Transcript Generated by AI 00:05 Hey, Mark Parkinson back with Park Place. 00:07 And we're continuing to look at Texas. 00:09 And today we're looking at the regulatory environment in Texas. 00:14 And we're joined by one of my favorite people, Steven Littlehale, 00:18 who has done so many great things for the sector and just fun to, 00:21 to talk to and be around. 00:24 And I, I think this most recent work that you've 00:27 done, Steven, and creating State Regulatory Index is 00:30 just amazing where you've come up with an objective criteria of some several 00:34 objective criteria to judge where a state is at. 00:38 You know, I think most providers think that their 00:40 states are the worst to operate in, in the country. 00:43 And you've given us a way to really evaluate, OK, you know, 00:46 which ones are the more favorable and which ones are the less favorable. 00:49 So before we get into Texas, tell us about the state regulatory index 00:53 and what it's all about. 00:55 Sure. 00:56 And, and thanks very much, Mark, again for that very warm welcome. 01:00 I'm delighted that there is such value in the State Regulatory Index. 01:05 Just to start off, the focus of the State Regulatory Index 01:10 is really a more more centered around survey and certification. 01:16 But many things that are present in the regulatory environment that pull 01:22 resources away from providers, though those resources are in the shape 01:27 of actual dollars, but also resource in, in terms of people power in an 01:32 environment where we just don't have the extra bandwidth to pull people away from 01:39 actual care. 01:40 It, it ended up being a, a really important feature in the State 01:45 Regulatory Index. 01:48 So as you said, it's a way to help any stakeholder, 01:53 be it a provider or perhaps a lender or REIT to understand some of the dynamic 02:01 influences in a state that may ultimately pull focus on resident care. 02:09 So we took a look at many criteria that are related to regulatory stress, 02:18 such as the abuse icon or civil monetary penalties. 02:25 Both the number of CMPs, but also the amount of CMPs, 02:31 the number of months someone stays on SFF or the frequency of DPNAs or DDPNAs at 02:42 some of the examples. 02:46 And so you take all of those criteria and then you compare each state to every 02:51 other state to come up with your rating. 02:54 Is that right? 02:55 That's right, that's right. 02:56 Basically, we're interested in understanding the 03:00 national averages and then the state's performance away from that national 03:06 average. 03:07 So whether it's a standard deviation or half standard deviation, 03:12 2 standard deviations, how different are they from average? 03:17 And what is your grading system? 03:18 What, what are the adjectives that you use? 03:21 Sure. 03:21 We have 7 different categories that that we use to differentiate the states. 03:30 They are very unfavorable to unfavorable, slightly unfavorable, neutral, 03:37 slightly favorable, favorable and very favorable. 03:43 OK, so when you when you apply all the 03:45 criteria, where does Texas fall? 03:47 OK, so Texas is, is really rock solid right in the middle 03:52 of slightly unfavorable. 03:55 Now this analysis is updated every single quarter and there's been some recent very 04:02 positive momentum in Texas to address some of the very criteria that is in the 04:10 SRI, namely the awarding of IJs. 04:13 So we're seeing some movement and we hope to see some additional movement in the 04:17 future. 04:19 What are what are some of the features in Texas that are actually sort of good that 04:23 that look, you know, somewhat favorable? 04:25 OK, well, in thinking about Texas, it might, 04:29 we'll go through all of the criteria for Texas, which I think is important, 04:35 but the favorable would be things like the number of days in between survey 04:41 which a provider might think, you know, why is that a good thing? 04:47 Well, even though they're awarding a very high 04:51 proportion compared to other states in the nation of IJs, 04:55 the fact that they're coming in frequently means that you have a greater 05:01 opportunity of cleaning your survey record, if you will. 05:05 So changing your data profile that translates into how long is a facility on 05:11 the candidate SFF list or how many months are they spending on the SFF list because 05:18 the surveyors are coming in with a great deal of frequency and it gives you the 05:24 opportunity once again to improve your outcomes. 05:29 And then something completely unrelated, the denial of payment for new admissions 05:34 is actually not something you see frequently in Texas compared to other 05:39 states. 05:40 So that is marked as a positive amongst the criteria for Texas. 05:46 What what are a couple of the negatives? 05:48 OK. 05:49 So the CMP fines for example in the amount, 05:52 the actual dollar value of the CMP fines are both unfavorable. 05:58 I also, I also mentioned the percent of tags that 06:02 were at the IJ level. 06:04 And then also if you are receiving A tag of G or greater, 06:09 how many of those tags were at the IJ level? 06:13 So really handing out Ijs at a much, much higher rate than the rest of the 06:18 nation, which is specifically where we hope to 06:22 see some very dramatic improvement over the next several quarters. 06:28 That's great. 06:29 Well, I mean, it's like a lot of things that we've 06:31 learned in our analysis of Texas. 06:32 It's not easy there. 06:33 It's in fact, it's pretty darn hard. 06:36 But there's there's hope and there appears to be some improvement that's 06:39 taking place over the years. 06:42 Absolutely. 06:42 And and fingers crossed. 06:45 Here's where Texas appears on the map in terms of their assessment of the state 06:51 regulatory index. 06:53 And you can see that they, as we, as we discussed, 06:56 are considered slightly unfavorable. 07:00 So we will look for Texas hopefully to become at least neutral in the next few 07:05 quarters. 07:06 That's great, Steven, thanks so much. 07:08 This analysis is always really interesting to me and I think somewhat 07:12 encouraging. 07:12 I agree with you that this, this whole measurement of time between 07:16 surveys is so critically important. 07:18 You know, a lot of, a lot of the Texas providers have the 07:21 business model of buying an underperforming facility and trying to 07:24 turn it around. 07:25 And you got to get those surveys to, to get your five star score up, 07:29 which in some states, you know, you just can't get done. 07:32 But in Texas it looks like you can. 07:34 Precisely. 07:35 And, and really taking that excellent example, 07:38 Mark, is when a facility is trying to get 07:41 better financing and they're immediately excluded because of their past survey 07:47 history, which may have absolutely nothing to do 07:50 with the current providers. 07:53 Yep. 07:53 Well, Steven, again, thank you very much. 07:55 We appreciate your analysis here. 07:57 It's my pleasure. 07:58 Thank you and, and thanks all of you for your continued 08:01 support of Park Place. 08:02 And we're having fun with this analysis of Texas and it will continue and we 08:06 appreciate you continuing to watch the series. 08:08 Thanks.
