The business of home health care is changing thanks to new regulations that continue to be implemented at warp speed. At the same time, reimbursement cuts are straining agency resources while accountability and transparency requirements are increasing. In an environment that demands home health businesses do more with less, adaptability and driving value is key, according to Rita Numerof, Ph.D., president of health care strategy consulting firm Numerof & Associates.
Home Health Care News caught up with Numerof to hear her thoughts on the current regulatory environment, the new challenges for home health agencies and how businesses need to adapt and prove their individual value, or risk it all.
How would you describe the current regulatory environment for the home health industry?
RN: Ramped up is a really good statement. In some respects, I think that’s an understatement. The regulatory environment is extraordinarily challenging. You’ve got a number of regulations, the rapidity of them coming, and so there’s considerable uncertainty. Whenever you have uncertainty, it make business a challenge for organizations both large and small. Though, the regulatory challenges are more troublesome for smaller, standalone institutions because they don’t necessarily have the infrastructure and deep financial reserves to deal with it.
There’s a history as to why these regulations are coming with new intensity—the failure to adequately connect payment with patient outcomes. [The regulatory environment] reflects scrutiny from some questionable practices of some, and home health appears to be caught in the crosshairs. There’s an increased focus on Medicare and Medicaid fraud and abuse in a number of different segments. Wherever you have a situation where payment is brought in early for a service that has been undervalued for years and you have to get into an argument whether services are justified, you end up creating an environment that is more prone to outright fraud and abuse. The environment has been created in part because of a corrosive payment system where you don’t have a connection to outcomes.
How does a home health care agency operating today differ from, say, 10 years ago? What are the new challenges and opportunities?
RN: There was once historically more predictability than there is today. The changes that were introduced in the regulatory environment were clearly fewer and less intrusive. The model for fee-for-service (FFS) was the dominant model. Today, there is a model that is evolving to focus on increased accountability and interest in moving delivery to alternative settings like home health. And we should be encouraging home health as a delivery setting. So, I see this as an opportunity. Years ago there was no serious consideration for this standalone model that would be tied to health outcomes. All of this is new.
While this is also challenging, the good news is that home health is not the only one challenged. This is the very time we need to incentivize providers to move into this area. Yet, because of the size, the impact of this shift could be felt more strongly on the home health side. They might not have the market clout to push back against regulations or the same capital resources as other health systems. The information technology (IT) and ability to adapt is going to be harder for home health.
If we are serious as a country about health and moving care, it has to be in the home. Hospitals were never meant to be destinations of choice. We should be able to have care at home and in less intrusive settings. A lot of these pressures and regulatory challenges are going to work against that very goal.
How can home health businesses adapt?
RN: I think the opportunity is for us to work the model that really focuses on the delivery of care across the continuum, and not focus so much on paying for the services depending on where they are. [Focus on] value and delivery of value. Those agencies that are able to make this argument and have the data to back it up are going to be extraordinarily successful. More data is in the grasp of home health than many realize, and the question is, in part, about knowing how to package it.
More barriers to delivering appropriate care are not helpful to home health agencies, and rules that require new signatures are likely going to get in the way of being able to quickly access treatment. The environment requires more transparency and accountability at the same time as there are new pressures on reimbursement. Nipping and tucking percentages here and there is going to be problematic for agencies.
Agencies individually need to understand what makes them unique. What is it that they deliver to their marketplace, their consumers, their patients and buyers of service that makes them attractive? Just saying that they do good work isn’t good enough. They need to show the outcomes, show how they’ve helped individuals, the outcomes that are desirable and be able to show those market dynamics. Why is it that the service you are giving is better than another agency, or better than getting that same care at a large hospital based system? They’ve got to be able to think about themselves from a business perspective as being different, and that’s challenging.
What is home health care’s role as the health system continues to shift?
RN: The industry needs to be optimistic. There is an enormous need for the services they provide. Agencies need to be very clear about what those services are, how they add value in the whole scheme of things and think about themselves very differently in terms of hard business. There are enormous opportunities for those agencies that have the clinical and managed variability in cost, in quality, to get meaningful outcomes at their price point. It doesn’t mean they have to be the cheaper; they have to look at their outcomes. They need to be able to negotiate with bundled payment conveners, for example.
Streamlining the delivery of care has been a strain for many home health agencies. The pressures they are experiencing now are not going to go away; they will only intensify. We are at risk for major horizontal and vertical consolidation. Whether institutions go at it alone or become a partnership, they have to demonstrate value—clinical value that they can go to the bank with.
Written by Amy Baxter
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