The Godfather Part II delivers one of the best pieces of advice any senior living operator is likely to receive.

Repeating a lesson passed down from his father, Mafia Don Michael Corleone notes how it is important to “keep your friends close, but your enemies closer.”

It’s easy to conclude that your enemies consist entirely of senior living communities within a 10-mile stretch. But going forward, that may be less the case.

In fact, I’d submit that skilled nursing facilities will become one of the biggest “enemies” your organization will be facing, particularly as managed care and accountable care organizations take hold. Chances are, you will find your community competing against skilled operators for the patient referrals that will increasingly separate the winners from the losers.

So it’s probably worth noting that skilled operators are making a subtle but critical positioning adjustment. For decades, their message to public and other payers has been that they were the cheapest game in town. And in a world where acute care settings were incentivized to get people out the door as quickly as possible, that worked pretty well. Especially as assisted living communities insisted they were not delivering healthcare services.

But the landscape is changing. Medicare is cutting payments to hospitals when patients bounce back too soon. Regulators are also putting the squeeze on skilled care operators to demonstrate quality care. As for the notion that assisted living is not in the healthcare business? Let’s just say the available facts strongly suggest otherwise.

Given these realities, the new skilled care proposition in many quarters is becoming this: We are the lowest-cost quality provider. More evidence of this addendum was seen earlier this week in Philadelphia, during the American College of Health Care Administrators Convocation and Exposition.

As my colleague Emily Mongan reported, skilled players were being urged to assess their clinical competencies and seek out related strategic opportunities. Strategy will be vital to success in a field increasingly coming under managed care’s umbrella, noted Speaker Lisa Thomson, chief marketing and strategic officer for Pathway Health.

Being able to provide quality services will drive more referrals into skilled nursing facilities, and drive up rehab levels, Thomson said.

“Ultimately, look at data, look at outcomes, strengthen disease states, and seek out partners,” Thomson said. “It’s our time to show people what we [skilled care facilities] do, and what we do well.”

There is no getting around the fact that senior living will face serious challenges in the years to come. But there will be opportunities as well, especially for operators who figure out how to leverage data insights to deliver quality outcomes at a lower cost in a consumer-friendly way.

You may or may not want to change the way you do business. That’s your choice. But there are two undeniable realities playing out.

One is that healthcare and the way that it is paid for is undergoing a fundamental shift. The other is that many of your enemies are adjusting accordingly.

John O’Connor is editorial director of McKnight’s Senior Living. Email him at