Nonprofit Health System Beaumont Forges New Home Health JV

One of Michigan’s largest health systems and a national provider of post-acute solutions have teamed up in a new home health and hospice joint venture designed to expand patient access to care.

The new JV is between the Southfield, Michigan-based Beaumont Health and Alternate Solutions Health Network, a Kettering, Ohio-based organization that specializes in rolling out joint ventures with health systems akin to the eight-hospital not-for-profit Beaumont. Since its founding in 1999, Alternative Solutions has teamed up on at least 20 JVs and partnerships across Florida, Ohio, Virginia and West Virginia.

The new organization between Beaumont and Alternate Solutions, which was publicly announced a day after it began operations on Tuesday, is branded as Beaumont Home Health and Hospice.

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The JV will serve roughly 16,000 patients living in southeast Michigan, John Kerndl, executive vice president & CFO of Beaumont, told Home Health Care News.

“Working with a specialized provider with home health and hospice expertise improves our ability to serve current and future patients,” Kerndl said. “Patients are our No. 1 priority. We are always evaluating ways to serve them better.”

The partnership with Alternate Solutions will allow Beaumont to deliver compassionate care at a reduced cost, according to Kerndl. While the new JV will deliver both home health and hospice services, home health care is typically needed more than hospice in its market, he said.

Reimbursement challenges

Formed in 2014, Beaumont Health has a total net revenue of about $4.5 billion. Its system-wide network includes 3,429 hospital beds, 187 outpatient sites, nearly 5,000 physicians and 38,000 employees. Beaumont had more than 175,600 inpatient discharges in 2017.

Crain’s Detroit Business reported that Beaumont was looking to outsource its home health and hospice business in December, weeks before an official announcement came from the health system.

Beaumont declined to comment on the news to HHCN at that time, noting that the joint venture was still in the process of being finalized.

In its initial report, Crain’s claimed that reimbursement difficulties also factored into Beaumont’s decision to partner with Alternate Solutions. Although Michigan “has a challenging commercial reimbursement market,” Beaumont had “more strategic” reasons for the move, Kerndl told HHCN.

Under the Beaumont Home Health and Hospice joint venture, employee compensation will be structured “more like a home health company,” Kerndl said, adding that there will be no across-the-board pay cuts.

Crain’s previously reported that home health nurses, physical and occupational therapists, social workers and other caregivers could have pay cut by up to 40% as a result of the joint venture.

Beaumont’s medical equipment, home infusion and personal assistant service employees will remain with the health system. The health systems expects the JV with Alternate Solutions to create new jobs for home health and hospice workers throughout southeast Michigan.

Alternate Solutions will handle day-to-day operations of the JV.

“The vast majority of home health and hospice positions have transferred to the new company,” Kerndl said. “Those whose current positions did not move forward with the joint venture have received assistance to find another position within Beaumont.”

What the future holds

Reductions in re-hospitalizations and increases in revenue are among the two main benefits health systems have seen in partnering with Alternative Solutions, according to the company.

Specifically, Alternative Solutions’ technology and analytical capabilities have been shown to identify a patient’s risk of re-hospitalization with an accuracy of 85%, while increasing partners’ revenues by up to 35% within the first year.

Inova Health System in Virginia and Memorial Health in Georgia are among the other health care organizations that Alternate Solutions has partnered with over the past several years.

About 20% of all Medicare patients are readmitted to the hospital within 30 days of discharge, while chronically ill beneficiaries are up to 100 times more likely to have a preventable re-hospitalization, according to Alternate Solutions statistics.

Overall, inadequate care coordination resulted in as much as $45 billion worth of wasteful spending last year.

“We look forward to working with Beaumont to serve patients who need home health or hospice care,” Alternate Solutions Co-CEO and founder Tessie Ganzsarto said in a statement. “Our team is impressed by the compassionate care delivered by the Beaumont team, and we are eager to offer home health and hospice services to more patients in Michigan.”

From a growth perspective, home health providers in Michigan, Florida, Illinois and Texas have often had to get creative when looking to break into new territories or markets.

The Centers for Medicare & Medicaid Services (CMS) has repeatedly extended a temporary moratoria on new Medicare home health agencies from opening in those states. Initially implemented in 2013, the moratoria can, at times, restrict organizational growth, industry insiders say.

It was last extended in July 2018.

Moving forward, Beaumont expects the Alternate Solutions joint venture transition to proceed smoothly and without any hindrances to quality or accessibility of care. Despite those sentiments, other reports surfacing Thursday raised questions about Beaumont and the availability of pediatric home health services under the JV.

“Alternate Solutions Health Network as extensive experience in these transitions,” Kerndl said. “We are working closely with [Alternate Solutions], our staff, patients and families to ensure they do not experience any interruption in the care they receive.”

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