Healthcare is Local

Whether seeking long-term care or rehabbing after surgery, patients typically seek care close to home.  But if there’s more than one option, how do they choose? Hospital discharge planners are required to provide a list of local facilities (and their CMS star ratings) to choose from. Patients are advised to visit the facility (or send loved ones) so that they can ask questions and ensure their needs will be met.  Most will also ask around, tapping friends and family for their thoughts on the best local option. Sometimes, the hospital may also have a referral program in place, where they send patients to high-performing homes that they’ve vetted and trust to care for the folks they refer.

What’s the common thread here? Reputation.  In a perfect world where beds are always available, a patient will always choose a better home over a worse one. SNFs know this, and they compete with their neighbors for the best referrals, creating a built-in incentive to build and safeguard their reputation.

But in a community full or high-performing homes, how do we identify the best of the best?  How about a market where the options aren’t so great? Diving into the CMS star ratings, we learn that for Survey, homes are compared against their state. For Staffing and Quality, they’re measured against every home in the nation. But if decisions are made locally, why aren’t homes rated that way? If they were, what would that look like? That’s what we set out to answer.

Market Context – Performance and Saturation

First, some context. We start with a home, then grab its nine closest neighbors and call that a market. To understand that market better, we created measures of both performance and saturation. Performance looks at the average Overall star rating of a set of 10 local homes and compares it to the national average to give an idea of how strong the competition is in a market. Saturation measures how many homes are located within a 10 mile radius to provide insight into how dense the market is.  Leslie Lakes, a rural facility we’ll explore later, is in a market with low density and very low performance – an average CMS Overall star rating of 1.4.

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Russellville Nursing, which we’ll look at in detail next, is also relatively rural, but has much higher-performing neighbors, averaging an CMS rating of 4.5!

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So these two measures help us understand the context against which a home is operating. Now let’s peek into the details of this high-performing market.

A Market Full of Stars

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Between Russellville Nursing and its nine closest neighbors, there are five facilities with an Overall star rating of 5, and five more with a rating of 4. Almost all the homes are 5 stars in Quality, too! Talk about spoiled for choice. But with all these top picks, who stands out? Who’s better on paper than in reality?

A New (Local) Perspective

This is where the StarPRO Local Market Rating comes in. Let’s look at this market under a different lens.

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Here, our five-star friends at Russellville Nursing are marked as a three star! Why? Well, we’ve gone local! Our first step is Survey, where, using CMS’s standard methodology, each home’s overall weighted survey score is compared against a set of cutpoints based on the whole state. In Russellville Nursing’s case, a score of 48 is good enough for 4 stars:

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But when it’s just a competition of neighbors, a score of 48 is only good enough to be #7 of 10.

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Calculation Details – Ranks To Ratings

At this point, we have Russellville Nursing’s rank out of ten, but the CMS rating system uses 1-5 stars. So in order to translate a rank into a rating, we use the 1-2-3-2-2 method.

  • #1 – 5 stars
  • #2, #3 – 4 stars
  • #4, #5, #6 – 3 stars
  • #7, #8 – 2 stars
  • #9, #10 – 1 star

This slightly skewed system rewards the top performer but leaves room at the bottom for those with work to do. We find that this closely mirrors CMS’s approach to breaking up the star cutpoints based on percentiles.

So in this new light, our friends start at 2 stars instead of 4. From here, we use the same methodology for Total and RN Staffing HRDs, ranking each home, translating into a rating using the 1-2-3-2-2 method, then applying the same matrix used for the real Staffing star rating. For Quality, we again rank based on total QM points and assign a rating.

Bringing it All Together to Create a Local Rating

With all these local-only ratings on hand, we take CMS’s approach to the Overall star rating and apply it to create the local rating.

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So, starting from the Survey score of 2, Russellville Nursing earns a bonus for having a rating of 4 in Staffing. Off too a good start. But moving back to the real Star Ratings for a second, remember how 8 of 10 homes in this market were 5 CMS stars in Quality? That earned them each a bonus star. But when we compare locally instead of nationally, only one facility can earn a rating of 5 and earn that bonus star. So again, our friends at Russellville fall just short at #2, and have to settle for an overall local rating of 3.

But wait, you say, this home is 5 stars on CMS! They are, and they should be. This is an excellent home! Ultimately, Russellville Nursing and all its neighbors will be judged by their CMS rating, which is correct. The local rating just adds extra insight by focusing in just on their competitors.

A Less Stellar Market

For contrast, let’s take a look at a market where the average performance is less stellar. Down in Louisiana, the 10 closest facilities to Leslie Lakes Retirement Center are having a rough go of it.

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With an average Overall star rating of 1.4, there aren’t any standouts. But maybe the local market rating can help us understand how each home is performing in context.

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Leslie Lakes has done better than its neighbors on Survey, earning a rating of 4.It’s neither a standout nor a struggler in Staffing or Quality, so no bonuses or penalties, resulting in a final rating of 4. Not bad for a facility that’s 1 Overall star on CMS!

Wrapping It All Up

The point here is that even in a tough market, there’s more to read into each home.  Whether you’re a patient looking for the best local option, an operator trying to understand your market, or an investor looking for clarity on a home’s story, the local market rating steps in with locally-determined insight where the CMS Overall star rating isn’t enough.

To learn more about the Local market rating or get started with a free trial, schedule a demo today or get in touch with us.  For more stories like this, use the form below to sign up for our monthly newsletter.

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