Tom Coble

Scott
Good morning everybody. I'd like to welcome to this version of our Versed podcast, Tom Coble, who's president, CSO of Elmbrook Management Company out of Oklahoma, and a longtime friend. Tom, welcome to our podcast.

Tom
Thanks, Scott. I'm very happy to be here.

Scott
We could talk about all kinds of things today but I know we've got two topics top of mind. One, of course, is this theme that we're using on our first podcast all year on value-based care, and you are just the country's expert in this topic. So I'm really excited for our listeners to hear you and hear your story. And the second is a really unfortunately timely topic, which is the CMS SNF minimum Staffing Ratio rule. I know you've got some strong thoughts about that, and some data came out even yesterday from HCA we can talk about. So I'd love to cover those two topics today in quick order, just so our followers have a really good sense of who you are, the impact you've had on the industry, and where you see things going. Before we get started on a personal note, I just gotta thank you, Tom. You may or may not remember this, but when I first got started in this business back in 2010 and was the new president of the Indiana Healthcare Association, I think you were the first person to call me to welcome me to the role and welcome me to the family, the association world, other than folks I knew in Indiana. So I've always remembered that, Tom, about you, and really wanna thank you for reaching out, and you really made me feel welcome and been a huge help in my career. So it's an honor to have you on the podcast today. Let's talk a little bit about your background, because I think for our listeners, you've got a very unique background that's a little unusual that most leaders in our sector. So maybe tell our listeners a little bit about your background and the industry you came from before long-term care, and then how you got into long-term care.

Tom
March 1st, 1993, I came into the long-term care industry as a business office manager, soon to be administrator-owner of a 126 bed skilled facility here in Ardmore. Prior to that, I'd worked in the oil and gas industry for my entire career. Up to that point, my last job that I had was coordinating the production and delivery of offshore natural gas and onshore natural gas for noble energy. I came into this industry having never worked a day in healthcare in my life. I tell people, and it's the truth. When they ask me, how did you get in here? Well, eight years in negotiations in the duck blind. AndI duck hunted with a gentleman who at that time ran a single facility here in Ardmore. His dad had been in the business, and he had been only for a while. His dad was gonna be retiring and selling out to buy this facility from his father and get in the business. So we took that opportunity, and I guess the rest is history, as he says.

Scott
What an interesting background. I guess real quick, any similarities between the oil and gas industry and long-term care?

Tom
There is, in a lot of ways. What happened with natural gas back in the late eighties, early nineties, (inaudible) delayed both offshore and onshore natural gas pipelines. You could deliver gas, you could sell gas and transport it, but if you did so outside of a certain margin, you were penalized. So there was risk involved in how much you delivered and how much you sold, and how much you produced. So that, in fact, in a lot of ways helped me understand earlier than a lot of people, the opportunity there was with ISNPs and other things.

Scott
Let's get into your experience. Way back in 2005, you were the very first person in the country to create a provider owned ISNP. Tell us a little about your ISNP today, its growth over the years, and then how many lives you cover and what states you're in.

Tom
When I started at Elmbrook in 1993 that the facility was only Medicaid and private pay, it was not Medicare certified. After having got started and started reading about the industry and coming up to speed, it became very apparent that we needed to get Medicare certified as soon as we can. We took those steps, and on January 1st, 1994, we took our first Medicare patient at Elmbrook. And once our nurses were IB certified, we had a couple of RNs that were PICC line certified. I mean, we did EKGs over the telephone, which seems like caveman stuff now, but at the time, you start to see these skills that we have, you start watching the residents that you have get sick and go to the hospital. It kind of opened my eyes to the fact that I thought that we could, if the system would have allowed, take care of a lot of our residents in the facility rather than having to send them to the hospital. Once that happened, the more I became convinced that it would be a really good model to use. 1996 and 1997, we took all of our hospital admissions at Elmbrook and for the previous year, SNF consultant nurse that we used and our medical director look at them. The determination was that we could reduce our hospitalizations by over 70% if we could have taken care of them in-house. We re-did that study in 1999 for the year, for 1998. We did it across all of our facilities, and it came out almost identical. Again, it was over 70% that we could reduce those hospitalizations. That really started me on the hunt then to try to find a model and a place to put this into. Medicare plus choice became known as Medicare Advantage and created a spot where we then could apply for a license, which we did, and we went live on August 1st, 2005.

Scott
What a great story and background there and early insight in the industry. 70% reduced rehospitalization. That's an incredible data point. Where are you today now, Tom, looking back, these last couple decades tell us about your ISNP today and how many lives you cover, what states you're in and data points that you looking back, realize you really moved the needle, especially with your residents?

Tom
I think we'll be in 15 states. By the first of next year. I started making presentations at HCA around 2008, trying to get other people interested in this. It took a long time to get them there. It is still not as easy as you think it is. The early adopters are now all in the door. It's trying to bring other people on that haven't thought about how this works, because it's not easy. And because you have to become an insurance company first. Then you apply to become a Medicare Advantage company, and then to go forward. And that requires a lot of expertise. I had to run an insurance company for a couple of years during this process, and we are currently in Oklahoma, Kansas, I'll probably forget some of these. Missouri, Texas Mississippi, Louisiana Tennessee, Georgia, soon to be Ohio, Indiana, Michigan, and Florida. So we're growing along. We've got about 7,000 members collectively in our plans. And so it's our results have been really good. I think I saw a number in a meeting yesterday that 2018, we've paid out over $15 million in shared savings to our provider partners. We basically use the same model of care. It's refined every year. We're moving the needle, and that's what we want to do.

Scott
We had an interesting conversation with your colleague Steve Fog a couple months ago out of Oregon, and I know you worked very hard to create the provider population Health Management Council through HCA through all your work over the years. Exciting about that council certainly is to spread the good news to operators who are thinking about going down the path and that already have and support them. The benefit is there for the provider and for the most importantly, the residents. In many cases, it's work that they're already doing in-house. They should be getting the benefit both internally, financially, but also, and be able to return those funds back into the quality of care services provided inside the building but also demonstrate higher quality outcomes for residents. Tell us a little bit about the Population Health Management Council and some of its work to date.

Tom
The Population Health Management Council was created to really help educate HCA membership on different value-based care models, and particularly the ISNP. When anything comes out, there's a lot of people drawn to new products and along the lines, and we just wanted our membership to understand what, to look out for, what the important things were when they started to look at these different models. And those models range from contract only models to full. You can invest and be an invested partner in some of these plans. It's Buyer beware and for sure need to do your due diligence to make sure that you're really getting to a plan that empowers you to do exactly what you just said, Scott. To take what you're already doing to give you the flexibility to provide care to your residents. And as a result of that flexibility and improved quality, there are any savings you're allowed to share in those so that you can be rewarded for the high quality of care or higher quality of care that you're delivering.

Scott
It sounds like this population Health Management Council is a perfect vehicle for anybody that's new to market for the ISNP world and or thinking about going down the path. I know there are a lot of resources at HCA, there's a whole team available to folks too, to help walk them down the path. You mentioned one potential hurdle or difficult step, which is certainly creating an insurance company. My background as a lawyer, I actually started in the insurance business and represented some insurance companies here in Indiana. I know how difficult that industry is outside of that step. What are some other lessons learned or some advice you'd give someone who's thinking about creating a provider on ISNP to be wary of or think about in advance?

Tom
If you're wondering about how a provider, a certain insurance company, or ISNP is performing, we file quarterly reports, and then an annual report within IC. So those reports are out there. You can go look at them and talk to the providers that are involved in their networks and that work with them. You know how this business is, everybody knows everybody. So pull them aside. We've got our annual convention coming up next week in Denver and say "Hey, I was thinking about doing this. What do you know about it?" And also, there's a breakout session. We've got a population health management track for the first time. There's a lot of different information there to do that. The other thing that HCA is doing, they're building provider networks within state associations. So that's another good place for everybody to get involved. If you're a small operator, you may not feel like there's a place for you, but there is. Using the state networks as a way to contract with a plan is another way to go about doing this and to do it. There's room for everybody at the table in this world of value-based care. So you just have to get plugged in the place that you feel the most comfortable.

Scott
That last point, Tom, is really important. I wanna make sure our listeners understand it's a big tent. There's a lot of interesting work being done. And in the big definition of value-based care, there are a lot of different models. They're available to large multi-state SNF operators, smaller SNF operators like yourself. There are different collaborations that are done up and through a State Trade Association or independently. That's the hope I'd like to make sure our listeners take away this year through our whole series, is that there's an opportunity for everyone to participate in a right way and a productive way through this big definition of value-based care. And there are a lot of resources out there to help you get started. Whether it's talking to leaders like you and Steve Fog directly coming to the American Healthcare Association, national Center for Assisted Living Annual conference next week in Denver. Reaching out to Nisha at HCA, I know there's a standing population health management council meeting. There are a lot of resources available for everybody. One last question about value-based care. Tom, you've spent several decades in this world already. Where do you see things going in the next 10 or 15 years in terms of growth and opportunity?

Tom
It's just going to continue to grow and it's gonna continue to accelerate. CMS has said they want everybody moved out of fee for service by 2030. That's a stretch, but who knows what they'll come up with between now and 2030? I can't hardly see how we can get it done by then, but I just think they're going to continue to force the issue to the point that it's really going to accelerate going forward. There's a big opportunity for SNF operators and the fact that as they start to push the people who live in the community into managed care, we have ISNPs that are for institutionalized, but the ISNP is for an institutionalized equivalent. And a lot of those institutional equivalents we're already taken care of on our skilled units when they get sick and they come through for a stay before they go home. So that's gonna create a whole new marketplace for delivering care, whether it's in the facility or not. So depending on the scale or that your appetite as an operator for doing that, it's gonna open up the world of being able to deliver care in the community. The whole world's going there. CMS has to do something. I can remember when I started working on this Medicare penetration was like 3%. It's in there for forties, maybe over 50% by now, depending on what state in some states it's up to 70 and 80%. If you're gonna be in this business, you need to embrace it and you need to go ahead and get involved. And because I think a lot of operators think, well, no harm no foul yet because it's not really affecting me. But it's not all about a cap fee and it's not all about a per diem or whatever you get. So it's you need to really start thinking about a long-term care strategy if you haven't already done it.

Scott
I'm gonna quote Bob Kramer who, you know, founded Nick and was a longtime leader there. I heard him at a conference once saying, if you continue to swim and the sea of sameness, you're gonna sink. And I think that's all that alliteration, I was able to get that out without starting through it. But I always remember that. And I think about this is a market and industry and a sector that is constantly under change, but has a great opportunity for innovation. And I think this value-based care world is a perfect vehicle to think about how to improve process capture savings, and improve quality of care. And everybody wins. I wanna encourage our listeners, if you have questions. I know Tom's available, he's been talking to a lot of people over the years. This is an all boats rise experience. I know Mark Parkinson, we had on the podcast last year, talked about how providers really need to think about controlling their own destiny in the future. And this is right in front of everybody. So again, I wanna encourage you, no matter what size operator you are, there's a way you can participate in a value-based care program in your community. So Tom, I'd like to spend the last few minutes of our time together talking about a very concerning topic, which is the Biden administration, CMS SNF minimum staffing ratio rule. I know you've been studying this really closely, I know by now, HCA has put out information on a per building experience of what it would cost to comply with the rule as is. They just put out a new study yesterday from Clifton Larsson Allen given some updated data on what the impact of the rule as is for the sector we would require CLA indicates over a hundred thousand new staff will need to be hired. About 80,000 nurse aides, about 20,000 nurses, cost per year to the sector. Almost $7 billion, about $6.8 billion a year. That's higher than the Biden administration's estimate of 4 - 4.5. About 94% of SNFs currently would not comply with one of the three new staffing ratio requirements. And maybe the most concerning thing is about 280,000 current residents would be impacted somehow. People don't realize this is a huge industry, but they're about a million nursing home beds in the country. So if we're talking about almost 30% of residents would be impacted by this rule as is. That's a real concern. So I've said a lot there, Tom, you may have had some time to look at your own portfolio. What, what could this mean for your facilities that you manage?

Tom
The staff's not there. Even before they published this rule, a study that they commissioned, showed that it wouldn't work, the staff wasn't there, they couldn't do it. And the fact that they want to go ahead and do it with ghost RNs and LPNs that don't exist, and the fact that they want us to pay for it out of an already underfunded program, basically Medicaid, and they have no way, and they have no power, over the states to force the states to increase our rates to bear it. I don't know what they're thinking. I mean our rural buildings, if we had to close them, where would the residents go? We just closed in June a rural building. It was only a building we didn't own. We had been operating that building for 25 years and we could not hire in that county. So we just had to close it. And that's what's gonna happen. There will not be a place for those residents to go. They're gonna have to move. Their family's gonna have to drive an hour or two one way to go see them and check on them when it comes time, which is coming ahead. We all need to have our staff and our families write and tell CMS how this is going to affect them. ACA is working on getting that campaign set up. I don't think it's quite ready yet, but we all need to actively participate and try to get the comments in, because like you said, it's gonna affect a lot of family members, not only family members, the facilities and the current staff that's there, but it's just gonna be a disaster.

Scott
Real concerns and fears from a lot of operators, especially those in rural America. One of the most concerning components of the rule, of course, is that 24/7 nurse requirement. The nurses just aren't there to be hired right now. And even if they were, they make it sound like there's a long glide path to comply with this rule. But the shortest timeframe would be for urban SNFs to comply with that 24/7 nurse requirement. And that's only two years. And the definition they're using is the US Census Bureau rule. And by that definition, about 80% of the nursing homes in the country would be considered urban. Even that we know that they operate mostly in rural markets and outside of urban areas. So that's a real concern. And I think the other point, certainly Tom, is, you know, an access to care issue. I mean, we have a demographic wave coming through where the boomers are gonna hit their low eighties in 2025. We don't need less options for seniors. We need quality, we need quality options that are available in local marketplaces. And so I think that's the real concern here as well. Tom said that the comment period is open. HCA if you go to the American Healthcare Association's webpage, there is an easy button to click at the top of their webpage to provide comments here at VIUM Capital. We put out a VIUM voice alert to all of our clients with that link so that everybody can participate. Also, certainly wanna stress, Tom, you mentioned you've got assisted living in your portfolio. All healthcare providers, regardless of the continuum of care placement should be concerned about this rule. And that's why the American Hospital Association's come out against it. I know home health and assisted living is a concern 'cause the staff is gonna come from somewhere and everybody should be concerned. Well, Tom, I really wanna thank you for your time today. Before we go, I've got two quick questions. We started off talking about your interesting career before long-term care. You now are a part of a family business. Your son Brett is in the business too, is that right? And you all worked together for a while and he's now doing his own thing. Tell us a little bit about Brett's career.

Tom
His mom and I are so proud of him. He worked for us up until two, three years ago. And a gentleman who recruited him to run his company here in Oklahoma, Bridges healthcare. Brett is the CEO of Bridges. I've always wanted him to work for somebody else, just to get a different flavor. He's done a fantastic job of Bridges and we could not be prouder of him.

Scott
I love hearing people's stories about this business, not only how they get into it, but then also passing on the mission that this industry is and people's children are coming up through the business 'cause they see how important it's, how valuable it's to take care of others. So I know Brett well, he is a tremendous guy and maybe we'll have him on the podcast in future too. So thanks for sharing that. Hey, one more question I ask all of our guests. Is there a book you like reading right now, what's on your nightstand now and anything you wanna recommend to our listeners?

Tom
I'm reading a book about Lloyd Noble. He was born and raised here in Ardmore. And I worked for Noble Energy for 13-14 years before I came to work here. Rereading this book again at this time, just because the most important asset of any company are the employees. And this just kinda re-grounds me when I do this to remember that and particularly at a time right now where staffings like it is to be able to remember what kind of leader I need to be, but also the example our company needs to set in taking care of our employees who are part of our family. That's what I'm reading right now. And I'd recommend this book to anyone. I mean he was quite a guy.

Scott
Thanks for the recommendation, Tom. I'll always love understanding what true leaders also are inspired by and are reading on a side. So thanks for sharing that story. Tom, it's been a real pleasure to have you on today. Again, it's been an honor to have you on. I know our listeners can now see why I wanna make sure we had you on to talk about this very important topic of value-based care this year. I look forward to seeing you in Denver next week at the American Healthcare Association Annual Convention. And then also hope to see you later this year sometime in Oklahoma, or out in DC. Again, I wanna thank our listeners for tuning in to this episode of the VERSED of VIUM Capital Podcast. Be sure to check back in for our future sessions when we are talking to other leaders in our profession that are shaping our sector during these very interesting times. This is VERSED.

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