rule. 94% of those surveyed indicate they could not comply with the rule going forward. And their numbers indicate that could be a total cost about 11 billion additional dollars.

Mark

$11 billion a year. So who's gonna pay for that? We'd have to come up with 50,000 additional RNs, which is just absurd. They're just not there. Yeah. It doesn't make any sense, but, you know, it looks like the administration's forging ahead, so we're gonna have to fight it.

Scott

Well, I know our listeners are clients or sponsors, our referral partners all stand ready to help. However we can mark. So we'll look forward to getting information from the association and really hitting all of our contacts in DC as best we can to help with the advocacy.

Mark, I wanna turn to a couple things kinda looking forward. You know, we've talked about some pretty tough challenges of the sector. I know you're an eternal optimist and have a real bright thought about where we're all going here. You, like me, share a real affinity for Winston Churchill. I love the quote used about Churchill, thinking about how we can write our own history, maybe share that quote and why you think it's applicable for operators and owners right now. How they could use it to really carve a way through all this going forward.

Mark

Well I think Churchill was asked if he was worried about how history would treat him and he said, I don't worry about that because I intend to write history. I intend to write my own history. And I think that's what providers have to do. We can't just sit around and wait and hope that things get better. We have to take the bull by the horns and write our own history. And so, what we see aggressive, innovative providers doing is really developing a population health management strategy, which I think is a really good way to control your own future. Getting really good at taking care of residents and then figuring out a way to get paid to do it is a really important piece of this. We also see folks, particularly because of the workforce crisis, doubling down on their employee engagement and satisfaction programs.

Mark

If you look at facilities and operators that are doing well, it's people that have really focused on that. As difficult as things are on the business side, 31% of buildings are now back at or above pre pandemic census. And the exact same number, 31% of buildings according to the PBJ data are using no agency. So it is very, very hard. But, if we sit, you know, I'd love something, I think it's in seven habits where they talk about when, when things are bad. You know, if you're not a successful person, you look out the window to see who you can blame. But what highly successful people do is they look in the mirror and at themselves and try to figure out is there anything that they can do? And I think this is a time for us to look in the mirror, figure out what can we do in our operations to be one of those 31% that are at or above pre pandemic census and that aren't using agency. And it's not easy and it's not possible in many markets. I mean, if you're in a rural area and there just aren't people there, you know, you can't be a part of that group. But there are things that providers can

Scott

And just to highlight a little bit of the work that AHCA NCAL has done to lead on this, I know you've created a whole team internally to help operators think through how to walk down the process of creating a population health management program where there's ISNFF or DSNFF, think about networks and the likes. So I know you've got a whole team thinking about how to help operators be successful here.

Mark

We want every member, whether they have one building or 200, to be able to have the opportunity to participate in population health management. So we've hired what I think is an all-star team of people that our members can call and for free, get advice and information about what their options are.

Scott

Yeah. And then just for our listeners, especially those small operators, you know, our mutual friend Tom Cobol, who's a small operator from Oklahoma, went down this path early and has created a very successful program. So operators of all sizes can be successful in this area.

Mark

They can be, and even if you have one building in a rural part of the country, you can participate in population health management. We want to help you figure that out.

Scott

Yeah. When an additional prong, I think of operators taking control of their future. One, one focus we certainly have here on the finance side is how to think about helping operators through various programs like HUD. I know you're a big fan of HUD and maybe share a little bit about why you've, you've really encouraged a lot of your members to sort of think about looking at HUD finance.

Mark

Well, Stacy and I were independent operators and we didn't have any financial investors. So the way that we did our operation was one building at a time. We built all of our buildings from the ground up and we didn't come into it with a whole bunch of money. We came into it with enough money to, to put down 20% for our first building, but that's all we had. And then from then on we were just scratching and clawing and trying to figure out how to get up the next building to the next building. And you know, I ended up signing tens of millions Stacy too, tens of millions of notes with banks, which is good. And as long as you're making your payments to banks, they love you and they invite you to play golf and you become friends. I ended up on a bank board and all of that.

Mark

But the problem is those interest rates reset typically somewhere between five and 10 years from when, from when you enter into your agreement and interest rates change and you might start out with a pretty good rate. But as we've seen here in the last six months, interest rates can go up dramatically. So the great thing about a HUD loan is that the rates don't reset every five or 10 years. It's set for the life of the loan, which typically I think is a 35 year payout. And the borrower doesn't have to guarantee the note. And so if things suddenly go wrong in one of your buildings, you're not broke. You haven't lost everything that you built up over time. So we always thought that total success for us, you know, there are a lot of different benchmarks. One is getting the building approved, getting the building built, getting the building operating well, getting it full.

Mark

But we didn't feel like we had been completely successful until we were able to close our HUD loan. And that's the point where we could sleep at night at least as it related to that one building. So, you know what a lot of folks I think have come to realize over the last six months is that interest rates can go up very quickly and very dramatically. And if you're not locked into a rate, you have a massive interest rate risk. We're now in a little bit of a lul. Rates have come back here just a little bit over the last, you know, 30 or 60 days. And I just, you know, I encourage every provider. I know that if you're not locked into a long-term rate, you need to look and take a look at it because it just makes total sense.

Scott

Yeah, I just saw this morning the rates were just a little below 5% too on the HUD side. For all the reasons you demonstrated and talked about it and heard you, you really encourage operators at, in small group meetings and in and large conference calls to take a look at HUD as a way to kind of take control of your destiny, right? Is to really have some confidence and stabilize your finances going forward. And so really appreciate your encouragement there, especially for small independent owners, assisted living operators, not-for-profits alike.

Mark

Yeah, there are many operators and they don't realize that yet because their rates haven't reset, but their single biggest risk is not CMS their single biggest risk are escalating interest rates because of what can do to your cash flow. So anyway, I could go on and on about this and no one ever listens to me because I was begging people to refinance when you could close a HUD loan in the twos and people weren't doing it so.

Scott

We appreciate encouragement and it's another way that, you know, you can, you're helping operators think through, working through these difficult times and that's just another, another way they can think through it too. Mark, we've gone through a lot of big topics in a short period of time today. I know we'd love to have you back at some point. I know we're maybe a year from now, I'm sure there'll be lots to talk about in the 2024 presidential general election cycle. So really appreciate your leadership in DC and helping the sector through these very difficult times. I wanna ask you one more question that I ask every guest, which is what's on your nightstand, which is just another way of saying kinda what's, what are you reading right now? What do you recommend? I know you're a voracious reader. You named your oldest child, middle name Atticus after Atticus Finch. I think you've got a grandchild after a Harry Potter character. I mean this for, for our listeners. We're talking to a real reader here. So any, anything you're reading right now or that you recommend?

Mark

Well, my, my sister who I love desperately got me a promised land, which is Obama's first part of his series of his autobiography on his election in early years in the White House. And I'm reading that he's a great writer and a great person and I'm enjoying that.

Scott

Yeah, well Mark, I dunno if you remember one of the very first times we met was way back in, in Long Beach, California and we shared, we were talking about some books and you realize that I also have an in affinity for politics and work for a governor and, and you said, Hey, you really should read a book called What it Takes. And I ordered that book and I've been always waiting all these years. If you ask me if I ever read it you know, it's about 900 pages long. It's about the 1988 election cycle. I did get through a lot of it. This is a fascinating read. And so I do encourage people to think about that book, especially as we're thinking about leadership in our country and future leadership and challenges and what it takes to run, to be president of the United States.

Mark

The the great thing I like about that book and just coincidentally I was thinking about that book a few months ago because I was giving a speech about leadership, is that there are some leadership lessons out of that that have nothing to do with politics, which basically what it takes for to succeed in most things is a real passion and a willingness just to work your tail off. George Bush won the Republican nomination because he wrote, I think it was 6,000 handwritten notes to people in Iowa that he happened to come across. But I have this theory that, you know, people can work harder than they maybe think that they can. And I sometimes use the example of Bush and, and what it takes as an example of that. You're right, you gotta have a ton of time because that book takes forever to read, but it's very interesting.

Scott

Well, I always appreciate you recommending me at that time and Mark again, thanks for your time today. It's been a great honor for us to have you on a Versed podcast and hope our listeners enjoyed it. Again, I'd love to have you on sometime in the future and catch up.

Mark

We appreciate VIUM and you all helping us with our events. You guys have stepped up and we appreciate that partnership and look forward to it continuing for a long time.

Scott

Well, thanks so much Mark, and we look forward to working with you and your team in 2023 to help fight the good fight in DC and our State Capital.

Mark

You bet.

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