Independent Pharmcy + Assisted Living facility

[Doctor M]

Independent Pharmacy + Assisted Living Facility

Is this a good synergistic combination? In other words, One owning the other. Discuss.

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[southpharmindy]

I've actually thought about this myself with such an aging population. There will certainly be a need for more nursing homes and assisted living facilities. I also think there is a great need for respite care if marketed correctly.

What are the reimbursement rates like for something like that?

I wouldn't even know where to start but a couple nursing homes could support a pharmacy.

 

[Doctor M]

I've actually thought about this myself with such an aging population. There will certainly be a need for more nursing homes and assisted living facilities. I also think there is a great need for respite care if marketed correctly.

What are the reimbursement rates like for something like that?

I wouldn't even know where to start but a couple nursing homes could support a pharmacy.

Sure, own your pharmacy, buy a few ALFs and fill all the scripts there at your facility. You get income from the ALFs and pharmacy!

 

[group_theory]

*disclaimer - I know there are differences between assisted living and nursing homes (and skilled nursing facilities) - but the amount of regulations between them will differ between states. Doctor M asked about Assisted Living Facility. The purpose of this post is the "discussion" part where I just bring up possible challenges to such endeavors (whether Assisted Living or SNFs).


I agree - there is a need for more nursing homes, skilled nursing facilities, assisted living, etc. A lot of the inpatient medicine admission these days have patients discharged to one of these facilities instead of home (a product of when you have a 80+ year old patient population on polypharmacy and working kids/grandkids)

So would it make sense to own such facility (and operate or hire a management company to operate) ... maybe

Just like pharmacy, nursing homes/ALF are heavily regulated by the state and the federal government (through various agencies). And the level of regulation will depend on the "type" of nursing facilities you will have - ranging from assisted living (ALF), to more intensive nursing homes (with dementia unit and inpatient hospice). There are pros and cons to each type. One type made the news recently (the 911 call and CPR/staff not trained or instructed to do CPR)

The Stark Laws (anti-kickback statues) mostly refer to physicians, but it may be a roadblock to pharmacists owning a ALF (and being the sole supplier of medications to that place). This area of law gets very complicated and tricky - certain SNF services are not "designated health services" under Stark and are not subject to its limitation, but other SNF services (such as laboratory services) are. I don't know where pharmacy falls on this designation. Also, the residents of the ALF should still have freedom of choice when choosing a Part D plan.

And will it be profitable? CMS, MedPAC, and OIG have been saying for years that reimbursements to SNFs have been overinflated and are trying to reduce reimbursement rates. Currently reimbursement is based on prospective payment system (PPS), which pays a per-day rate for each residents, according to the case-mix adjustments. It is similar to bundle-payments that hospitals get for DRGs except charges are made per day instead of per admission (up to the limit that medicare part A will pay). Due to this payment structures, there is pressure for SNFs to provide fewer services (or do group physical therapy session instead of individual sessions) while billing medicare for those individual sessions. The OIG recently have been investigating these events and starting to crack down.

But you would not be seeing all these SNFs everywhere if owning and operating them isn't profitable. If a physician deciding to start and own a pharmacy (and hire pharmacists), he/she will have to learn a whole new set of rules, regulations, and market conditions. It is the same situation with a pharmacy (whether individual pharmacists, LLC, or S corp) decides to start and own a SNF (even if you hire another company to operate). There are new sets of laws and regulations to go through (and huge startup cost)

(an easier option would be to buy an existing SNF/ALF, but make sure lawyers review the ownership arrangements to make sure they don't violate any laws, and you take the risk of any existing liabilities from that SNF/ALF)

I also think that a SNF or Assisted Living Facility will be an ideal place to provide MTM and other counseling services (perhaps even immunization) that would have great impact on quality of life for these residents.

*your post just said "Is this a good synergistic combination? In other words, One owning the other. Discuss." Is this the stuff you were aiming for when you said "discuss"?

 

[Doctor M]

*disclaimer - I know there are differences between assisted living and nursing homes (and skilled nursing facilities) - but the amount of regulations between them will differ between states. Doctor M asked about Assisted Living Facility. The purpose of this post is the "discussion" part where I just bring up possible challenges to such endeavors (whether Assisted Living or SNFs).


I agree - there is a need for more nursing homes, skilled nursing facilities, assisted living, etc. A lot of the inpatient medicine admission these days have patients discharged to one of these facilities instead of home (a product of when you have a 80+ year old patient population on polypharmacy and working kids/grandkids)

So would it make sense to own such facility (and operate or hire a management company to operate) ... maybe

Just like pharmacy, nursing homes/ALF are heavily regulated by the state and the federal government (through various agencies). And the level of regulation will depend on the "type" of nursing facilities you will have - ranging from assisted living (ALF), to more intensive nursing homes (with dementia unit and inpatient hospice). There are pros and cons to each type. One type made the news recently (the 911 call and CPR/staff not trained or instructed to do CPR)

The Stark Laws (anti-kickback statues) mostly refer to physicians, but it may be a roadblock to pharmacists owning a ALF (and being the sole supplier of medications to that place). This area of law gets very complicated and tricky - certain SNF services are not "designated health services" under Stark and are not subject to its limitation, but other SNF services (such as laboratory services) are. I don't know where pharmacy falls on this designation. Also, the residents of the ALF should still have freedom of choice when choosing a Part D plan.

And will it be profitable? CMS, MedPAC, and OIG have been saying for years that reimbursements to SNFs have been overinflated and are trying to reduce reimbursement rates. Currently reimbursement is based on prospective payment system (PPS), which pays a per-day rate for each residents, according to the case-mix adjustments. It is similar to bundle-payments that hospitals get for DRGs except charges are made per day instead of per admission (up to the limit that medicare part A will pay). Due to this payment structures, there is pressure for SNFs to provide fewer services (or do group physical therapy session instead of individual sessions) while billing medicare for those individual sessions. The OIG recently have been investigating these events and starting to crack down.

But you would not be seeing all these SNFs everywhere if owning and operating them isn't profitable. If a physician deciding to start and own a pharmacy (and hire pharmacists), he/she will have to learn a whole new set of rules, regulations, and market conditions. It is the same situation with a pharmacy (whether individual pharmacists, LLC, or S corp) decides to start and own a SNF (even if you hire another company to operate). There are new sets of laws and regulations to go through (and huge startup cost)

(an easier option would be to buy an existing SNF/ALF, but make sure lawyers review the ownership arrangements to make sure they don't violate any laws, and you take the risk of any existing liabilities from that SNF/ALF)

I also think that a SNF or Assisted Living Facility will be an ideal place to provide MTM and other counseling services (perhaps even immunization) that would have great impact on quality of life for these residents.

*your post just said "Is this a good synergistic combination? In other words, One owning the other. Discuss." Is this the stuff you were aiming for when you said "discuss"?

Yes, exactly. I would never start an ALF from scratch. I am mostly interested in purchasing an existing ALF. I am staying away from SNF and NH due to strict and heavy regulation. I am def no ready for that. The ALF business is also heavily regulated but that is where i have done most of my business the last 4 years. As for the Stark law, owning an ALF and pharmacy, as i see it, would not be an issue as long i always let the patient decide where he/she wants to fill their meds. The freedom of choice can not be taken away. The pharmacy would of course be offsite from the ALF. Also, since i am not the one doing any referrals of patients to the facility and i will have a disclaimer letting residents know that they may fill their prescriptions anywhere they wish, the self referral law should not apply.

 

[Unchained]

I remember when the word ALF conjured up images of a small furry animal from another planet who always had a witty comeback. Now it is a government created hall of horrors which will consume you. If you are a glutton for punishment buy an ALF. Pizza is much less regulated. A pizza shop is a good supplement to your pharmacy business. People will have to buy their cholesterol and BP meds from you after consuming your pizza.

 

[SoylentGreen]

I did a rotation at a place like that. It was a facility where the owner poached the consultant pharmacist from the LTC pharmacy he was using and started his own pharmacy, and later the pharmacy expanded to serve maybe 30 or so other facilities in the area (with different owners). The pharmacy was where the real money was made, not the facility, but that depends on how generous the state is (most of the patients at most of the facilities were Medicaid patients, but there were some privately insured ones too).

I don't know about the Stark laws, but the pharmacy was in the basement of the facility, which apparently wasn't a problem. They were strictly an LTC pharmacy, no retail business at all.

Anyway, I was told that they were doing quite well.

 

[Doctor M]

I did a rotation at a place like that. It was a facility where the owner poached the consultant pharmacist from the LTC pharmacy he was using and started his own pharmacy, and later the pharmacy expanded to serve maybe 30 or so other facilities in the area (with different owners). The pharmacy was where the real money was made, not the facility, but that depends on how generous the state is (most of the patients at most of the facilities were Medicaid patients, but there were some privately insured ones too).

I don't know about the Stark laws, but the pharmacy was in the basement of the facility, which apparently wasn't a problem. They were strictly an LTC pharmacy, no retail business at all.

Anyway, I was told that they were doing quite well.

The ALF business can be quite profitable if you have it filled, with the right staff and the state off your back. Break their rules, and you are in for really bad situation. As far as pizza shop, we will be opening, my brother and I, our first one in like a month or so. Should be fun!!

 

[Unchained]

The ALF business can be quite profitable if you have it filled, with the right staff and the state off your back. Break their rules, and you are in for really bad situation. As far as pizza shop, we will be opening, my brother and I, our first one in like a month or so. Should be fun!!

Are you franchising?

 

[Doctor M]

Are you franchising?

No, bought an existing one that has been closed for a few months. Changed the name and menu, did some upgrades and will be ready for business in a month or so. Franchise is too expensive.

 

[phampau]

If the ALF you are looking to purchase is already profitable, and you have growth opportunities to gain from your existing pharmacy by purchasing this ALF, i don't see how you can go wrong. I don't see how it cannot be a good synergistic combo! You can gain more Rx's from the ALF and also have potential "patients" for the ALF from the pharmacy with a large customer base? What am I missing here?

 

[Doctor M]

If the ALF you are looking to purchase is already profitable, and you have growth opportunities to gain from your existing pharmacy by purchasing this ALF, i don't see how you can go wrong. I don't see how it cannot be a good synergistic combo! You can gain more Rx's from the ALF and also have potential "patients" for the ALF from the pharmacy with a large customer base? What am I missing here?

The catch is, the pharmacy i own with my partner already fills their rxs. I would merely be purchasing the beds and making profit from the facility itself.

 

[phampau]

The catch is, the pharmacy i own with my partner already fills their rxs. I would merely be purchasing the beds and making profit from the facility itself.

Well in that case, the only thing synergistic you have going for you would be potential "future patient" from the pharmacy to the ALF. With that being said, I would go in it like any other business venture and run the numbers and see if the investment is worth the reward! Good luck!

 

[southpharmindy]

I see it as a no-brainer. You've got a chance to make some money on the ALF but you are also securing your future. Obviously if you own the ALF, you will not be tempted to contract with another pharmacy.

 

[Doctor M]

I see it as a no-brainer. You've got a chance to make some money on the ALF but you are also securing your future. Obviously if you own the ALF, you will not be tempted to contract with another pharmacy.

My concern is regulation. AHCA is ruthless. Citations for everything, but i see it as an opportunity. An opportunity to put two businesses together and have long term growth in income.

 

[radio frequency]

Doctor M, I just wanted to say I like your style of thinking. You are a definite "make lemonade out of lemons" type of a guy, it seems, and a calculated risk taker with smarts. That is very cool.

 

[Doctor M]

Doctor M, I just wanted to say I like your style of thinking. You are a definite "make lemonade out of lemons" type of a guy, it seems, and a calculated risk taker with smarts. That is very cool.

I do take calculated risk. I see the pizza shop and ALF as opportunities to grow each other. How you may ask? By networking and meeting new people. I met a wonderful couple via a friend i know and they own a company called Placement works. Their company places people with slight disabilities in the right work environment. The state pays for their salaries for the first 90 days to see if that person is the right candidate. The more people you help, the more people you meet, the better opportunities that open up. Everyone wins. My thinking is lets spend some money to make money. although the pizza shop is not in the industry im use to, i see it as an opportunity to grow professionally and economically. Either that, it will bite me in the ass and i will be a bankrupt pharmacist looking for work 🙂

 

[group_theory]

Forgive me for not knowing this - but how many employees do you have at your pharmacy? Expanding into owning a pizza place (and potentially an ALF) would make you an employer of many employees - and with more employees, more potential liability (health insurance, unemployment insurance, sexual harassment insurance, unfair labor practices accusation, etc). It's one thing to have 1-2 employees, and another to have 50+

And if you buy an ALF, make sure you have a good accountant (that knows the field) go over the books to make sure that everything is kosher - no hidden expenses, or liabilities (or even potential liability) - you don't want to buy a place only to find out 2 months later that a former employee is suing for wrongful termination (or a former resident's family is suing for negligent care).

What will be your direct personal liability should there be judgement that exceeds your insurance limits? (are you shielded legally from liability related to the business)

I would also check the payer mix of any ALF that you purchase - is it mostly self pay. private insurance, medicare, or medicaid? That can affect your reimbursement, account receivable, and paperwork requirements (AHCA may not require certain documentation but medicaid might require it as a medicaid provider). Is the current business profitable? Why is the current owner trying to sell or unload the business? What is the future trend of reimbursements?

And who will you hire to operate the facility? Will you subcontact to another company to operate the business (and make the majority of decisions) or will you actually run the ALF (as president/ceo) and make all the important decisions? Besides AHCA and OSHA and HHS/CMS/OIG, what other agencies (federal, state, or even local) will be involve (or can get involved)?



*oh, I think it is awesome that you are considering hiring people with slight disability (whether mental or physical) to work at your place - everyone deserves a change to prove that they can work and be productive

 

[Doctor M]

Forgive me for not knowing this - but how many employees do you have at your pharmacy? Expanding into owning a pizza place (and potentially an ALF) would make you an employer of many employees - and with more employees, more potential liability (health insurance, unemployment insurance, sexual harassment insurance, unfair labor practices accusation, etc). It's one thing to have 1-2 employees, and another to have 50+

And if you buy an ALF, make sure you have a good accountant (that knows the field) go over the books to make sure that everything is kosher - no hidden expenses, or liabilities (or even potential liability) - you don't want to buy a place only to find out 2 months later that a former employee is suing for wrongful termination (or a former resident's family is suing for negligent care).

What will be your direct personal liability should there be judgement that exceeds your insurance limits? (are you shielded legally from liability related to the business)

I would also check the payer mix of any ALF that you purchase - is it mostly self pay. private insurance, medicare, or medicaid? That can affect your reimbursement, account receivable, and paperwork requirements (AHCA may not require certain documentation but medicaid might require it as a medicaid provider). Is the current business profitable? Why is the current owner trying to sell or unload the business? What is the future trend of reimbursements?

And who will you hire to operate the facility? Will you subcontact to another company to operate the business (and make the majority of decisions) or will you actually run the ALF (as president/ceo) and make all the important decisions? Besides AHCA and OSHA and HHS/CMS/OIG, what other agencies (federal, state, or even local) will be involve (or can get involved)?



*oh, I think it is awesome that you are considering hiring people with slight disability (whether mental or physical) to work at your place - everyone deserves a change to prove that they can work and be productive

I will be operarting the ALF under a separate management company. The pharmacy has nothing to do with the purchase, therefore, the 50+ employees will not apply. I have done due diligence with respect to lawsuits and potential lawsuits. As it stands now, we know of no pending lawsuits and the contract states as such. As for payer mix, the beds are paid for by the residents SS check as well as ACS payments. The current business is profitable with absentee owners, although there have been issues with AHCA. The current owners are absentee owners who live in another part of Florida. Managing a 120 bed ALF from 4 hours away is difficult, and AHCA has not been too forgiving. The facility is operating with an administrator and manager. I will not hire an outside company. I will manage the meds, and the admin will manage the daily operations. The admin and myself will make the decisions together; what ever it is we have to do to be compliant and keep the residents content. It is a limited mental health facility, so it is quite different than your normal ALF.