Home health providers continue to struggle with capacity challenges, as an increasing number of them are forced to turn away referrals from the acute care setting.
Home health “rejection rates,” or providers’ tendency to “say no” to new patients recently discharged from the hospital, has become a key data point for the industry since early 2021. That’s largely due to the public health emergency (PHE), which has exacerbated staffing problems while boosting the demand for home-based care.
In January, the home health industry’s rejection rate was 58%, according to a data analysis from CarePort, a WellSky company.
“This is telling us that [providers] can’t take this high volume of patients looking for home health services, and they’re starting to turn down more and more patients from their referral partners,” Tom Martin, director of post-acute care analytics at CarePort, told Home Health Care News.
Prior to the PHE, home health agencies tracked by CarePort were turning down 42% of the patients that were referred to them, according to Martin.
CarePort’s most recent analysis examined data from 690 home health agencies and 136 health systems.
Its latest findings should come as no surprise to those who have been watching closely. Prior to 2021, home health providers were already struggling to take on new referrals.
In May 2020, CarePort’s hospital partners sent an average of 50 referrals to their home health referral network. Back then, home health agencies’ acceptance rate checked in at 51%.
The gap between referrals and acceptance rates began to widen in July 2020. On average, hospital partners sent home health agencies 67 referrals around that time, with an acceptance rate of about 47%.
The following year in June, the average number of hospital referrals to agencies was 84, with an acceptance rate of only 36%.
Large providers such as Encompass Health Corporation (NYSE: EHC) have recently discussed their capacity challenges.
“The biggest thing for us is that the volumes are there, but the staffing has been the challenge,” Barb Jacobsmeyer, CEO of Encompass Health’s home health and hospice segment, said during the company’s Q4 earnings call earlier this month.
Birmingham, Alabama-based Encompass Health’s footprint includes 145 hospitals, 251 home health locations and 96 hospice locations in 42 states and Puerto Rico. Its home health and hospice segment is on the verge of transitioning into its own entity, “Enhabit Home Health & Hospice.”
Encompass Health reported that the company lost a “minimum” of 1,700 home health admissions in Q4 because of staffing constraints.
Declining new referrals has hindered home health providers’ ability to grow, LHC Group Inc. (Nasdaq: LHCG) President and COO Joshua Proffitt said last year during the BofA Securities Home Care Conference.
“The growth in home health demand has been running about 14% to 15% this year in our referral volume – and the growth in hospice is north of 20%,” he explained. “If you look at how we’re modeling, if we’re only putting 5% to 7% for organic growth, that would indicate that we’ve got some headwind to the growth potential baked in for labor dynamics.”
Lafayette, Louisiana-based LHC Group provides home health, hospice and home- and community-based services across the U.S.
One consequence of the high demand and low supply in home health is extremely high hospital length of stay averages prior to a patient being discharged to home health agencies.
In January 2022, the average hospital length of stay was 7.4 days prior to discharge, compared to 6.5 days between January and March of 2020, according to the CarePort data shared with HHCN.
“That’s almost a whole additional day that they’re needing an in-patient bed before they are being referred and discharged to the post-acute space,” Martin said. “We’re talking, in a given month, 65,000 patients and referrals that we’re tracking here. This is a significant increase in the amount of time these patients are staying in the hospital.”
Sales and marketing impact
In addition to directly impacting volumes and providers’ ability to grow, capacity challenges have also impacted sales and marketing strategies. Similarly, they’ve influenced how operators manage their referral-source relationships.
For Elara Caring, it has been crucial to “meet referral partners where they are at,” Ananth Mohan, the company’s chief operating officer, said earlier this month at HHCN’s Sales First Summit.
“You’ve got to know your data,” he said. “Your value is a big part of this. Understand and be transparent about your own operating realities — where you have the capacity and where you don’t. There’s never been a time when sales has had to be more connected with operations and the rest of the company.”
Addison, Texas-based Elara Caring currently has about 225 offices across 16 states. The company offers home health, hospice, behavioral health and personal care services and takes care of about 60,000 patients daily.
Home health providers have also had to manage to maintain a healthy balance of community referrals and institutional referrals.
“Everything’s just getting higher acuity,” Mohan said. “Then you add the labor shortage, and now you’re kind of choosing who you prioritize. You have to manage your visits and who you have in-person contact with. Part of the challenge is such: how do you still touch all your referral partners, have a healthy mix and serve the communities broadly, while the reality is that you have to pick and choose on a daily basis.”
Jane Shekman, president of JS Healthcare Advisory, stressed the importance of having a sales and marketing team that is well-integrated with a provider’s clinical team.
JS Healthcare Advisory offers operational management consulting, M&A advisory services and more.
Shekman also believes that the sales and marketing team needs to make an effort to get the operations team involved.
“Because [the sales and marketing teams] are out there at the forefront, talking with discharge planners and providers they have a very good understanding of their needs,” she said at the event. “Take this information back, sit down, and have a discussion with your operations team. Layout the strategies because if you have an important potential partner, … you can maybe allocate certain resources to ensure that you have coverage for the provider.”
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