Preferred SNF Networks: Where They Help—and Where They Can Hurt

TL;DR: Preferred skilled nursing facility (SNF) networks can tighten coordination and sometimes lower length of stay, readmissions, and spend—but they also carry compliance, equity, and market‑capacity risks. Use them as a tool, not a tunnel.

Why hospitals build preferred SNF networks

• Tighter handoffs and accountability. Hospitals in bundled‑payment and similar value programs often formalize SNF partners to standardize pathways, share data, and support transitional care. In national surveys of bundled‑payment hospitals, roughly two‑thirds reported forming preferred SNF networks to help control post‑acute variation [1].
• Potential outcome and cost gains. In multi‑market studies, patients routed to preferred SNFs had shorter SNF stays, lower Medicare payments, and lower probability of SNF readmission versus non‑preferred facilities (associations, not guarantees) [2].
• Operational focus inside ACOs. By 2019, more than half of surveyed Medicare ACOs reported preferred SNF networks to manage post‑acute quality and spend, alongside data sharing, care coordination, and expectations for responsiveness [3].

The upsides (when networks work)

• Faster, more reliable accepts. With shared expectations and direct lines between teams, hospitals report more predictable placement and fewer back‑and‑forth delays—one reason networks proliferated under bundles [1,3].
• Lower utilization in some settings. Evidence links preferred‑network SNFs to shorter LOS and lower payments for the SNF stay—again, not universal, but a real signal in the literature [2].
• Better collaboration mechanics. Programs commonly include shared data, embedded staff or transitional‑care nurses, and telehealth links—practices associated with smoother transfers [4].

The downsides (and why some efforts disappoint)

• Mixed or null effects are common. Some evaluations find no clear gains in outcomes or market share for patients sent to “preferred” SNFs from ACO hospitals. Work on BPCI‑Advanced shows limited change in SNF referral patterns after program entry. Translation: labeling a network “preferred” doesn’t guarantee different behavior or results [3,5,6].
• Compliance and patient‑choice risk. Federal discharge‑planning rules require hospitals to support patient goals and preferences and to assist with provider selection using quality and resource‑use data—not to steer. Hospitals must offer choice among qualified post‑acute providers and present data relevant to the individual patient; over‑narrow lists or implied exclusivity can conflict with Conditions of Participation [7].
• Equity and access concerns. Networks may concentrate referrals to facilities more willing to accept lower‑risk patients, leaving complex cases (behavioral health, bariatric, limited caregivers) with longer waits. Studies note availability of high‑quality SNFs and willingness to admit costlier patients as recurring pain points [3].
• Market‑capacity realities. In many regions there simply aren’t enough high‑quality SNF beds at the moment they’re needed. Preferred status can’t manufacture capacity; it can even narrow options on a tight day and slow the accept if non‑network facilities are ignored.

How to do preferred networks right

1. Build around transparent quality + responsiveness—not exclusivity. Use public measures and shared SLAs (e.g., “respond within 60–90 minutes,” “post daily capacity”) to define “preferred,” then publish criteria internally. Keep non‑preferred, appropriate options visible to meet choice requirements [7].
2. Support true patient choice (and document it). At discharge, present several appropriate SNFs with relevant quality/resource data and document the patient’s goals, preferences, and final choice. This aligns with CMS Conditions of Participation and June 2023 reminders on safe discharges [7].
3. Guard against risk selection. Track case‑mix and acceptance rates by facility (bariatric, dementia, HD/IV, behavioral overlays). If your preferred panel isn’t taking complex patients, it isn’t truly “preferred.”
4. Measure results you actually control. Outcomes can be confounded; start with operational metrics most sensitive to your process:
   • Time‑to‑First‑Accept (admit → first willing SNF)
   • Order‑to‑Door (discharge ready → departure)
   • Weekend discharges as % of all discharges Tie patient‑relevant outcomes (30‑day readmit, ED returns) to case‑mix so you don’t over‑interpret [2,3].
5. Keep a safety valve to the open market. When capacity is tight, a countywide capacity view and a PHI‑last broadcast (need signals first) can prevent your network from becoming a bottleneck. Use the network as the fast lane, not the only lane—mirroring how many public programs manage behavioral‑health and LTC capacity [3,4].

Bottom line

Preferred SNF networks are useful infrastructure, not a silver bullet. They work best when they make quality and responsiveness visible, respect patient choice, and stay flexible when the preferred panel can’t take the case in front of you. Expect improvement when the network changes behavior (faster accepts, clearer handoffs)—not simply when it changes labels [1–3,5].

Sources

1. McHugh JP. Reducing Hospital Readmissions Through Preferred SNF Networks. (overview of rationale) [PMC]
2. Huckfeldt PJ et al. Do SNFs Selected to Participate in Preferred Networks Have Better Outcomes? (shorter stays, lower spend/readmit associations) [PMC]
3. Zhu JM et al. Hospitals Using Bundled Payment Report Reducing Post‑Acute Spending. (two‑thirds formed preferred networks) [PMC] • AJMC coverage
4. Duke‑Margolis Center for Health Policy. Value‑based payment and SNF partnerships: common collaboration mechanisms. (brief) [healthpolicy.duke.edu]
5. Gu J et al. Effects of ACOs Forming Preferred SNF Networks. (no outcome/share gains in some ACOs) [PMC]
6. Lin SC et al. BPCI‑Advanced and SNF Referral Patterns. (limited change in referrals) [PMC]
7. CMS Conditions of Participation—Discharge Planning (42 CFR 482.43) and 2023 CMS memo QSO‑23‑16‑Hospitals. (patient choice, use of quality/resource data; safe discharge reminders) [ecfr.gov]