Home Health Providers Scramble To Offset Rising Costs, Potential Rate Cuts

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Prior to Home Health Care News’ FUTURE event at The Times Center last week, Bill, Hillary and Chelsea Clinton took the same stage to film a new television show.

Rumor has it that they were shocked and honored when they heard some of the biggest names in home-based care – the future of health care in the U.S. – would be taking the same stage in the coming days.

If they stuck around, what they would have learned is that home health care providers are still up in arms over the proposed payment rule for CY 2023 from the Centers for Medicare & Medicaid Services (CMS). They will continue to advocate against it until the rule becomes final, and even then, they’ll probably advocate against any future rate cuts or clawbacks as well.


Having said that, at FUTURE, I sensed a different energy from providers as we near the end of September. They are facing reality more than they may have been at the beginning of the summer.

Specifically, they are dissecting ways to optimize their current workforce and their scheduling. They are evaluating everything they can to make sure their home health businesses work in this day and age.

It’s not about a futuristic technology solution or a complete upheaval of current strategy. Instead, it’s more about getting back to the basics after two and a half outlier years.


In this week’s exclusive, members-only HHCN+ Update, I break down what I learned at FUTURE – on panels and elsewhere.

Forced to change

Massive consolidation has been “right around the corner” since I began writing about home health care in 2019. Many had consolidation in their crystal ball even before that, my colleagues tell me.

The implementation of the Patient-Driven Groupings Model was supposed to force it. COVID-19 was supposed to force it. Neither did. That could have been for the same reason, which is pandemic relief from the government.

This issue is different. The government isn’t giving agencies money to mask inefficiencies. It’s likely taking money away from them, and telling them to go ahead and figure it out.

“It’s the proposed rule, on top of wage inflation, gas prices going up and the penetration of Medicare Advantage. It’s all those things,” Enhabit Inc. (NYSE: EHAB) CEO Barb Jacobsmeyer said at FUTURE. “Those are going to weigh really heavily on [smaller agencies]. … You’re certainly going to see continued consolidation.”

Every provider believes cuts are a bad thing.

But they also do have some ability to change the industry for the good in the long term. As providers brace for rate cuts and clawbacks, they are forced to evaluate everything about their businesses.

“We need to find [general and administrative] offsets to get as efficient as possible. That’s one of the things that we can be doing,” Amedisys Inc. (Nasdaq: AMED) President and CEO Chris Gerard said at FUTURE. “We’re not going to see wages for clinicians come down. They have permanently reset up. You’ve got to find other ways to be able to offset that increase in costs and that’s especially true when you’re looking at a cut in reimbursement.”

Gerard specifically told me that, for Amedisys, getting more efficient on its scheduling for clinician visits is one of the key areas it has to hone in on. It currently has over 700 manual schedulers across its over 500 care centers in the U.S.

It isn’t something the company has keyed in on before, but now, all hands are about to be on deck.

“This is one of the things that’s most inefficient in our business today,” he told me.

VNS Health President and CEO Dan Savitt said his company deals with those same struggles. But there is another aspect of his business he wants to make more efficient: calls.

“We have a lot of room for [more efficiency],” Savitt said. “We’re hyper-focused on why we get 100,000 calls every year, and what can we do to cut those in half. That would lead to significant cost savings. And if people aren’t calling, that means you’re solving one of their problems, which also means our staff is not dealing with problems while they’re in the field.”

Even if the final rule miraculously does not include a negative adjustment – either due to legislative or other advocacy success – these wheels are in motion.

Thus, providers are preparing for the worst and hoping for the best. Either way, they’ll be better off for it.

“So we’re, I’d say, in our early stages, but there is a solution that is going to be developed out there for us,” Gerard said in regards to the scheduling piece. “And some of our technology partners can do it as well.”

Left to right: VNS Health CEO Dan Savitt, Enhabit CEO Barb Jacobsmeyer and Amedisys CEO Chris Gerard at FUTURE | HHCN photo

Implementing the right technology

It’s interesting how unified providers were with their messaging on technology: “We don’t need something crazy. We need simple fixes for long-standing problems.”

Gerard, of course, mentioned the scheduling fixes. But he also mentioned two other areas: He said that intake could be centralized and automated more than it is today, and that so could pre-audit billing.

Pre-billing audit automation and intake automation will help back-office staff. Scheduling automation will help field staff. That’s what most of the tech wants and needs boil down to – helping out staff to retain them, but also get more out of them.

On that note, providers are also reevaluating what benefits they offer to their employees.

Leveraging data – and, subsequently – predictive analytics is another area that can help providers identify complex patients, which will help them prepare for each visit, further move toward value-based care and also succeed in the Home Health Value-Based Purchasing Model (HHVBP).

“I think that is one of the biggest opportunities,” Wes Little, the chief analytics officer at WellSky, said at FUTURE. “We’ve been able to see our clients use predictive analytics to reduce their overall hospitalization rate by about 21%, while reducing their number of visits per episode by 19%. And, out of that, they’re not taking those cost savings to the bottom line or not hiring nurses. They’re actually using that extra capacity from those savings to go out and grow their census.”

Left to right: WellSky Chief Analytics Officer Wes Little and WellSky Chief Clinical Officer Tim Ashe

M&A action

Providers or other players wanting to engage in M&A in the home health space are currently in a wait-and-see period due to the looming final payment rule for CY 2023.

One of the things that is separating buyers and sellers right now is that buyers are forecasting future earnings, and that may bring prices below what sellers expect as they look back at the past success of their businesses.

“What they’re buying is future revenue streams, future growth, and it’s the leadership that determines that for the most part,” Braff Group Senior Managing Partner Mark Kulik said at FUTURE. “And that’s a critical component.”

What could bring buyers and sellers together is those buyers and sellers both being directly in the home health space.

If consolidation is coming, larger providers could more seamlessly work out deals given their shared knowledge of the space with the seller, increasing clinical capacity on the way.

“Certainly, the strategic buyers that are in the marketplace know the issues. They know where to look. They know the reality of the business,” Kulik said. “So I would say that due diligence process goes a bit more smoothly, because there’s an understanding of the marketplace. Private equity takes a very financial look, it’s more of a return-on-investment look for them.”

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