Home Health & Hospice Week

Learn valuable lessons from one agency's business diversification journey.

What would you do if you were the lowest-paid home health agency in the nation?

That's what VNA of Indiana County in Indiana, PA had to figure out under the interim payment system in 1997, said the agency's Linda Bettinazzi at the National Association for Home Care & Hospice's 24th annual meeting in Seattle last month.

Because the VNA pinched serious pennies under cost-based reimbursement, it had the distinction of being the lowest-paid agency in the nation under IPS, Bettinazzi recounted in her Oct. 24 educational session at the conference.

In response to the IPS belt-tightening and the incentives for reduced utilization under the prospective payment system, the Medicare-certified VNA launched a separate private duty corporation called VNA Extended Home Care. VNAX's goal was to provide long-term home care no longer available under IPS and PPS, make that care affordable and compete in the managed care market. The resulting revenues would fund the VNA's charitable mission and help the organization to survive, Bettinazzi recounted.

VNAX also aimed to furnish a diverse array of services and products, including professional case management and care coordination, she said.

The new company took off like no one at the VNA expected. "Guess what? People will pay" for services in order to stay at home, she told attendees. 3 Tips For Implementing Private Pay In VNAX's first year of operation in 1996-1997, the division furnished about 18,000 hours of service and made $500,000 in revenues (twice as much as projected) with 10.2 full time equivalent (FTE) employees--a director, an office manager and other part-time caregivers.

In 2004-2005, the company provided 141,000 hours of service and took in $2.3 million in revenues with 41 FTEs across 97 employees. Half of those employees are full time with benefits, Bettinazzi added.

Looking ahead: And the outlook only gets better for next year. VNAX has projected 160,000 service hours and $2.8 million in revenues, Bettinazzi revealed.

The VNA is what social worker Joe Jackson with ElderCare Advisors in Lenox, MA calls a "Type IV agency"--one that offers Medicare-certified medical, non-certified medical, and non-medical home care, he said in the presentation. The VNA "is a modern-day Type IV full service success story," praised Jackson, who assisted the VNA with its business strategy.

Bettinazzi offered these tips for agencies making the switch to a private pay division: • Use social workers. To increase conversions from your traditional Medicare patients to new clients for your private duty unit, you may need to utilize different staff--social workers. "Nurses don't think they need them, but they do," Bettinazzi noted.

Under Medicare PPS, nurses don't have the time to review patients' cases in detail for other needs that your private duty division can meet. Social workers are [...]