The majority of health care financial leaders view home care as a key area of investment.
That’s according to a recent survey from BDO, a Chicago-based accounting, tax, financial advisory and consulting organization. Released Monday, the survey includes the responses of 100 CFOs at U.S. health care organizations, including home health providers, with revenues ranging from $250 million to $3 billion.
Specifically, 12% of the CFOs surveyed were leaders at home health or hospice organizations.
The COVID-19 virus is among the drivers making home care a priority. One of the impacts of the public health emergency is that it forced many health care organizations to reevaluate their areas of focus and specialties in order to address patient needs.
When looking toward 2021, 59% of surveyed CFOs identified home care as a priority investment.
This finding further suggests that home-based care providers demonstrated their value in delivering care during the past several months. As the U.S. still faces ongoing COVID-19 surges, the demand for home-based care will likely continue to grow.
“The home health setting has seen many significant contributions to the value-based care supply chain,” Steven Shill, partner and national leader of the BDO Center for Healthcare Excellence & Innovation, told Home Health Care News in an email. “I think the pandemic has just served to confirm an already valuable process.”
Aside from home care, 56% of surveyed financial executives identified elder care as a priority investment.
Another 77% of CFOs said they’re looking to fund primary care.
“A significant number of in-home primary care users are the elder population,” Shill said. “As there is a transition to Medicare Advantage, you will see an acceleration of in-home primary care. The reason is that, when a physician, nurse or [physician’s assistant] visits higher-risk patients in their homes, patients are less likely to need emergency room visits, acute care hospitalizations or institutionalization in a [skilled nursing facility] for example. This will likely reduce the overall costs.”
In addition to identifying key investment areas, the survey also touched on emerging trends. From an M&A perspective, for example, 42% of surveyed CFOs said they believe the COVID-19 emergency will cause increased consolidation throughout health care.
In fact, many health care organizations went into the public health emergency with already weakened balance sheets, according to Shill.
Many have been able to stay afloat thanks to the Paycheck Protection Program (PPP) and CARES Act funding, but eventually, those wells will run dry.
“The focus on consumerism, the move towards value-based care and a major drive toward digitization in health care — trends that existed prior to the pandemic — all contributed to consolidation,” Shill said. “Many health care organizations pre-pandemic did not have the resources to address these trends, which in turn caused them to have weakened positions in the marketplace, increasingly inefficient operations and significant losses to patient volumes, all ultimately resulting in them becoming financially weakened and forcing them to either merge, be acquired or shut down.”
Additionally, BDO’s survey found that partnerships will likely take center stage in 2021.
About 31% of surveyed CFOs said they had plans to acquire physician practices. Another 28% said they planned on merging with another organization, with 24% planning to form a joint venture.
In the home-based care space, this move toward partnerships could be a business opportunity for providers.
“The home health sector has historically been heavily fragmented, often lacking professional leadership and appropriate levels of capital investment,” Shill said. “That is why, in the few years prior to the pandemic, it was getting a lot of attention from private equity. As institutional health care continues focusing on value-based care and overlaying it with the impact of the pandemic, it would seem that this type of partnership will likely see an acceleration.”
BDO’s survey was conducted by Rabin Research Company, an independent marketing research firm.