Throughout the past decade, health care policymakers have attempted to curb spending by shifting care into the home and away from hospitals, skilled nursing facilities (SNFs) and other higher-acuity settings.
Coupled with demographic tailwinds tied to a baby boomer generation that is rapidly aging, those efforts have contributed to the growing U.S. home health care industry, which is projected to continue growing at a pace of about 7% annually from $103 billion in 2018 to $173 billion by 2026, according to Business Insider Intelligence.
In 2009, there were 1,808 SNF days per 1,000 Medicare fee-for-service beneficiaries, a March 2018 analysis from consulting firm Avalere Health found. That fell to 1,539 days per 1,000 fee-for-service beneficiaries in 2016 — a 15% drop.
But the trend of moving patients out of SNFs and into the home — often referred to as SNF diversion — may be over.
That’s at least according to Genesis HealthCare (NYSE: GEN) CEO George Hager, who discussed home health care competition Tuesday while speaking at the Barclays Global Healthcare Conference in Miami.
Kennett Square, Pennsylvania-based Genesis is a holding company with subsidiaries that, on a combined basis, form one of largest post-acute care providers in the country, totaling about 400 skilled nursing centers and senior living communities in 29 states nationwide. Genesis subsidiaries also offer rehabilitation therapy services across 1,500 locations in 46 states and Washington, D.C.
“Whether it’s bundled payment programming, whether its accountable care, whether its managed care penetration, I think those things have reached a point of equilibrium and we’re beginning to see some margin growth in total census,” Hager said at the conference. “I’m less concerned about migration out of our setting or diversion away from our setting.”
In 2018, U.S. SNF occupancy held steady at 82.4% in the fourth quarter, virtually unchanged from the previous quarter and down just 0.4% from the previous year, newly released data from the National Investment Center for Seniors Housing & Care suggests.
Indeed, diversion efforts have “run their course” over the past five to 10 years, and the people who can safely be treated at home largely are being cared for in that setting, Hager said.
“To anyone [who] would want [to] or has toured a skilled nursing asset, I would challenge you to look at the patients in our building and find patients that could be cared for in a home-based or community-based setting,” he said. “The acuity levels of an average patient in a skilled nursing center have increased dramatically.”
Genesis has recently seen marginal growth in its total census for the first time in years, according to the CEO. The company is scheduled to report on its fourth quarter of 2018 and year-end earnings before the market opens Monday morning.
“From the demand side, I think once we’ve hit the inflection point, which it looks like we hit in the fourth quarter of 2018, we should expect to see steady — not significant — but steady census growth and demand for skilled nursing for the foreseeable future,” Hager said.
Related to competition between SNF and home health providers, recently published research published in JAMA Internal Medicine also suggested SNFs are doing a better job at keeping people out of the hospital.
As part of a study analyzing more than 17 million hospitalizations of Medicare beneficiaries, researchers found that readmission rates for patients discharged to home health agencies were 5.6 percentage points higher than those who went to SNFs.
Lafayette, Louisiana-based LHC Group (Nasdaq: LHCG) is among the home health care providers leading the charge on SNF-diversion.
The company has been providing a SNF-at-home service for about four years and has seen a reduction of SNF utilization by more than 50% in some of its markets, LHC Group CEO and Chairman Keith Myers previously told Home Health Care News.
The concept is primed to play a big role in LHC Group’s 2019 plans as well.
“We’re thinking in terms of SNF-at-home and hospital-at-home, which incorporates more utilization of nurse practitioners, which isn’t just the traditional home health model,” Myers said.