Mark Traylor

Scott 

I'd like to welcome to this episode of our podcast VERSED Mark Traylor, President of Traylor Porter Healthcare in Alabama. Hey, Mark, welcome to our podcast.
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Mark

Thanks so much for having me. Looking forward to talking to you.

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Scott

It's an honor to have you on today. We've been friends for a long time, and we could talk about all kinds of fun things from Alabama football to golf, to all kinds of things. But we've got you on today to talk about a pretty important topic, which is value-based care. Since I have you on also, another timely topic, of course, is the Biden administration minimum staffing ratio proposed rule. We'd love to talk to you about that and your perspectives and your concerns about it. Because that's certainly top of mind to our audience as well. So tell us a little about your company, your operations, and your family history of long-term care.

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Mark

So my family got in the business back in the fifties. My great-grandparents started a home in a small town in rural Alabama. She actually started outta the back of her house taking care of people and then realized there was a need and kind of grew that into what we would call a traditional nursing home now. I came back after college, wanted no part of the business, decided to be a stockbroker, and got into the brokerage industry for 10 years. And then my father kind of came back to me and wanted me to come help with the family business. And so I kind of went out on my own, partnered with a gentleman named Howard Porter, great guy.

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Mark

And he's turned out to be a really good business partner. We wound up buying a really depressed property in Opelika, Alabama. And we're able to turn that one around from a, you know, about to be shut down to a five-star home. And then we kind of grew that and leveraged that into buying some other ones out of bankruptcy and receivership. And now we have five total homes. We have two independent living complexes separately, some assisted living, and own a pharmacy co-op with some other owners in the pharmacy and medical supply business and a rehab business. And we also have a nurse practitioner business and kind of just really diversified in our ancillary companies to try to make sure we had a good presence and good service.

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Scott

What a wonderful story. And I love talking to independent owners in the AHCA/NCAL family. Because so many of you have multi-generational experiences. You know, someone in your family was a leader in the sector before you. Super mission driven wanted to improve healthcare, improve the lives of seniors and families. And so it's really inspirational. Your wife was also involved in the business too, is that right?

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Mark

She is. She is. She's a nurse by trade. You live and breathe it, right? It's not a job, it's a lifestyle. Our challenge is segmenting that and actually enjoying ourselves when we have time together versus talking shop. But at the same token, it's still fun because it is, there's no more rewarding business having been in the brokerage industry and other industries. You don't get the opportunity to take care of somebody 24 hours a day, 7 days a week, and make a difference in people's lives that are so vulnerable. And it's a wonderful, wonderful feeling to be able to do that and do it with you know hopefully the right way.

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Scott

Well, thanks for sharing that. I mean, again, I want our listeners to kind of understand who we're talking to and your passion for the sector. And so many of our listeners, again, are independent owners and share your story and know your perspective. And that's really important too. So as I mentioned, one of our topics we've been covering this year with our guests is this big bucket of value-based care. And we've talked to some large operators in terms of some SNFs, some independent owners, Tom Coble out of Oklahoma, Steve Fogg out of Oregon, and wanted to give our listeners kind of perspectives of how every different size operator, both skilled and then we're gonna talk some male operators down the road too, can participate somehow in this big bucket of value-based care. You all have a very interesting model there in Alabama. And I'd like for our listeners to understand from a small independent owner in a southern state, what led you to think about putting your ISNP program together and tell us a little about the model itself, the various different components, and the different owners involved.

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Mark

We saw the lay of the land kind of shifting. One of the things we do in Alabama is we are very actively involved politically. Being involved that way, you hear the rumblings of managed cares trying to come into the state and trying to take over the Medicaid program. And all of these dynamics were kind of working back in the late 2000s and early 2010s, we kind of got together and realized, you know, our mantra kind of was our former Chief Executive Officer for our association used the mantra, "Do we want the change to manage us or do we want to manage the change?" And we decided, you know what? We want to manage the change. The spectrum's a very large owner another smaller owner and then a, a kind of a mid-size owner in the state kind of got together and talked about it, discussed it, did a lot of legwork.

I know a lot of people in the ISNP world, especially independent owners, they tried to Google smaller ISNPs. We decided to go ahead and take, I guess not a small bite of the apple. We just swallowed the whole apple. We were able to start a statewide network. The amount of time and money spent to do that was very challenging. But at the end of the day, we were able to do that because we were able to partner with, I think we have 25 nursing home owners that joined in to create this ISNP and we also wound up getting a couple of, I think a home health agency that was statewide joined us in that as an owner and a couple of physicians. It's turned out to be a unique thing. It's kind of turned out to be a very challenging thing to run. I don't know if that's still the case, but we're the third-largest ISNP in the United States. Now, granted, you know, the largest is 50,000 bodies and we're 4,000. But at the same token, it just goes to show you how hard it is and how challenging it is to execute it and build it and make it all kind of come together.

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Scott

Such a unique model you have there in terms of that statewide approach. What has been the benefit to you and your company in terms of some clinical outcomes, some operational experience maybe even some cost efficiencies?

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Mark

We have to ask ourselves, why are we doing this again and what's the real reason? And, then so the very hard challenge as an owner of a skilled nursing facility coming into being on the board and starting up an insurance company, right, is you have to take these hats off and you have to take this SNF operator hat off and put on an insurance hat for a little while, and think of this strictly as an insurance company that is all the dynamics of an insurance company, and then how are we gonna be a good customer to these skilled nursing facilities? Then of course, as this thing evolves, you catch yourself putting back on your skilled nursing hat, which you have to, to kind of hold the insurance company accountable to say, look, don't turn into every other insurance company. Slow pay, no pay, and all those dynamics.

Let's actually do something beneficial for the customer, the patients. And so that's a ying and a yang kind of going on there because you have to be financially solvent as an insurance company obviously, but you also have to provide a value-add to the SNFs that you're dealing with. So it's become a big challenge and we've really, we've learned a lot. I mean, COVID, was one of the major things that kind of taught us a lot about the true value of an ISNP. And I think it really allowed a lot of people to see the true value of an ISNP or of a SNF for that matter. Because one of the unique things about ISNPs is you have now nurse practitioners that are coming in your building and taking care of your patients. It's a really great model because a lot of skilled nursing facilities don't get the benefit of practitioners coming in their building on a consistent basis, right?

You may get the once-a-month visit from your local doctor, especially a rural area in smaller-sized buildings. Well, we're getting nurse practitioners walking through the halls on a weekly basis. And when COVID came, the value that the ISNP added was we turned into what I would call a sub-acute, what you used to think of as a rural hospital, I guess we were taking care of obviously the COVID patients, which had the same symptoms as the flu pneumonia. You pick it, that's what we were doing. We were hanging IVs, our acuity level went up, and the ability to show that value base that we provide in our setting was enhanced and kind of brought to the forefront during that time. So it was a unique time and it was a great time to be, and thank God we had that ISNP right already in place to be able to execute that game plan.

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Scott

You really credit your ISNP to really helping Alabama operators get through COVID and now survive post-COVID really, and kind of manage through this whole process, which I think is really exciting. Timing's everything sometimes, right? I've read you certainly the value proposition of having those, is it Simpra Advantage? Is that right? So the Simpra nurse practitioners in your buildings on a regular basis, having their eyes and ears on your residents too has really helped from a clinical standpoint and an operational standpoint.

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Mark

I've always said this, my mother's a nurse, my wife's a nurse, and I trust nurses with 500 employees and taking care of things. It also helps to alleviate the family's fears a little bit, right? Because now you have another set of eyes that's coming in and collaborating with you and is basically validating what you're doing in a building as a separate entity to your customer base and letting them realize, hey, these guys are doing a good job. It's been a unique proposition to have it. The timing of it was, like you said, was wonderful, and it's been a good thing. It's been a challenge, but it's been a good thing.

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Scott

You touched on something really important too, in terms of the mechanics of the backbone of the ISNP release. You're creating an insurance company, right, and I actually have some legal background. I first started practicing law, I was doing some insurance work here in Indiana, so I have some sense of certainly what I remember, what it takes to form an insurance company. I mean, it's an expensive operation. Got to get approval from the state insurance commissioner, got to show your leadership team got to eyeball-to-eyeball with the insurance commissioner. I mean, it's definitely an intentional process, understandably so. I think what I want our listeners to really understand here today is that it's not just the big SNF operators that maybe can afford to go down that path. There are other options out there for independent owners, and especially including the one you've taken there in Alabama. So I think I'd like for our listeners to really think about where they are in their own journey towards thinking about value-based care, and just know that there are some other models out there that you can look at, especially in a way to do maybe a statewide approach. Are you aware, are there other states that have done something like this where they're thinking about it, do you know?

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Mark

I think there's a couple that I've talked to that are trying to get it together. I don't think anybody's actually taken the bite of the apple that we have. I do think, like you talked about, there's strength in numbers and I would tell any of the listeners, you know, at the end of the day, don't be afraid to be bold, right? I mean, that's kind of what we did. We originally had that conversation of let's just try to do it here and kick the tires and get this off. But, you know, I mean, you're gonna spend the same amount of time and the same amount of effort and not the same amount of money. So that's something to understand. But however, strength in numbers created it. So that, a three nursing home shop, like we were at the time when we started this thing, it was a capital of about $400,000 that we had to come up with. It wasn't easy, but it wasn't daunting. It wasn't something that we couldn't do to try to generate economies of scale for the whole state.

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Scott

I imagine there's kind of an all-boats-rise experience too, right? I mean, you're really rooting for everybody else around the state to maybe make sure they're also providing high-quality care, not only because they're inside the ISNP as well, but because it helps the sector. A prior guest, our mutual friend, Mark Parkinson, and he really pointed to value-based care and ISNPs as asking operators to think about ways they can control their own destiny in the future, and that this is an option out there for you to think about. There are a lot of headwinds in this sector. There are a lot of challenges and a lot of folks who wanna come in and, and think they're able to do something a little bit better than you're able to do on the front lines. And so I think there's probably a lot of sense of control also through the ISNP and making sure you're managing the healthcare for your residents in even better ways. Is that right?

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Mark

The challenge is, what you realize is when you set up this INSP it really boils down to your model of care and how you're actually impacting that resident in room 101A, right? How we're actually taking care of them the best way we can and that collaborative mindset and having the ability to not only sit in my skilled nursing facility and have that mindset of how we're gonna take care of that patient to sitting in the boardroom with a clinician who's over your whole entire ISNP to make sure those two are coexisting with the same mindsets and the same goals. That's the key, and that's the beauty of it that I don't get when, and it's nothing against United, it's nothing against these others. I'm not gonna get that with them. They have their agenda and we have our agenda, and those two usually are sitting here, you know, not intersecting the right way. And that's what creates the beauty of provider on ISNP.

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Scott

For those especially independent owners out there around the country that are interested in thinking about this. I know Mark's available, the folks at AHCA/NCAL have got a whole team dedicated to helping operators thinking about how to implement value-based care models inside their operations or work collectively through networks. So there are a lot of folks out there to help you think about what could be possible. So I'd really encourage you to contact us or contact Mark and we can help get you in the right direction. Mark, I'd like to shift topics actually to a pretty concerning topic, which is the Biden administration's proposed skilled nursing facility, minimum staffing ratio rule that the open comment period just recently closed a couple weeks ago,. A world record, 46,000 or so unique individual comments went in, and that's a big thanks to you and the leadership team at AHCA/NCAL for really making sure that voices were heard at CMS. The numbers were run by AHCA/NCAL on a building-by-building basis. So if this rule were to go in place as is, do you have a sense of what that could cost you kind of on a per-building basis per year to comply with it? Again, that's assuming that the labor capital was there to hire.

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Mark

Right now with the increase in our end pay and the, you know, in order to do it, you would've to obviously hire in our situation, and I think this is not uncommon from the majority of us, you would take your one or two off that you're having to pay to go in a hundred-bed building to maybe four or five of those RNs at, you know, $60 an hour when we're usually paying $30, $35 an hour in our state. And the problem with it is, is prior to the Covid pandemic, we tried to have the lowest ratios, I guess we'll say as we could, but the challenge with this particular model that they've come up with that, take consideration, LPNs, there's no landing spot for LPNs. There's no realistic way to achieve the end game that the administration's wanting us to achieve.

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Scott

Yeah, and we've heard, again, Mark Parkinson talk about, you know, every 1% of census that is under pre-COVID levels is about a billion dollars of less money into the sector itself. And now you're talking about layering on a minimum staffing ratio that's gonna cost, you know, even by the administration's low numbers, $4 billion additional a year. I think the HCAs numbers are closer to six, six and a half, or seven billion. So you're laying on 10 billion plus dollars of added cost or loss revenue each year. And I think that's the emphasis point from the advocates out there to the administration is, you know, the sector's not against minimum staffing ratios. It has to be reasonable and realistic and also appropriately paid for. We've all gotta be into helping improve quality and everyone wants quality improve, but this unfunded mandate that is just impossible to achieve, it's just not the right time and, an unfounded, unrealistic proposal,

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Mark

Kind of scary that you know, that kind of proposal can be actually put forth in light of all of the headwinds that our industry's facing. It's almost insensitive to what's going on and it's out of touch and it's just, it creates a really big challenge of, what else are we deciding up there? But it's something that hopefully cooler heads will prevail, whether it's through Congress or whether it's through the court system. Cooler heads will prevail and we'll get some relief from this. I agree with you, I'm, I have no fear of a staffing mandate. I don't really, doesn't scare me. I just need to know how am I gonna pay for it?

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Scott

Thanks to the hard work of all the trade associations and operators themselves a lot of voices are being heard both formally through the CMS process. There are a lot of op-eds written around the country. There are a lot of letters from members of Congress going to the White House. We've got some great new champions on Capitol Hill. And so hopefully what this will result in is an elevation of an understanding of really the challenges and the front lines going on in skilled nursing facilities right now and what's needed to provide high-quality care, especially as this baby boomer demographic is coming. But the work's not done, right? We still need to advocate really hard to make sure that voices are being heard at the White House and the administration. You and I both have been participating in some government relations calls recently where there have been some efforts on Capitol Hill, some legislation introduced, some key amendments. And so hopefully with the good work being done over the next year, we can help make sure we sort of soften this blow and make it much more realistic, right?

We've got just a few minutes left. I know you've got some leadership positions there at the Alabama Nursing Home Association. Tell our listeners a little bit about some things you're looking forward to next year. Are there some opportunities or some challenges or some goals for the association there in your state?

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Mark

There's always challenges and there's always opportunities, right? And we're really focusing on making sure that we do adjust our Medicaid rates and increase our ceilings relative to the higher cost of care, higher cost of paying for nurses. But we've been really focused on that and we've made a lot of progress in that. We've had a lot of successes this past year, positioning ourselves for that. So we're in a fortunate position now that we think we've done some pretty good legwork state-specific in Alabama that can help us to supplement paying for a mandate in some way, but it still is work to do. One of the things we're also working on is we're trying to really help our particular state in our rehab population for SNFs to be able to provide that value base that we're talking about, to geriatric patients that don't need to necessarily go into higher cost setting an inpatient rehab facility and come into a skilled nursing facility.

So we're trying to make sure that the playing field is fair. We're working with our state health planning agency to try to make sure that verbiage on the legislation and how that state plan looks relative to skilled nursing facilities, managing rehab patients is going. So, and that's something that we've been spending a lot of time on here recently, and I can't get into all the details because we're still in negotiations, but that's something that we're trying to help out to make sure that again, we are creating value not only for our state, but that also helps out with Medicare recipients doing it in a lower cost setting.

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Scott

Well, thanks for sharing some thoughts about what's going on there in Alabama. I know you've got a tremendously effective state exec there and our mutual friend Brandon Farmer, and I know he's gonna do a great job there in the State House there in 2024.

A couple fun quick questions. We just had a really amazing Iron Bowl over the weekend. You're a big Alabama fan boy, what an incredible ending. Certainly, you guys won with that incredible play there at the end, the bomb pass to the back corner. And I was impressed with Nick Saban. Of course, he said that you guys practiced that play, but he also said, hey, a little luck isn't a bad thing either. And it sort of made me think about leadership. You know, it's like, Nick Saban has got to be one of the most prepared leaders in any industry just with the amount of success he's had, and even he's acknowledging that, hey, you know, some luck every once in a while is a good thing too. What do you think? Is that the same perspective you have and lead your team? And along the way, a little bit of luck's a good thing too.

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Mark

I've said that a thousand times. You constantly prepare to take advantage of luck when it does occur, right? And you constantly prepare. You never quit until you quit, right? So you don't lose anything by continuing to try. And that's the one thing that I think Nick Saban, we all, from a business perspective, I try to relay, we have to always consistently be prepared. And if I'm a young entrepreneur trying to get into the nursing home industry or whether I'm a guy making widgets, constantly prepare as if you're a backup because I think sometimes we all get caught in life where we have a little bit of success and we want to say, look how good we are, and here we go, and something hits you out of left field that you're not prepared for and challenges arise and you're unlucky and you're not in a position to either A, adjust to that bad situation or B, capitalize on that and fight through it so that when luck does come, you're prepared for it. I think that's a huge thing. And I think there is no substitute to preparation so that when your time finally does come as that backup mentality that you can execute when the timing is right. To me, that's probably one of the most successful things, I have learned more from my failures than I ever will think about learning from my successes. Those failures have allowed me to adjust my sails when the wind adjusts the sail and be able to position myself for whatever opportunity may come down the road.

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Scott

Can't thank you enough for all the work you do on the front lines there to improve healthcare and the lives of our seniors and families. Hey, before we go, just a question I ask of all of our guests, is there a book on your nightstand right now you'd recommend or something you've inspired you along your journey?

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Mark

I'm like the person that watches the TV show for about 20 minutes and flips the channel. So I have several books on my nightstand, so.

But two that I'll tell you that I'm kind of focused on right now, and I always try to have one for kind of self-development, and then I always have one from just enjoyment. I'm reading Lexington, which is about a famous racehorse back in the Civil War days by Kim Wickens, I believe it is. And that's really enjoyable and it's been fun to kind of read about that and understand horse racing in the, it was a stage and how important that was to the nation and how big of a sport it was back then, and just, that's been fun. Then the second one I'm building self-fulfillment on helping my business is Strategy by Lawrence Freedman.

And I know that's stable for a lot of people, but it's my first opportunity to read it and I love the quote right when you open it up it says, you know, everybody has a game plan until you get punched in the mouth. Mike Tyson said that, and that is absolutely true. Everybody has a plan until you get punched in the mouth and that kind of goes back to your preparation statement. I think that's why it's so important to study strategy and figure out, because there's a lot of ways we can all get to the end game that we're trying to achieve, and your way may not be the same as my way, but the key is to commit and believe in a way and adjust yourselves as you find out this may, maybe we need to turn here, maybe we need to turn there and have the open mind to be able to do that. And this strategy thing is just something that I've really enjoyed reading.

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Scott

Thanks again, really appreciate you being on today, means a lot to me. For our listeners, thanks for tuning in. This is VERSED.