Home-based care insiders are looking on as outsiders come in and sweep up top assets within their industry.
There’s the payers, like UnitedHealth Group (NYSE: UNH) and Humana (NYSE: HUM), that are doing so. Then there’s the retailers, such as CVS Health (NYSE: CVS), Walgreens Boots Alliance (Nasdaq: WBA), Best Buy (NYSE: BBY) Amazon (Nasdaq: AMZN) and Walmart (NYSE: WMT).
Those organizations picking off home health assets is not a problem in a vacuum, however. In fact, their interest is validating, to a certain extent.
What’s troubling is what they’re able to do that traditional home-based care providers may not be doing, Chapters Health System President and CEO Andrew Molosky said Tuesday during a panel discussion at the Home Care Innovation + Investment Conference in Chicago.
“The amount of red tape and nonsense that we deal with – whether it’s in personal care services, traditional home health, hospice – it’s really a rate limiting factor for many of us,” Molosky said. “But I see these non-traditional models as people coming in from the outside and seeing the access that we have, the capabilities that we have to care in the home and the innovativeness that our caregivers provide at the bedside. Then they’ll take that and repurpose that asset outside the original construct.”
The Tampa, Florida-based Chapters Health System is a community-based nonprofit organization. It provides home health, hospice and palliative care services to nearly 120,000 patients.
In other words, the larger companies are coming in and taking all the good things that come with home-based care, and placing those assets in environments where the downsides aren’t as significant.
The payers – UnitedHealth Group and Humana – are a good example. They’d prefer that the Centers for Medicare & Medicaid Services (CMS) propose a positive home health payment rate update for CY2024, but it’s not the be-all and end-all that it may be for traditional providers. And that’s because they view the assets as risk-based and value-based care enablers, and not just Medicare fee-for-service collectors.
“There’s no reason, as a cost center and risk-based model – as opposed to a revenue stream – to follow those regulations and burdens,” Molosky said. “So, I actually see the deconstruction of some of the benefits as a purposeful move by these outside entities coming in. It’s just a pragmatic reality of where this is going.”
Of late, UnitedHealth Group’s Optum acquired the home health provider LHC Group for $5.4 billion. It also submitted a bid for Amedisys Inc. (Nasdaq: AMED). Humana has its own home health entity in CenterWell Home Health, which used to be Kindred at Home. Both companies also provide primary care, health assessments and a myriad of other services in the home.
On the retailer side, CVS Health acquired the at-home care enabler Signify Health for $8 billion earlier this year. Best Buy acquired the hospital-at-home platform Current Health, and partnered with the health system Atrium Health, to scale hospital at home in the U.S. Walgreens owns a home-based care convener in CareCentrix and has invested over $6 billion in VillageMD, which provides primary care at home.
“This industry – particularly on the skilled level and in [personal care services] – has been designed to serve for that Medicare benefit and the regulations around it,” Elara Caring CEO Scott Powers also said on the panel. “The players who could come in, they’re gonna be more interested in outcomes and the value that can be created. … I think that’s going to continue to be the opportunity: how do you create value and outcomes in the home, and pivot a little bit away from this traditional model that actually drives utilization?”
The Dallas-based Elara Caring is a home-based care provider that has about 200 locations across 16 states.
Moving toward risk
Home health providers are regularly being told to get further into risk- and value-based care models.
That’s largely because more Medicare beneficiaries are under MA plans than ever before, and theoretically, those MA plans want home health providers that can enter into risk-based agreements.
And while that may be true, it’s the MA plans that often aren’t ready to strike innovative partnerships with home health providers, Enhabit Inc. (NYSE: EHAB) CEO Barb Jacobsmeyer said on the panel.
“We’ve been very open about going in and saying we’re willing to take on risk,” Jacobsmeyer said. “We’re very proud of our quality outcomes, particularly around things like readmissions, hospitalization rates, [etcetera]. What we actually have found is that the majority of [MA plans] aren’t prepared to actually get into a lot of risk-bearing agreements.”
Dallas-based Enhabit is a home health and hospice provider that has nearly 360 locations across 34 states.
Jacobsmeyer has also made it clear that as Enhabit does form more preferable relationships with health plans, it will have to deprioritize patients from others.
“There are some member access issues now for the plans,” she said. “And frankly, we are not going to put forth staff to take care of those access issues if it’s for substandard rates.”
Moving forward, these large home health providers are looking forward to controlling their own destiny – at least as much as they can.
“You’re on a ticking backwards clock to be in an environment where you have to have exerted some measure of influence in the equation,” Molosky said. “Whether that is just being the preeminent component of a care plan, or in control the total premium dollar, you’re going to have to get there.”
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