CEOs: Home Health Must ‘Take Control’ To Get Paid Properly

Home health and other post-acute providers must work toward getting paid commensurately for the value that they are providing to the health care system, some of the most prominent leaders in the industry believe—including Benjamin Breier, CEO of Kindred Healthcare (NYSE: KND), the largest home health provider in the nation.

Changes enacted under the Affordable Care Act (ACA) have put pressure on providers across the continuum to coordinate care and reduce costs while maintaining quality. For the past five years, Louisville-based Kindred has been evolving to respond, meeting the demands of public policy as well as consumers by beefing up home health offerings, divesting skilled nursing facilities, and investing in the technology and other resources necessary to manage post-acute episodes of care more efficiently. Yet, Kindred is not being properly rewarded for all these efforts, Breier said last week at the National Investment Center for Senior Housing & Care (NIC) Fall Conference in Washington, D.C.

“Somebody today is benefiting from all the value that we’re creating in the marketplace—the reductions in length-of-stay, the reduction in utilization, the reduction in return to acute, the improvement in outcomes. Guess who’s not benefiting from that today?” he said. “We’ve got to get upstream and start benefiting from some of that.”

Specifically, payor organizations or other so-called “conveners” are reaping the rewards of these efforts to lower cost and improve quality, through models such as accountable care organizations (ACOs). Post-acute providers are taking part in these organizations in varying capacities, but in general are not fully engaged in the financial rewards and risks. That has to change, according to Breier and some of his peers.

Kindred and providers like it have spent decades building relationships with physicians and other referral partners across the continuum, and now should be able to coordinate with them directly rather than relying on a financial “middleman” to manage patients’ care, he said.

“We can be our own middleman for a lot of this stuff,” Breier said. “We have to be able to control our own destiny.”

Genesis Healthcare Inc. (NYSE: GEN) has taken a different approach than Kindred—for example, by selling off its home health business and relying more on partnerships in that realm. However, the Kennett Square, Pennsylvania-based provider is going big on alternative payment models, seeking to take a leadership role and share in the cost savings. So, it’s no surprise that Genesis CEO George Hager agreed with Breier.

“One important fact [as to] why we as providers [should be in control] versus an intermediary, a fiscal intermediary or even physicians upstream … patients live in our centers.” he said. “They’re our patients. We care for them every day. We have our own physicians, we don’t need an outside third party. We can produce a better outcome at a lower cost, we don’t need anyone else. There is a huge, huge opportunity here.”

Adding his voice to this chorus was Andy Smith, CEO of Brentwood, Tennessee-based Brookdale Senior Living (NYSE: BKD), also a major home health provider as well as the nation’s largest senior housing provider. While acknowledging that the post-acute evolution hasn’t impacted Brookdale as much as Kindred and Genesis—companies that derive a much larger share of their revenue from Medicare-reimbursed post-acute services—he also came down emphatically on the same side as Breier and Hager.

“I personally believe we’ve allowed ourselves to be prevailed upon a lot of times and commoditized, is a good word for it,” Smith said. “And now, what Ben’s doing, what George is doing, what we are doing to a smaller scale, I just think it creates real opportunities for providers to take control of the situation better than we have in the past. There is no reason we need navigators or conveners to do what they’re currently doing right now.”

The timeframe for when post-acute providers might be able to get a larger piece of the cost-sharing pie is not totally clear, the CEOs agreed. In the next two years or so, there will continue to be volatility as large-scale change occurs, with the health care system shifting from a fee-for-service to pay-for-value framework, Hager said.

The transition will indeed be “choppy,” said Breier. Kindred plans to make investments in the next five years to be able to go upstream and play more of that care management role, he said. Meanwhile, fee-for-service continues to prevail, and so providers need to continue to be able to succeed under this model while also putting the pieces together for the future.

“Nobody’s going to wake up tomorrow with a 4% Medicare market basket increase with no offsets in any of these businesses we’re in,” he said. “We’re going to continue to have to slog this out in the FFS world. So our jobs are, yes … operate efficiently, provide the right kind of business and services that consumers want, but we’ve got to get upstream to get a piece of that value curve … whether it takes two years or five.”

Written by Tim Mullaney