The coronavirus is expected to drive demand for home health care in the long term. But in the short term, it has yielded industry-wide declines in employment and spending.
That’s according to a new data analysis released Tuesday by the Kaiser Family Foundation (KFF) in partnership with the Peterson Center on Healthcare.
Specifically, KFF and the Peterson Center found that home health employment decreased 7% from February to April 2020, with job loss stabilizing and showing no change from April to May. On top of that, home health spending was down 12% from February to March.
Compared to the health care sector as a whole, home health care fared relatively well when the coronavirus was at its worst.
Overall, health care employment decreased 9.5% from February through April, equating to more than 1.5 million health care jobs lost. In May, more than 300,000 jobs were recovered. Spending on all health services was down 16% from February to March.
Despite being the epicenter of the COVID-19 outbreak for weeks, New York City saw a sharper decline in employment than the national average, with a decrease of about 10.8%. Washington D.C.’s healthcare job loss was even more pronounced, with a drop of 13.8%.
“In comparison, healthcare job losses in the Los Angeles (-8.3%) and Phoenix areas (-8.5%) have been a bit lower than the national rate,” the authors of the analysis wrote. “New York City and Washington, D.C. have much higher rates of COVID-19 cases per capita than Phoenix and Los Angeles, and yet the former two cities have seen steeper drops in healthcare employment so far during the pandemic.”
While those geographic trends are somewhat unexpected, sector-wide and home health care-specific declines are less surprising. Amid COVID-19, health care providers were forced to cancel or delay elective and routine medical procedures to free up hospital space.
And because procedures such as hip replacements weren’t happening, that meant fewer referrals to home health providers, contributing to a decline in patient volumes.
LHC Group Inc. (Nasdaq: LHCG), for instance, was averaging about 18,800 home health admissions per week from Jan. 1 to March 14. But on April 13, at the height of COVID-19, home health admissions hit a low point of 6,169.
Rochester, New York-based HCR Home Care saw a similar decline play out. The home health provider experienced a census drop of about 15% when the virus was at its worst in April, leading to a “handful” of furloughs.
But since elective surgeries have picked back up and the country has learned more about the virus, both LHC Group and HCR have started to rebound, slowly but surely.
“I’m pleased to report that we are currently seeing that number rebound with week-over-week improvement and home health admissions of 6,634 the week of April 20,” former LHC Group CFO Josh Proffitt said on the company’s Q1 earnings call. “And [for the week of April 27], we were back up to 6,700 for an 8.6% improvement over the week of April 13.”
Proffitt was promoted to president last week.
Still, in the thick of COVID-19, Interim HealthCare and EvergreenHealth Home Care reported similar patterns.
“We are seeing some decline in home health cases, specifically therapy-led cases,” Interim CEO Jennifer Sheets told HHCN in April. “That’s mainly due to cancellation of elective orthopedic surgeries like knee or hip replacements.”
While home health care is only a small portion of the Sunrise, Florida-based in-home care franchiser’s business, it’s a larger piece of the pie for EvergreenHealth.
Based just outside of Seattle, the home health provider was among the first in the nation to deal with coronavirus, as its affiliated hospital treated the first COVID-19 positive patient to die in the U.S.
While grappling with COVID-19 positive patients, the provider was also facing declines in therapy volumes, as therapists are often heavily relied on for home health patients referred for care after elective procedures.
“Therapy is in a tough situation right now,” Chief Home Care Officer Brent Korte told HHCN back in April. “We have seen a sharp increase in nursing, but our therapy visits have probably seen the most drastic decrease.”
If agencies were providing less therapy as a result of COVID-19, it’s logical to assume they were using few therapists to deliver those services, only compounding the therapy layoffs prompted by the Patient-Driven Grouping Model (PDGM).
PDGM changed home health reimbursement so that therapy is no longer an automatic revenue-driver. The change has caused therapy layoffs at 24% of home health agencies, according to an HHCN survey conducted in February and early March.
Another factor contributing to volume declines and subsequent spending and employment decreases: fear of contracting the COVID-19 virus.
HCR, Interim and EvergreenHealth all reported that patients were turning home health aides away at much higher rates than usual in the early months of COVID-19. The same was true for the rest of the industry, leading to higher rates of low-utilization payment adjustments (LUPAs), meaning less money for providers.
In fact, more than 67% of all home health agencies have seen their LUPAs rates at least double amid the coronavirus, according to data from the National Association for Home Care & Hospice (NAHC).
Lack of telehealth reimbursement under fee-for-service Medicare has also contributed to the problem. Because providers can’t be paid to provide remote services, many agencies have no choice but to provide them for free or lose touch with their patients entirely.
Combined, these factors can’t help but hurt an agency’s bottom line.
For example, in April, one San Diego-based home health agency told HHCN it anticipated revenues for the month to be down about 33%.
Meanwhile, home health agencies in New York are facing $200 million in 2020 losses due to COVID-19, according to financial estimates by the Home Care Association of New York State (HCA-NYS).
For the Visiting Nurse Service of New York (VNSNY), projected home health losses “are a minimum of $27 million through July and as high as $82 million if a second wave of infections materializes later this year,” according to Vice President of Government Affairs Dan Lowenstein.
While providers have anecdotally told HHCN their volumes have since improved from April low points, only time will tell how that translates to their employment and spending rates.