The Executive Study series is a forum to connect with industry thought leadership on a range of thought-provoking topics. These are not interviews. They are conversations to stimulate the ideas and collaboration required to solve some of the industry’s biggest challenges.
In the third installment of the Executive Study series, we sat down with Zeke Turner, Founder and CEO of Mainstreet. Zeke and the team at Mainstreet are the epitome of innovation. They are constantly pushing the boundaries, questioning conventional wisdom and striving to make things better for those they serve. It has been a remarkable journey for Zeke. He founded Mainstreet in 2002 at the age of 25 years old. Heading into its fifthteen year, the Mainstreet team has created an incredible organization and is now the country’s largest developer of transitional care properties. Zeke will tell you that Mainstreet’s success is centered around their mission, to transform lives.
Zeke and Patrick sat down for an in depth conversation in Zeke’s office. The two covered a lot of ground. They discussed Mainstreet’s unique approach, the current challenges in the industry and how Zeke manages his time with eight children - all 11 years old and younger!
Patrick: Mainstreet takes a very unconventional approach. When you look at the transitional care model, describe how Mainstreet is uniquely positioned to help those you serve?
Zeke: One of the things that separates Mainstreet from the norm and helps to push us toward that front edge is that we care more about what ‘should be’ and not so much about ‘what is’. Instead, we decided to do something about it, and move toward what ‘should be’. This opened up a world of possibilities that most people had never considered, like building new products inside of the skilled nursing space. We have now pushed to the next evolution of this which is the Rapid Recovery CenterTM . This actually reaches into the hospital as an extension, rather than the post-acute care facility. Regardless of what the new administration does, that idea of higher quality of care, better outcomes at a lower cost, and a better user experience for both the patients and the caregivers is an opportunity we are going to pursue.
Patrick: We don’t expect to see a significant change in value based programs, which is good news. Fortunately for you, Mainstreet appears to be positioned extraordinarily well. Tell us about your dialogue with health systems.
Zeke: We have a lot of active conversations with health systems both small and large about ways we can effectively be their turn-key post-acute strategy. What happens from here, is it helps them to better manage the universe of post-acute providers that they have without having to directly manage it themselves. If you take a decent sized hospital or health system anywhere in the nation, they are probably discharging 25-30 percent of their population to 200-300 post-acute care providers, this is just not manageable. Now there is a whole other population, 65-70 percent, that are either staying in their beds too long, or are going home probably a little too soon. Because we see high readmission rates when people go home, approximately 70-80 percent, when you look at the cascading set of events that comes from there, that’s where we are able to come in and actually put some programs in place to better manage the inpatient bed.
Patrick: Now, if we unpack this even more, one of the biggest challenges in healthcare is dealing with fragmented care. What is Mainstreet doing to help advance this cause when collaborating in ACO’s?
Zeke: There are two major things that we have. First of all, we know that the health systems view the world of post-acute care as a black hole. We talk to chief medical officers frequently and they mention they have no idea about the post-acute world. This happens all the time, even outside of health care systems. You talk to your doctor or your nurse and they ask you a bunch of questions, then they send you out to get an ultrasound, and they start over again at the beginning. That can be really troubling as a consumer. The big thing we are working on right now is interoperability. We can be the ones to pull the data and clean it. Let the data interoperate but still exist in its own world autonomously. Then, we use that data to make sure we are communicating appropriately every time that we see that patient in the lab etc. The second thing we are working on is telemetry. How do we make sure that the caregivers or physicians, keep in touch with patients on a real time basis even if the physician is not on the property at that moment. A big thing we are seeing in the post-acute world is that movement toward physician-based care.
Patrick: So, are you thinking about leveraging Telehealth?
Zeke: Our Rapid Recovery CenterTM was actually built to have daily physician involvement with patients. So, we are going to use extenders, we are using telemetry, and we are actually using physician's offices onsite so we have daily physical involvement with patients. By definition, outcomes are going to get better because of that caregiving. So, interoperability and telemetry are the two things that we are seeing as the next phase for us to be able to provide the care necessary.
Patrick: There is obviously a lot of play with telehealth, and for good reason, but why is there still poor adoption? Are we dealing with an industry adverse to change? Is it the hang-ups with regulation and reimbursement? What is your take?
Zeke: First, you have standard industry inertia. So, if you just pick on the long-term care providers for instance, you see they are all built to protect status quo. Every day they think about how to protect their turf in order to keep their rates from going down and keep people from moving away from them. In fact, when assisted living was first birthed out and became its own part of the industry, the long term care providers were most resistant to it. The second issue, is that people try too hard to solve everything at once. The Affordable Care Act, even if its intentions were really good, the mechanism was just madness. We said look, we can't solve the entire healthcare industry, but hopefully we can solve the impatient bed problem in the hospitals. Well, then that frees up a little room to solve other things too. For example, what we are seeing in decent sized hospital systems by working in our Rapid Recovery CenterTM, is that they can avoid millions of dollars being spent annually by reducing their length of stay by a couple of days. When you think about that, that's multiple millions of dollars of cost avoided in the system that can then go to other things that they need to do.
Patrick: How is Mainstreet’s Rapid Recovery CenterTM model different than what your competition offers?
Zeke: It is so much easier to do these things when you are building new versus trying to reformat old. We put medical gas in the walls of our Rapid Recovery CenterTM because it allows us to do a whole host of different rehab and therapy services that no one else can do. For example, tracheotomy rehab therapy, it can’t be done if you don’t have suction in the walls. When you are building, it doesn't cost a whole lot more to put that in. However, trying to put that in walls of something that already exists is exorbitantly expensive. You can wire the walls for high grade telemetry, you can put the system in place, you can have the building setup for wireless. That’s a way to push further on innovation with telemetry telehealth by doing it upfront in the design process rather than waiting and having to do it on the back end.
Patrick: On a go-forward basis, are you looking purely at development versus acquiring?
Zeke: We will acquire too. Our public platform, which is a real estate investment company, will acquire anything quality that is in the “peri-acute” space. Not directly with the acute hospital, but everything around the hospital. For example, surgical centers, freestanding ERs, assisted living, independent living, and skilled nursing. From our private company standpoint, we will develop mostly in the skilled space and maybe a little bit in the memory care element, but primarily in the skilled or acute space depending on licensing in that state. From an operating standpoint, what we call our family brands, the Rapid Recovery CenterTM is built to be new because of all the various medical needs and things you need to put in the walls to actually make them operate well.
Patrick: We’ve talked about the regulatory challenges. We heard that Mainstreet currently has some operating limitations in certain states. Is that true?
Zeke: Yes, it depends, we are currently working in about half traditional CON states and half non-CON states. The winds are at our back there, since those regulations are changing. The problem is that skilled nursing, because of the long-term care, inertia in the industry, and protectionism. These tend to be carved out of whatever reform happens. We know at some point in time, we are going to move to something akin to site neutral or at least making the licensure category more of a back office thing. Long-term acute care hospitals (LTACHs) are going to get squeezed at some point and we know that inpatient rehab facilities (IRFs) are probably going to go away completely.
Patrick: Yes, because Mainstreet is zero Medicaid.
Zeke: We are zero Medicaid, so we don't have any direct negative effect on state budgets. In fact you can make a case that we have a significant positive effect on state budgets. It's amazing how it is so often misunderstood by the broader healthcare industry that Medicaid doesn't do any short-stay care at all, it's all custodial medical care.
Patrick: What percentage is that?
Zeke: We cover a really wide swath of Diagnosis Related Groups (DRGs) that we can do to truly be the replacement of the impatient bed so a hospital can ultimately view us as being an equal alternative to their medical-surgical bed. This frees them up not only to move that person down to a lower cost environment even if they are the payer under the bundle system or to free up that bed when the next patient comes in, which may be an $80,000 surgical procedure.
Patrick: What is Mainstreet’s philosophy when you look at growth?
Zeke: There is an old economist, Joseph Schumpeter, who talks about the idea of creative destruction. What we call disruption in today's modern language, is this idea that creation of new comes through the destruction of the old. Most people will think of that as a Netflix taking on a Blockbuster, but it also happens inside organizations too. The very thing that got you where you are is not the thing that will take you into the future. I didn’t set out to try to build a massive real estate company. I didn’t set out to build one of the largest development companies in the US or to even do some of the things we are doing currently. I set out to make a positive difference in people's lives. It's our “why”. It's the mission that we have, that everyone knows deep down in their heart, they are fully into this idea, that they are going to transform lives, it is very deep for us. What if we took it a little bit further, what if we actually moved into the operating side, what if we not only moved into the operating side, but we also reinvented the operating model from the bottom up to actually change the dynamic for what it could be in the industry? What if we moved into telehealth, put medical gas in the walls and actually replaced the impatient bed at the hospital? It just keeps going, where we keep finding more and more impact that we can have on the industry and it is actually disrupting the current reality. We've said that there is nothing sacred at Mainstreet, other than to glorify God. Everything else has to be continuously tested and constantly reviewed to the same standard. If we can keep that mentality, inside of our company then year by year, we are going to keep pivoting just a little bit to take a stance. For us, our “why” is that we want to have as big an impact as possible. We know that means that over the next 10 years we expect to have positively affected five million lives in the United States. We expect to impact those five million lives through our direct efforts, the jobs created, the caregiving and our giving programs. If we do that, we will have accomplished our mission of transforming lives.
Patrick: I am going to qualify this question, Mainstreet cannot be your answer. So, who else besides Mainstreet will be another catalyst for disruption in the industry?
Zeke: I’m not seeing anyone really stepping up on that kind of scale. Some of the bigger ones we’ve seen, like Kindred, are announcing that they are going to get out of the skilled space. That completely took me by surprise… and I’m not often surprised. I think the health systems have an incredible platform for disruption. I think the insurance industry itself when they look at the way they can create better funding models to simplify and get more involved in population health. Truly the caregiving one on one is in an incredible position to disrupt. When the freestanding ERs started popping up, the immediate response of the hospitals was ‘this is going to destroy us’. Then the hospitals figured out how to work with the freestanding ER such that all of the lower acuity cases and the non-emergency cases go there, outside of the 15-20 minute wait times, this vastly improved the experience for the consumer. Outside of all the emergent cases, the hospital has already sorted out the lower care cases that are going to be handled in a more efficient environment, shorter wait times, and they still get all the items they need for their overall health system to deal with the trauma. This is ultimately what will lead to the surgical procedures. To me, this is a good example of something that fragments first, but then actually ends up adding value back where it initially might have been looked at as purely competitive. It is those types of things that I see as emerging and we have to figure out ways as an industry, health care in general, not just post-acute, as a government, and as the payer sources, to drive innovation in those fragmented pieces that help us fix the parts that will fix the whole.
Patrick: When you consider the proliferation in technology, it is not a stretch to think this level of care could eventually be offered in the home environment. What are your thoughts?
Zeke: We have two different things happening, you have those stays in which people are stable but not well, they have been cared for in the hospital. If they go home, the likelihood is that they are going to have something bad happen. Then you also have what their residence is, and how they stay in their home, whatever the home looks like. We’ve often confused those things as being one in the same, but the truth is the residence can be any of a number of things, he/she could be living in an apartment, living with the adult child, it could be just a single family residence, assisted living, independent living, even long-term care, those are all just homes of some form. What we said is, at some point in time we want to solve both those things, both the horizontal movement and this vertical movement being the residence. Let's focus first on the horizontal movement, let's get people from stable to well so they can go back home. We are doing that, we are doing it well, but we have a lot of work to do. The next thing we are doing, and we are in research and development right now, is how do we help reinvent the home so that it is something where somebody lives, it is their home. Even if you look at the small house and Greenhouse models, there are still many facilities. I was interviewing my grandparents the other day because they are a great source of information. When you look at their residence, I asked them, “What has to be there for home to feel like home to you?” And they brought up all different things that you just don't think about, like your linens not being laundered elsewhere outside of your home, because who wants their linens being laundered with somebody else's. That means you are going to have a laundry room because it can't go out to an outside place. Things like a front porch, a mailbox, because that is home to people. All these different pieces and then figuring out a way to get the medical care in there so that these people who need long-term custodial medical care, about 25-30 percent of the population, has it. We are deep in R&D right now to reinvent that product, but I think it is completely possible, and we are trying really hard to make it more probable.
Patrick: I know that you always focus on the “why”, but you just brought the whole continuum in full circle. When you think about a name like Mainstreet, it almost appears your evolution will ultimately end up in the home.
Zeke: Bringing it back home, it's the neighborhoods and – Dr. Bill Thomas said it yesterday, – he said somewhere along the way I had to be inspired by the small towns in Indiana, because people live in neighborhoods, but they have their own homes. We are seeing this emerge in other places with micro apartments in the cities and with the tiny house model that is just a reinvention of mobile home parks.
Patrick: One last simple, but fun question that we like to ask industry thought leaders. What do you like to read?
Zeke: I love to read. I read in three different forms, I read for information, such as industry publications, that provide context. I’m big on pattern recognition. I also read for thought provocation, this was a big shift for me. A few years ago, I would only read to find answers. Instead, I now try to read those things to try to come up with better questions and to provoke questions. Then, I get to go find the answers or come up with the answers. That changed everything for me when I read. Finally, I just read for fun. To clear my head I will read fantasy novels or something similar just to get away. I try to take some breaks. Weekends are not much of a break for me because I have eight children, so I try during the week, every other week or so, to take a day off and just get away.