Top Home Health Predictions for 2022

The ongoing public health emergency is sure to bring more staffing turmoil this year, along with additional regulatory and policy updates. The year ahead is also likely to bring more leadership turnover at the very top of home health organizations.

Beyond the pandemic, private equity dollars will keep flowing into home-based care, leading to an uptick in home health M&A activity. Meanwhile, home health agencies will continue to see changes to their “typical payer mix,” though each operator will navigate that shift in different ways.

To stay ahead of the curve in 2022 and beyond, home health executives must identify the key factors shaping the industry – and their businesses. To help do that, Home Health Care News offers its top home health predictions for the coming 12 months below.

Curious what we predicted for last year? Revisit our 2021 predictions here.

More leadership changes are coming.

When the home health industry was initially coming into its own, it was led by a relatively small group of CEOs and other well-known advocates. Some of those industry titans have already stepped down from their previous leadership roles – and many more will in 2022.

In reality, one can argue that the home health changing of the guard began in 2017, when Bayada Home Health Care’s founder, Mark Baiada, transitioned out of the CEO role. It continued in 2020, when April Anthony announced she was stepping down as the top executive of Encompass Health Corp.’s (NYSE: EHC) home health and hospice segment.

Most recently, Amedisys Inc. (Nasdaq: AMED) Chairman and CEO Paul Kusserow revealed he’s retiring from the CEO position, effective April 15. President and COO Chris Gerard will take his place at that time.

“Seeing what we have built since 2014, the talent we have developed, the patients we have cared for and the quality care we have focused on and delivered has been simply astonishing,” Kusserow said when the news first broke. “Though there is so much to be proud of, I am especially proud of the team we have assembled across the organization, which is why I am so confident in a seamless transition to Chris.”

HHCN believes more leadership changes are coming for a variety of reasons, not the least of which is the ongoing COVID-19 pandemic.

Similar to their nurses and caregivers, home health executives have had to overcome a seemingly endless wave of crisis-level challenges over the past two years – and some are starting to feel the burnout. That’s true for mom-and-pop agency administrators and corporate CEOs alike.

“The Great CEO Resignation” is actually a global trend across all industries.

Among just over 1,000 large, publicly listed companies, at least 76 CEOs left their jobs in the first half of 2021, according to data from recruiter Heidrick & Struggles. That was almost as many that stepped down in all of 2020.

Yet HHCN sees more leadership changes coming for positive reasons, too.

For years, the home health industry has needed visionaries and big-picture mavericks to just earn a seat at the table. With that seat firmly secured, providers now need operational leaders to rise up and handle all the X’s and O’s, from clinical-capacity constraints to new technologies.

During a conversation about Amedisys’ recent connectRN investment, Kusserow made that exact point. After spearheading a major company turnaround, drastically expanding the hospice business and overseeing transformative deals such as the one for Contessa Health, Amedisys now needs “an executor” at its helm.

“Strategically, we have a very clear direction,” explained Kusserow, who will still hold the chairman title moving forward. “What we need to do now is execute against that strategy. And Chris is probably the best executor I’ve seen.”

Home health dealmaking will outpace nearly all other sub-sectors.

Home health transaction volume over the past 10 or so years has easily exceeded both home care and hospice dealmaking. Yet “recent M&A mojo” has clearly favored hospice, thanks to the sub-sectors’ particularly strong tailwinds, The Braff Group highlighted in a report released earlier this week.

And unlike their home health peers, hospice providers haven’t had to deal with a giant reimbursement overhaul such as the Patient-Driven Groupings Model (PDGM). That stability has put hospice M&A on “an extraordinary run” since 2018, according to Braff.

“We’ve noted in the past that hospice and certified home health M&A often moves in opposite directions, as challenges in one sector drive buyers to the other,” the advisory firm wrote.

In 2022, HHCN sees that mojo going back to home health care.

Why? Well, for starters, there’s far more clarity around PDGM and its impact on providers. Overall, the overhaul has been far less disruptive than some anticipated going into January 2020, the model’s first year.

A sense of confidence will push some sidelined buyers back into the home health game.

Additionally, the home health industry is on the brink of, perhaps, its biggest change ever.

Choose Home – legislation effectively creating an upgraded home health benefit with add-on services for targeted patients – is quickly gaining support in Congress. While it still needs to be scored by the Congressional Budget Office (CBO) and likely attached to a larger legislative vehicle, if passed, Choose Home would create so many new opportunities for home health operators and investors.

“This would be arguably the most innovative reform to broaden access to home health care, perhaps since the inception of the benefit,” LHC Group Inc. (Nasdaq: LHCG) President and COO Josh Proffitt recently told HHCN. “And I know that’s a pretty big statement.”

What’s more, HHCN projects the home health dealmaking forecast to be strong because there’s a dwindling supply of available hospice assets.

Many of the publicly traded home health, hospice and personal care companies have touched on a lack of hospice sellers during their quarterly earnings calls. Those that haven’t have suggested they’re generally more interested in home health dealmaking because they’ve already carried out substantial hospice expansions.

For all these reasons and more, HHCN sees home health M&A activity not just outpacing hospice, but most other health care sub-sectors as well.

Choose Home will headline legislative, policy changes.

There are multiple big-ticket legislative, policy and regulatory goals that home health advocates are looking to accomplish in 2022, from cementing telehealth flexibilities and adjusting PDGM, to jump-starting Build Back Better conversations and its promise of $150 billion for home- and community-based services.

In HHCN’s view, however, the best Washington, D.C., bet the home health industry can make in 2022 is Choose Home.

As of Jan. 26, the House version of Choose Home had over two dozen sponsors, with a healthy mix of Republicans and Democrats alike. The Senate version, meanwhile, had 18 total sponsors, with a spectrum of bipartisan support from Sens. Bob Casey (D-Pa.) and Joe Manchin (D-W.Va.), to Sens. Rand Paul (R-Ky.) and Susan Collins (R-Maine).

As things stand, mid-February could be the soonest that Choose Home sees some movement. Around that time, Congress will need to pass a continuing resolution to keep the government funded, which may open up a door for the in-home care bill.

But again, CBO first needs to dig into Choose Home.

“We have great allies in Congress now helping us get that CBO score,” National Association for Home Care & Hospice (NAHC) President Bill Dombi told HHCN during a recent HHCN+ TALKS conversation. “With CBO, it’s always an issue of demand and supply – how much supply of resources they have to do the analysis and what are the priorities of demand.”

Of course, there’s still plenty of pushback to what Choose Home aims to do.

Broadly, the legislation would create an add-on to the traditional home health benefit, where providers could receive a Medicare bump if they’re delivering services that keep patients out of costlier settings, such as a skilled nursing facility (SNF), following a hospital stay. For that reason, the American Health Care Association and National Center for Assisted Living (AHCA/NCAL) – a powerful lobbying interest – has said it’s “adamantly” opposed to Choose Home.

Others – including AARP, LeadingAge, NAHC and the Partnership for Quality Home Healthcare (PQHH) – argue the legislation gives older adults much needed flexibility to decide how and where they recover.

With COVID-19 hospitalizations rising because of the Omicron variant and long-term care facilities again experiencing pandemic-related challenges, that’s an argument that U.S. lawmakers are very attuned to. And that’s why HHCN sees Choose Home passing in the not-too-distant future.

Marquette University’s College of Nursing recently published a “pros-and-cons article” about the legislation in its current form, edited by home health expert Lisa Grabert.

As for pros, the article reinforces that Choose Home gives Medicare beneficiaries more recovery options, with 95% of Medicare-age adults preferring in-home care. It likewise explains the legislation could potentially save taxpayers hundreds of millions of dollars in savings on an annual basis.

And as for cons, the article argues that Choose Home “creates a confusing layer of financing for Medicare beneficiaries” while expanding “an already compromised benefit.”

Providers’ payer mix will continue to shift in unique ways.

Fee-for-service (FFS) Medicare has been the dominant home health payer since the inception of the benefit itself. That is changing, with many providers leaning further into Medicare Advantage (MA) and managed care.

According to data from Trella Health, there are at least 11 states where MA utilizes home health services more than FFS Medicare.

That figure is likely to climb, with MA enrollment projected to grow faster than traditional Medicare. CBO projects that the share of all Medicare beneficiaries enrolled in MA will reach about 51% by 2030.

“There’s a real opportunity for home health agencies because MA plans actually have more flexibility in terms of how they reimburse and utilize home health services,” Carter Bakkum, senior data analyst at Trella Health, previously told HHCN.

Yet a lot of providers are still hesitant to expand their MA book of business because MA plans sometimes have trouble understanding home health care’s role and value-add. That lack of understanding can, in turn, lead to visit rationing.

Home health payer mix isn’t just changing between FFS and MA, though.

Providers are also increasingly working with Accountable Care Organizations (ACOs), risk-based primary care groups, direct-contracting entities (DCEs) and other alternative payment models. Additionally, some providers are shifting within FFS Medicare even by doing more Part B business.

In 2021, there were 6.38 million Part B home health episodes, compared to 4.48 million in 2011, according to the most recent Home Health Chartbook.

The takeaway: Home health providers will continue changing and experimenting with their payer sources in 2022 in unique ways. As a result, it’ll become more difficult to paint the picture of “the typical home health agency.”

There won’t be a light at the end of the COVID-19 tunnel.

It has probably become obvious by now, but COVID-19 isn’t going away in 2022, at least not entirely. Similar to last year, there will be surge periods and lulls for home health agencies, but the overall pandemic will likely persist in some form over the next 12 months.

After breaking multiple pandemic-era highs, U.S. hospitalization rates are beginning to plateau in much of the country – even decreasing in some states. Even so, the U.S. Centers for Disease Control and Prevention (CDC) predicted Wednesday that more than 62,000 more people could die from COVID-19 over the next four weeks.

As the public health emergency drags on and upstream referral partners look to discharge patients home, agencies will continue to battle capacity challenges and staff burnout. Operational costs will remain higher than normal. At times, supply chain issues may remerge.

After nearly two full years of operating in crisis mode, though, home health providers are prepared and well-equipped for what lies ahead.

In terms of more specific predictions, HHCN believes the prolonged pandemic will lead to permanent regulatory changes for home health agencies. The U.S. Centers for Medicare & Medicaid Services (CMS) will have more insights, for example, on how providers utilized temporary telehealth and workforce flexibilities, and that will encourage the agency to take action.

Additionally, HHCN also sees the Acute Hospital Care at Home (AHCAH) waiver being extended, if not turned into something with more staying power. Moving Health Home plus nearly 50 organizations, including health systems and home health companies, sent a letter to Congress requesting just that earlier this week.

“As the Omicron and other COVID-19 variants persist as a continued threat, Congress must ensure that the time-limited AHCAH waiver does not abruptly expire,” the organizations wrote.

As of Jan. 20, there were 90 health systems and 197 hospitals in 34 states participating in the program.

Today’s staffing struggles will set providers up for tomorrow.

Within the larger staffing war, retention has been maybe the most difficult battle.

Specifically, many home health agencies are seeing turnover throughout mid-level or manager positions on the clinical side. Nurse supervisors are stepping down. Chief nursing officers are retiring. Clinical leaders are leaving the industry.

​​Almost half of U.S. nurses are at least “somewhat likely” to leave their professions in the upcoming two years, according to an October report from ShiftMed. In the near term, this “brain drain” will no doubt create headaches, with younger, less-seasoned clinicians forced to step up.

This trend will accelerate in 2022, but there’s a silver lining. The home health mid-level workforce is being replenished by a new cohort, one that will learn, grow and, ideally, stay within the industry for years to come.