The Veterans Administration: An Exceptional Case

I credit several readers for their careful reading of Sunday's post and thank them for bringing to my attention the new Green House recently opened in central Illinois. The VA Illiana Health Care System opened the first of a proposed 10 Green House's on their downstate campus in Danville This exciting development marks the first time a Green House opened in Illinois, but I continue caution against becoming too optimistic about the prospects of this model gaining significant presence here. As a matter of fact, in some ways this Green House validates my chief concerns about the viability of this innovative effort to de-institutionalize long-term care services.

The VA and Community Living

The Veterans Administration provides for nursing home care in a VA nursing home (or a contracted non-VA facility) in all cases if the veteran has  service-connected disability rating of 70% or more (here). The payment source for the veteran's care is the VA: not Medicaid or Medicare. Additionally, the VA facilities are owned and operated by the VA on their (Federal) property. All costs associated with the development and construction of VA facilities are financed by the Federal government. All chief differentiators compared to non-profit and for-profit skilled nursing facilities.  Additionally, VA facilities are not subject to inspections by state regulators (i.e., the Illinois Department of Public Health) and the Federal OBRA Regulations do not apply. As a result you cannot even search for these facilities on the CMS Nursing Home Compare website. In short, the market forces which daily impact skilled nursing operations (and increase operating expenses) are irrelevant to the VA in the operations of their extended care facilities. Green House naysayers will be quick to identify this fact and use it to marginalize the relevance of this model.

Financial Implications of the Green House Model

The National Investment Center, a senior housing industry research group recently published an intriguing study of the Green House Model's Viability (here). This 23-page report asserts that the Green House model's cost of operations are comparable to traditional nursing home, but it does leave many questions unanswered. Due to the small size of traditional size nursing homes  used in the study,  their low Medicare census'  and the failure to address how OBRA staffing requirements are satisfied in the Green House homes,  I found the report unpersuasive on the question of comparing staffing expense.  Also, the for-profit SNF providers in Illinois have lower operating expenses then those used in the study. Additionally, I need to see additional research to validate the report's assertion that the increase capital costs of the Green House model (as compared to a traditional SNF) may be offset by increased occupancy and more private-pay residents.

I hate to be a pessimist, but I'm still skeptical of the viability of Green House model, despite its many merits.



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    Bruce -- Great job responding to reader comments, I'm impressed by your thoroughness and critique. It's probably true that the Green House model will not easily compete financially with large for-profit SNF's when it comes to squeezing a profit out of long term care.

    However, rumor has it there are some Green House Projects in the works in the Chicago area, so you'll have additional examples to test the viability of the model in Illinois.

  • In reply to Kavan Peterson:

    Thank you! I am encouraged that there are many innovators in the elder care field who are struggling with how to create viable alternatives to the limited options we've come to expect.

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    Bruce Lederman has over 25 years experience in the senior care field as a direct care provider and thought leader. Bruce was CEO and president of his own firm that operated skilled nursing facilities in Illinois. He is a former nursing home administrator and has consulted to numerous elder care providers on planning for strategic growth as well as process improvement. Recently he served as board chair of CJE SeniorLife, a leading non-profit elder care provider in the Chicago area. Bruce is currently employed as chief strategy officer for a company providing skilled nursing services in communities throughout Illinois and Missouri.

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