Regionalization Changing Strategies for Changing Times

Introduction

When I first began the formal study of the health care system as a post graduate student, we were told of the importance of the long term care (LTC) sector in the overall system. Something about the message rang hollow though and it became apparent that the professors thought that acute care was what was really interesting. The media all but ignored LTC unless there was a nursing home fire, a scandal involving the abuse of residents, or horrid physical plants. The popular literature, such that it was, was often negative. I well remember coming across a book entitled, “Warehouses for death: the nursing home industry” and it hardly encouraged me, as a Health Care Administration student, to want to pursue a career in LTC.

The image of LTC as either a negative phenomenon or a non-issue has changed over the years. LTC has begun to emerge as an important issue in the fabric of the Canadian reality. It is an important part of the considerations of health care providers, managers, policy makers and Ministries of Health. A number of demographic, epidemiologic and social factors have contributed to this new emphasis and governments have responded with a more encompassing view of what constitutes health care. This has resulted in a number of strategic opportunities and threats and we will discuss some of them here. We will argue that the key to success in a regionalised environment is to stop thinking in a strictly competitive strategic mode, but to adopt a systems view strategy which embraces the opportunities presented by regionalisation.

As of the 1996 Canadian Census, there were almost a million people (3.28% of the total population) living in various LTC institutions Trends in aging and medical technology lead one to predict that this segment will continue to grow even if successes are achieved in enhancing the role of community and home based programmes.

Studying the history of health care in Saskatchewan teaches us that whatever is emerging in terms of health reform will soon have implications for health care elsewhere in Canada and around the world. Regionalisation has presented some unique challenges and opportunities to the field of long term care in Saskatchewan and the lessons learned may have great import for the rest of the country. The changing environment has improved the coordination of care from a regional perspective but has changed the strategies needed by LTC operators to prosper.

The History of Saskatchewan's Regionalisation

The trend of increased importance of LTC became well established with a wave of provincial commissions in the late 1980s that put new emphasis on keeping people in their communities and looking after people’s ADL and IADL needs in new and innovative ways. Methods of dealing with an aging population, given limited resources, became a matter of importance for policy makers. Many of these provincial studies recommended a process of regionalisation. Saskatchewan was the first to take the leap, and established approximately 30 health districts with overall control of most aspects of health care delivery with the notable exception of physicians’ fee-for-service payments.

Before the reform the province had over 400 independent organisations, each of which had its own board of directors/trustees and its own CEO. Nearly 200 of these were long term care institutions and they received provincial funding based on a 25-year-old patient classification system. Each health care organisation had a tradition of competition and the environment was characterised more by non-communication than by co-operation. Although operating in a publicly funded environment, the system was rife with rivalries over client referrals, a finite labour pool, programme funding and overall global budgets. District Coordinating Committees, set up to provide a common waiting list and streamline admissions to LTC facilities (at least within a small geographic area) were more often dysfunctional than effective. Coordination of hospital discharges to LTC facilities was poorly handled and blocked acute care beds were so common that the Department of Health re-designated funding of two beds in every small hospital to LTC rates. Most LTC homes were operated by church organisations or by not-for-profit local organisations.

There was a smaller private sector presence as well, especially in larger cities. The system was dominated by acute care which seemed to win most battles for resources.

In conjunction with the regionalisation there are several trends in LTC that are common to most provinces. Most provinces followed Saskatchewan towards regionalisation. There have been efforts towards a one point of entry mechanism. A greater emphasis has been placed on community-based, rather than institutional LTC, and both of these sectors have gained in prominence relative to acute care.

The Saskatchewan reforms were titled the “Wellness Model” and part of this was to bring a new emphasis on the determinants of health, changing demographics and changing morbidity trends. “The wellness approach recognises that health is determined by many factors, including economic, social, political and environmental ones.” Government policy dictated that an essential part of strategic planning was to involve needs assessments and consultations with stakeholders and providers.

Part of the emphasis away from acute care was the use of one way valves between budget ‘purses’. The three main budget allocations to each health district were for acute care, long term institutional care and community based programmes (including home health care services). Districts could move money from the acute care or LTC institutional budgets to the community care budget, but not the other way around.

This latter budget was increased over several budget cycles while overall cuts were made in acute care. While the reduction in beds was difficult for individual institutions, the number of LTC beds in the province were reduced and the old ‘Level I and II’ beds eliminated completely. This was not entirely unwarranted, as in 1994, Saskatchewan had more than 170 LTC beds per 1000 seniors, the second highest ratio in Canada.

The institutional side of Saskatchewan’s LTC industry is divided into three. The smallest segment is composed of Personal Care Homes. These are almost entirely within the private sector and are small. Often they have just a few beds and they tend to accommodate residents with fewer ADL and IADL needs. In fact, nursing services are often provided by Home Care. While these are licensed and regulated by Saskatchewan Health, there are also many supportive housing environments that fall within the jurisdiction of other provincial government departments. The second segment is LTC Homes affiliated with health districts. These are privately owned and operated within the for-profit, not-for-profit or church-run sector, but receive their funding from and are largely accountable to the health districts. The third segment is similar to the second, except that the institutions are owned and operated by the health districts.

Adapting Strategies to Change

Surviving the Axe

Although this article focuses on the Saskatchewan situation, we have already pointed out that most other provinces are in the ‘throes’ of regionalisation. Adopting a systems perspective will undoubtedly lead to better coordination within the health care system, but it can undermine the strategy of the individual LTC institution. The first casualty of regionalisation was the small institution. Over 50 acute care hospitals were converted to other uses when the health reforms were initiated and many LTC homes were downsized. LTC and acute care institutions were combined into ‘integrated facilities’ as part of an initiative that dated back to the mid-1980s. Thus, the first strategic imperative for the new affiliate was survival.

Terms of Affiliation

The second strategic imperative for affiliates was to negotiate an affiliation agreement. Religious affiliates often wanted to negotiate a mandate for pastoral care or organisational philosophy. Other religious affiliates had traditionally served members of a particular ethnic or religious group and wished to assure that their target market segments would continue to have their needs fulfilled. Privately owned for-profit affiliates had their own set of priorities often having to do with managerial autonomy.

Basis of Competition

In either case, regionalisation carried two new expectations with it: 1) Competition for funding was now on a regional rather than a provincial basis, and 2) Affiliates and District-owned LTC facilities were expected to operate in a less competitive, more collaborative manner not only with each other, but with other component providers within the District.

Old stand-by strategies became suddenly ineffectual or even damaging, and some avenues of competition were cut off. For example, LTC facilities could, in the past, foster a population of potential clients by sponsoring programmes for people not yet ready for institutionalisation. These would include associated supportive housing environments, adult day care, geriatric day hospitals, etc. While these programmes are certainly needed, they also gave their providers a ready population of residents for their institutional programmes. These services are now provided on a regional basis and may be entrusted to the home care or community health departments and not to individual LTC providers.

In the era of global budgeting, it was not uncommon to compete by establishing new programmes (or expanding existing ones) and attracting additional funding for their operation from the provincial government. That is to say that revenue was often volume driven. Since part of the regionalisation scheme involved the use of population – needs based funding, regional budgets did not increase as a result of activity. New programmes needed to be accommodated within a finite budget. Many districts and affiliates have still not begun to understand this and still seek to open the government’s wallets by arguing the need for new or expanded programmes.

A major change was that, almost overnight, the system went from sporadic single entry systems dependent on cooperation to mandatory systems. What is more, in most districts, the process of assessing candidates for long term care is conducted by home care personnel, not by LTC facility staff. Since a part of the reform is to put “more emphasis on preventive, community-based services”, strict criteria have been established and light and even medium care beds have been purged from the system.

Of course regionalisation is not the only mechanism by which governments have attempted to impose single entry. In Ontario, the government has established 43 Community Care Access Centres, which are run by volunteer boards. They handle both Home Care and LTC Placement Co-ordination Services and are designed so that one call to the closest centre should give most consumers, families and caregivers the answers they need. Quebec has been using its CLSCs for such coordination. The single entry system means that LTC providers need to think of the Co-ordinated Assessment Teams as clients, since they now make the decisions regarding placements. The implication for marketing strategy is that the LTC agency must meet the needs, of not only the residents and their families, but of the Assessors as well. On the whole, however, the change has not caused LTC providers much suffering since most institutions operate at or near capacity.

Of course many environmental changes that obviate old strategies often give rise to new ones. The shift from long term institutional care to home care has given rise to a shift of caregiving responsibilities to family members. Caregiver stress is often poorly handled within the new system and, what is more, potential services to caregivers are often uninsured. American data indicate that as much as 80% of LTC is provided to the elderly by family members. The current Canadian trend may result in an even higher proportion of care being provided by families. There are opportunities to provide services on a for-profit basis for non-insured services to caregivers. These might include home maintenance, homemaker and nursing services in situations where assessors do not see sufficient need to justify publicly insured services. Not-for-profit affiliate agencies could use these profits to bolster the level of services beyond that funded by health districts.

Human Resource Strategy

Staffing issues have become important too. Even in a regionalised setting, competition for staff continues.

As always, health professionals generally find acute care services more attractive than LTC. The purging of Level I and II beds from LTC institutions means that service intensity has increased. Research done for the Canadian Nursing Association has predicted a likely international nursing shortage over the next two decades.12,13 The combination of increased service intensity and a dearth of human resources means that LTC operators will need to be strategic in their use of health care workers. Recruitment, retention and job satisfaction will become important criteria for organisational success as will be better utilisation of the skills and talents of all varieties of workers and health professionals. The astute strategist will ask whether functions being provided exclusively by one category of professional might not be as well, or even better, provided by another. Multi-skilling will likely become more important in the future and those that seize this opportunity successfully may gain a sustainable competitive advantage.

On the positive side, regionalisation has led to a rationalisation of bargaining units so that the same union is likely to represent the same classification of employee in all LTC facilities. This means less competition based on wages. Unfortunately, given province wide collective bargaining, it also increases the stress on the entire system in the event of a lock out or strike.

Strategy with a System-Wide Perspective

Turning Competition into Collaboration

While competition is a natural part of organisational activity, the key to strategic success in a regionalised environment lies with the ability to adapt to a system wide perspective. This is more difficult for agencies and affiliates that retain their own boards and ownerships. Nonetheless, failure to adapt will lead to their demise. First and foremost, the district board must be seen as a full partner and this means changing the way agencies think about themselves. It is essential to view the LTC home as an integrated part of the whole.

This new self image allows for many opportunities that simply did not exist under the old system. For example, it is now possible to share specialised staff such as rehabilitation specialists among more than one LTC home. Coordination allows better case management within the system. This means that clients are more likely to get the services they actually need and LTC agencies are more likely to admit residents whose true needs are better identified. Group purchasing becomes easier as does contracting out of services like laundry and food. Where there is excess kitchen capacity, the opportunity is opened to service the meals on wheels programme. It becomes easier to create programmes such as adult day care, day geriatric hospitals and respite care. LTC facilities may be used for community based or itinerant occupational and physical therapy programmes, especially in rural areas.

It wasn’t long ago that a dehydrated LTC resident would be transported to the hospital for IV therapy and then transferred back to the LTC home. Regionalisation is greatly facilitating a change from old thinking and, because the hospitals and LTC facilities are now part of one organisation (even accreditation is done on a regional basis) it is becoming easier to manage acute care problems in LTC environments. Better co-ordination is now possible between LTC homes and social workers, assistive devices programmes, nutritionists and other health care providers.

Regionalisation has changed the strategic environment in which LTC exists. Failure to adapt will jeopardise a LTC agency’s ability to survive. Although historically there were few incentives to encourage collaboration and many to foster competition, the key to survival today is to think on a system wide basis. Co-operation and partnership are the keys to success in this new environment and this change is likely to be difficult for some managers to embrace. Genghis Kahn expressed this reluctance when he said, “It is not sufficient that I succeed—all others must fail.” It is better to embrace the sentiment of Bruce Henderson, CEO of the Boston Consulting Group. “Competition and cooperation go hand in hand in all real life situations. Otherwise, conflict could only end in extermination of the competitor. There is a point in all situations of conflict where both parties gain more, or lose less, from peace than they can hope to gain from any foreseeable victory. Beyond that point cooperation is more profitable than conflict.”