An ongoing financial crisis related to phone troubles has put a Texas home health agency “on life support,” according to a local news report. The story further reveals how even a seemingly small disruption to cash flow can put home health providers with tight operating margins underwater.
Opened more than two decades ago, Beaumont, Texas-based Quality Care Services Inc. reportedly began experiencing problems with its phone number about six months ago, resulting in potential clients and referral sources being unable to reach the agency. Quality Care Services Inc. is a licensed home health and personal assistance agency that provides services throughout nearly three dozen Texas counties.
“Our phones no longer answered when you called our number, which has been our number since 1996,” owner Nancy Carlisle told Beaumont’s KFDM on Monday. “It said this is no longer a working number or this phone’s disconnected.”
By the time the phone troubles were finally resolved, the damage had already been done. Quality Care Services lost an estimated $100,000 to $150,000 per month throughout the episode — or more than $600,000 in total — according to Carlisle.
Due to the decrease in cash flow, Quality Care Services has struggled with paying its employees on time. On Tuesday, the agency began transferring clients to other home health agencies.
“We’re not surviving,” Carlisle said. “We’re just literally shut down.”
Carlisle did not respond to requests for comment from Home Health Care News.
Quality Care Services’ experience is unique to its business and one-of-a-kind circumstances, but the overarching story is not.
Home health and home care providers throughout the United States often operate with extremely narrow margins, forcing them to walk a delicate tightrope each and every payday.
Nationally, freestanding home health agencies had an aggregate margin of 15.2% in 2017, according to the Medicare Payment Advisory Commission (MedPAC). Industry statistics put that figure much closer to 2%, however, especially when it comes to smaller agencies that do under $2 million in annual revenue.
“Agencies aren’t sitting around with endless cash reserves,” National Association for Home Care & Hospice (NAHC) President William A. Dombi previously told HHCN.
If phone problems can lead an agency into financial chaos, imagine what an even bigger cash flow disruption could do — like the potential phase out of Requests for Anticipated Payments (RAPs) starting next year or the possible 8.01% behavioral adjustment-related cut baked into the Patient-Driven Groupings Model (PDGM).
Several factors go into home health agency cash flow, including days to RAP, days to final claim, patient case-mix and periods per patient.
Depending on how those things play out and the steps regulators take over, some agencies will likely experience double-digit cash flow losses during the first two months of 2019, according to estimates compiled by BlackTree Healthcare Consulting.
“That will take these small agencies out,” Mike Dordick, president of McBee Associates Inc., previously told HHCN.
Texas-based AccentCare acquired Quality Care Services’ Medicaid attendant care segment in March 2018.