Home Health: Is It Better to Own or Partner?

No matter where they live, most seniors prefer to age in place. But as they do, they also typically need more services. These can include assistance with the activities of daily living as well as health services.

But what’s the best way to deliver those ancillary services in a seniors housing or skilled nursing setting?

Effective home care and home health strategies were discussed recently at a well-attended session at the 2019 NIC Fall Conference in Chicago. A panel of experts took a deep dive into the pros and cons of outsourcing the services or taking them in-house.

“Seniors housing and care operators need a strategy,” said panel moderator Joel Nelson, president and CEO at Life Care Services (LCS).

The panelists agreed that an effective strategy can help boost resident satisfaction and also extend length of stay. Residents who can get the help they need where they live are less likely to move. They’re more satisfied, and so are their families.

The difference between home care and home health was defined. Home care consists of help with activities of daily living (ADLs). Home health is typically a Medicare-certified and reimbursed service, such as physical therapy or nursing care.

Several macro trends are impacting the home care and home health markets. The Centers for Medicare and Medicaid Services (CMS) is moving toward value-based care, seeking the best health outcomes in the lowest cost settings. More healthcare is being delivered at home. Also, CMS is allowing some payors to offer home care services. “That creates opportunity,” said Cheri Greenfield, senior vice president, Home Care Operations, Humana.

A 2018 study by Humana showed that the next generation of seniors will have less social support because of smaller and fragmented families, and more elders will live with chronic conditions. “We need to invest in the right services,” said Greenfield.

New Rules Disrupt Home Health

A big change takes effect January 1, 2020, that will impact the home health landscape. The new system—Patient Driven Groupings Model (PDGM)—changes reimbursements from per visit payments to ones based on value.

“The change will push mom-and-pop home health agencies out of the business,” predicted panelist Paul Kusserow, president and CEO, Amedisys, a large home care and home health services provider. He estimated that of the 12,500 home health agencies in the country about a third will have trouble surviving the change in the payments system.

Kusserow views the situation as an opportunity to purchase home health agencies and grow Amedisys. He noted that seniors housing operators might also consider jumping into the home health business, though a partnership with an established company might make more sense because of the complexity of the business.

Panelist Todd Kaestner agreed. “Home health is a technical and complex business,” said Kaestner, executive vice president, corporate development, Brookdale Senior Living. The company offers home healthcare in about 70% of its 800-plus communities. Home care services are available in 100 locations.

LCS launched a home health business in 1985 but several years ago decided to outsource the work instead. “We didn’t have enough scale,” said Nelson, adding that the availability of labor was an issue along with the need to heavily invest in new technology.

Start-ups are difficult, noted Kusserow. Amedisys launches 12-15 home health care agencies a year. The cost is about $500,000, and sometimes double that amount for agencies that require special licensing, such as for hospice services or in a state where a certificate-of-need must be purchased.

Nelson asked the panelists whether home health and home care services compete with seniors housing or represent a route to referrals and higher occupancies.

Humana’s Greenfield views the relationship as a partnership. “We can come together to identify the right services at the right time,” she said.

Kaestner at Brookdale doesn’t see home health as a competitor because of its episodic nature. Home health providers offer treatment for a specific condition over a short period of time. But he added home care services can help increase the length of stay of residents. “It can be a win-win,” he said.

Telemedicine will change the home health market, said Kusserow. “It’s a tremendous opportunity.” Sensors will monitor the elder’s activity and health, signaling when assistance is needed. Amedisys invested last year in Medalogix, a Nashville-based predictive analytics company. It provides data to customize care plans to reduce hospitalizations and keep seniors in the most appropriate care setting—information sought by managed care plans.

Whether a senior living provider decides to launch its own home care and home health business or partner with another provider, the panelists agreed that a strong local management team is necessary for success. “All healthcare is local,” said Kaestner. “This is a people intensive business.”