Home Health & Hospice Week

Industry consolidation is at hand, experts predict.

Are you one of the many HHAs sticking its head in the sand over big reimbursement cuts to come? If so, it’s time to pay attention or risk losing your business.

Home health agencies and their representatives are putting the full court press on both the Centers for Medicare & Medicaid Services and their elected officials in Congress to put an end to the devastating 14 percent rebasing cuts slated to begin Jan. 1 (see related story, p. 266).

But financial consultant Pat Laff doesn’t expect to see big changes — or any — to the rebasing reductions in the final rule expected out in November. Increasing pressure from the Medicare Payment Advisory Commission is contributing to CMS’s expected intransigence on this issue, says Laff, with Laff Associates in Hilton Head Island, S.C.

And wresting any change from Congress is a long shot, observers forecast.

Decimation ahead? "If the proposed HHPPS rule is finalized, we are very concerned that the industry will experience an inability to provide services similar to that of the late 1990’s," the Texas Association for Home Care & Hospice says in its comments to CMS on the proposed rule. At that time, the interim payment system (IPS) that was intended to merely slow growth instead resulted in a nearly 50 percent reduction in home health spending "virtually overnight" and the closure of 40 percent of HHAs over an 18-month period, TAHC&H warns. "More importantly, the number of Medicare beneficiaries dropped precipitously from 3.6 million annually to 2.1 million in just a matter of months." At the same time, the program saw a dramatic increase in spending and utilization of skilled nursing facility services.

Expect to see providers that are already struggling go on the block for sale. "The proposed reductions are forcing change in the industry with a need for consolidations and increased efficiencies," the Michigan Association for Home Care’s Barry Cargill recently told Crain’s Detroit Business newspaper.

"There is a big opportunity for us to grow," said Great Lakes Caring HHA and hospice CEO William Deary. "We are talking with two companies that are struggling right now," said Deary, noting that Jackson, Mich.-based Great Lakes likely will acquire a number of smaller agencies over the next several years.

Take action: To avoid becoming one of those struggling providers, make — and execute — your budget-cutting plans now. Don’t wait until the Jan. 1 deadline is here to shift gears, experts urge.

Consider the process "efficiency re-engineering," Laff offers. Ideas to consider include:

• eliminating unnecessary steps in every area possible,
• rewarding performance by incentivizing clinician case capacity and visit productivity;
• exercising more effective supervision and oversight, and
• reducing OASIS error correction by reducing errors. (For more ideas on how to cope with the rate reduction, see Eli’s HCW, Vol. XXII, No. 29).