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Everyone in home-based care wants to get further into value- and risk-based contracting. No one can agree on the best way to do so.
Some providers believe that honing in on just one or two core service lines – like home health and hospice care, for example – is the best way to go. Others believe that establishing a full continuum of care within the home is the best way to improve outcomes and attract payers.
For instance, earlier this month, the North Carolina-based Well Care Health offloaded its home care division to Avid Health at Home. Focusing on home health and hospice care was, in Well Care CEO Zac Long’s mind, the best way to “deepen its focus” on “improved payer relationships and value-based care positioning.”
Then you have other providers like the Texas-based Choice Health at Home, the Tennessee-based Compassus and Amedisys Inc. (Nasdaq: AMED) who like the idea of building out the full continuum within the home.
“I would say, from a reimbursement perspective, home health is challenge,” Nick Muscato, the chief strategy officer at Amedisys, told Home Health Care News. “I think that also presents opportunities for continued differentiation. Companies that are efficient, provide high-quality care and provide as many services as possible are really going to bubble to the top and be able to make their way through a number of rate cuts to come. And I think we’re in a very good position.”
Amedisys provides home health and hospice care, but also high-acuity and palliative care in the home through its subsidiary, Contessa.
Picking between those two options is a more prevalent consideration than ever, given all the care that can now be provided in the home. In-home service lines such as primary care, palliative care and high-acuity care are all far more popular – and doable – than they were even five years ago.
Both philosophies are impacted in part by strategy, and in part by payment. It’s not easy for legacy home health providers to shift to risk- and value-based care models after taking on mostly fee-for-service business for decades. It’s also not easy to build out or buy new service lines and integrate them into existing business.
That leaves room for opportunity, particularly for startups that are willing to build out full home-based care continuums from the ground up, with the sole purpose of going at risk with a payer.
“Who’s going to say, ‘I’m going to build my organization specifically to go at risk with payers. I’m not worried about the silos that are artificially created by Medicare, Medicaid, or hospitals,’” Dexter Braff, the president of the M&A firm The Braff Group, said at a conference in July. “You’d do home health, hospice infusion therapy, home medical care, physician housecalls, build that organization and have some capacity in a very, very tight footprint. Then go to the payers and say, ‘I’ll take care of all that, and I’m going to charge you X number of dollars per member, per month.’”
In such an arrangement, the reimbursement challenges of providing high-quality at-home primary care or palliative would not be an issue. It would be about driving better outcomes on behalf of a partner.
There’s not many obvious examples of a home-based care provider that has pulled this off. But there are companies that already provide a wide range of home-based care services.
The SCAN Group is one of them. Though it is a large payer, the company also is involved in the Program of All-Inclusive Care for the Elderly (PACE) and provides at-home palliative, primary and medical care.
“The question that we have to ask ourselves is, is how do we make sure that home-based medical care, for instance, connects in to other kinds of care?” SCAN Group CEO Sachin Jain told HHCN. “That’s super important, and we’re struggling with that question. One of the challenges that anybody who tries to innovate care experiences is that, if you build a digital system, it still has to plug into the analog system. If you can do home-based primary care, but if you can’t do home-based cardiology or home-based pulmonary care, then your patient’s care is still disaggregated, and the right hand still isn’t talking to the left.”
Jain’s point is that, if you don’t have the ability to do most everything in the home, it’s hard to make just three or four service lines work in the home in this kind of matter.
A potential solution – and what the aforementioned startup may need – is what Jain calls “confident generalists.”
“We’re actively thinking about how you fully make the home the nexus of care,” he said. “I think the answer there is more confident generalists. These are the so-called superstar physicians of yesteryear, who might digitally or e-consult specialists to be able to provide specialist-level care in the home. Because the truth is, you can’t have home-based primary here and then facility-based everything else.”
The full package
Braff believes that venture capital – and not private equity – would be the best sort of financial sponsor for that all-encompassing home-based care startup.
“You would have to have a patient investor get involved,” Braff told HHCN. “That’s why you’d need venture capital as opposed to private equity capital, because private equity is not patient. They need to buy and get out in a relatively short period of time.”
Behavioral health startups have tried their hand at this type of model, with mixed results.
The advantage behavioral health startups have, however, is the ability to gain market share quickly in a burgeoning industry. In home-based care, there are legacy companies in every market that do one, two or three service lines really well already.
“There’s not as much opportunity for people to start up in the space and grab market share, it’s more difficult,” Braff said. “The behavioral health space is growing so fast, there’s much more opportunity for people to get into it than there is opportunity for people to establish [themselves] within within the home care space.”
But nearly every payer recognizes the value of home-based care, and its ability to produce high-quality outcomes at lower costs.
Such a company within a fixed area could make a significant dent in spend for a payer. And that’s generally what payers want – partnerships with companies that can actually reduce spend for this patient set or that patient set.
But the willingness to go fully at risk with a payer doesn’t guarantee that payer will be jumping at the opportunity – in behavioral health or in home-based care.
“When you come in and start telling me from Day 1 that you’re going to take a [risk-based approach] on my membership, that’s a major red flag for me,” Suzanne Kunis, vice president of behavioral health at Horizon Blue Cross Blue Shield of New Jersey, said last year. “All that means to me is you’re a startup, you got some VC behind you with a bucket of money that’s saying, ‘Let’s go in there, make it easy for them.’”