How Home-Based Care Providers Can Protect Margins During Industry Upheaval

The home-based care industry is reeling with uncertainty these days. Change seems to be the only constant, from Medicare Advantage’s increasing role in the industry to the Trump administration’s rapidly evolving actions.

These fluctuations result in widespread cost pressures for the in-home care community. While reimbursement can be a struggle for providers accepting Medicaid or Medicare, that is far from the only problem. Ever-increasing administrative burdens and a fiercely competitive staffing landscape are among the issues top of mind for providers of in-home services. Providers can struggle to address these challenges and deliver safe, quality care while generating enough revenue to keep their doors open. Still, certain strategies can allow the home-based care community to increase efficiency, improve employee retention and weather the storms currently pelting the industry.

Home Health Care News sat down with Trent Smith, founder and CEO of Apricot, an AI-enabled company, and former owner and CEO of Accentra Home Health & Hospice, and Kevin Smith, CEO of Best of Care, for our latest episode of HHCN+ TALKS. During the conversation, Trent Smith and Kevin Smith spoke about streamlining processes with technology, keeping up with Medicare Advantage, rolling with the regulatory changes and elucidating the bottom line.

A replay of that TALKS episode for HHCN+ members is below. A transcript from HHCN’s conversation is also below. The transcript is lightly edited for style and clarity.

HHCN: I’m Morgan Gonzales, associate editor of Home Health Care News. Welcome to this episode of HHCN+ TALKS. I’m joined today by the founder and CEO of the generative AI tool Apricot and former owner and CEO of Accentra Home Health & Hospice, Trent Smith. I also have the CEO of Best of Care, Kevin Smith.

Today, we discuss Medicare, Medicaid, margins and building financial resilience. Trent, let’s start with you. Could you describe your overall payer mix regarding Medicare, Medicaid, Medicare Advantage and other payment sources?

Trent Smith: Yes, thank you for having me. We sold Accentra last October to Choice Health at Home in a strategic acquisition. At the time of the sale, we aimed to maintain our Medicare mix at 80% or higher. However, given the current state of Medicare Advantage in our industry, that goal was unattainable in our market. Ultimately, it ended up being around 65% to 70%.

We increased our margin and generated more profit with a lower Medicare mix after implementing our technology, Apricot, at our agency. However, it’s not a favorable situation for our industry overall today. We didn’t have any Medicaid, but thankfully, Kevin is here to discuss that further.

Yes, I want to hear more about the intricacies of what you’re discussing. Kevin, would you like to touch on your payer mix?

Kevin Smith: At my company, we’re around 75% to 80% Medicaid. This has been consistent month after month. For a long time in this company’s history, we had a higher percentage of Medicaid revenue. As we’ve sought to diversify and increase focus on our private-pay businesses, we’ve seen that mix shift slightly down to the 75% to 80% level.

Trent, returning to your earlier point, how did changes in Medicare reimbursement policies affect the organization? What movement were you just mentioning?

Trent Smith: Everyone in our industry is aware of the pressure on the skilled side. For me, the biggest issue isn’t the rate cuts themselves. Medicare has reduced our payments by nearly 10% over the past three to four years. Furthermore, if you consider Medicare Advantage, this amounts to an effective 40% to 50% rate cut on a per-visit basis.

The bigger problem has actually been rate complexity and the significant amount of administrative back-office burden placed on Apricot’s customers, my agency and Choice. These issues include numerous pre-authorization complications and increased rates of claim denials, often leading to automated denials from insurance companies. This situation is very unfair.

When you receive a referral from a hospital, they have likely sent that referral to 15 or 20 other agencies in your market. Speed in responding is very important. If you’re not a large company with over 1,000 census, simply saying yes to everything that comes in isn’t feasible, as you may not know the patient’s situation or your current staffing levels.

We’ve observed significant efforts by several larger, more resource-rich agencies we collaborate with, striving to automate their rate tables using either AI agents or conventional RPA methods that incorporate traditional algorithms.

When you have a rate table with eight different insurance payers and the various plans associated with each one, and you consider how much wound care this patient requires, simply saying yes to everything isn’t always the best method. Saying yes swiftly to the right patients is a better approach. However, that is not possible without technology.

The technology required to automate that process didn’t truly exist until around 18 months ago. It’s a challenge everyone faces. Simply saying yes to every patient isn’t a viable option unless you have an extraordinary scale.

Kevin, I believe I saw you nodding when Trent mentioned the administrative burden or something similar earlier. Would you like to elaborate on anything discussed there?

Kevin Smith: I certainly share the sentiment in the experience relative to the administrative burden then we experience more and more now, month after month, just to deliver one hour of service to someone. Looking back or examining that hour of service can sometimes be daunting when you realize how little margin remains after paying a caregiver to drive out, deliver that service and return home. This assumes the person is present when your caregiver arrives, by the way.

Then there are the billing and submission processes, the tracking of claims and the struggle for those claims. I was nodding because, as we look ahead, if we project that some of these cuts will negatively impact us as people predict, the battle for those dollars for that one hour of service — returning to that example — will become exceedingly tedious and tiresome. The time and energy invested in that effort present a significant obstacle for a company that has, in recent history, been in pure growth mode.

Kevin, in response to your point about potential cuts to Medicaid, how do you anticipate these cuts will impact your patient population and overall service delivery?

Kevin Smith: I’ll provide you with a microcosm-type example for the audience. We have been conducting business in Massachusetts since 1981. In recent weeks, we have received communication from many of our contract partners who refer Medicaid-funded businesses and consumers to us, indicating that certain funding and care programs will be closely scrutinized. It’s no surprise that these are the service plans with the highest volume authorized to providers like us.

We’re hearing that we will monitor the utilization of those hours and dollars for those consumers. If they are not maximizing their service delivery, we will likely remove them from that care program and shift them to another, which may not have sufficient funding. This will mean that these individuals will go from receiving 24 hours a day of care to just 10 hours a week. When projected across a network of care, it becomes a significant problem for facilities, hospitals, social workers, clinicians and nurses. The entire spectrum will feel the impact.

As providers, it is our responsibility to closely monitor the business, maximize our service delivery and stay on top of hiring to ensure we handle necessary cases while also focusing on other core aspects of our day-to-day operations.

Once again, that’s a microcosmic glimpse into one aspect we are examining as cuts become more common. I believe it’s a strong example, one that is tangible and allows everyone to observe how it might impact their business or community.

Perfect. Trent, turning back to you, what specific challenges is your organization facing due to the ongoing Medicare Advantage squeeze, and how can providers address those challenges?

Trent Smith: Yes. Well, the squeeze isn’t just about lower rates. That’s an easy target to criticize, but it’s also the previous delays, the denials and the inconsistent plan rules. What we were trying to achieve at the end of my time at Accentra and what we’ve continued to pursue as partners — I rolled some equity into the deal with Choice. They’re a great company, and I was happy to be part of it. We decided to start building systems at Apricot that assume nothing will be easy going forward.

How do you create technology and systems that support providers, clinicians, the back office and the C-suite while future-proofing the technology and automation needed to compete in the new situation we find ourselves in?

Handling authorizations and background tools with [robotic process automation] (RPA) and AI agents – where RPA is often referred to as a bot—is essential. Ultimately, we need our nurses to focus on nursing rather than being burdened with administrative tasks. To alleviate some of the workload, we hope to equip our back office with faster tools and tighter feedback loops between intake clinical and billing.

Many EMR systems available today are closed gardens; they do not integrate well with other tools or software programs. Many of them were built on code bases that are over 30 years old, which is absolutely archaic, even by today’s standards. Any software that hasn’t been developed in the last five years is, by definition, nearly obsolete and requires complete modernization. The necessary technology for the skilled side of the home care business simply does not exist at present. Building out that infrastructure poses one of the biggest challenges and the most urgent issues facing our industry today.

Thank you. Thanks for decoding the tech acronyms for people like me.

Trent Smith: I’m not a technologist. I just stumbled onto the stuff a few years ago and decided to try and build an internal tool for our agency, and it turned out that it was something that nurses and agencies everywhere needed and wanted. I’m happy to be able to give back to our nurses and do more than just call them health care heroes; actually do something that impacts and changes their lives. It’s been a thrilling ride, and we’re super proud of it.

Great to hear. Okay. We’ve been discussing these payment pressures. Alongside these payment pressures, cost inflation has been difficult over the last few years. Where have you all been experiencing cost pressures, and are they easing? Are they shifting? Kevin, let’s begin with you.

Kevin Smith: Where aren’t we feeling cost pressures? This may be a more appropriate perspective to consider. I’m being somewhat glib, but not really. Cost pressures are widespread. For a company like ours, which is always striving to recruit the most employees, that’s the situation we face. Right? To keep up with demand and volume, we need a larger workforce.

A competitive rate and a benefits package appealing to job seekers in the non-medical home care industry require flexibility. You must offer these incentives to hire as many people as possible and enable them to work when and where they can. However, all these elements come at a cost. Hiring the right talent to help implement these strategies also requires significant financial resources.

That’s not even considering the rate structure, rate increases, negotiations for rates and the geographic variances and discrepancies we see across the board. We are trying to factor that variance into something that appears to be a universally appealing and tangible pay rate to offer caregivers in a way that benefits your company.

Beyond that, the other ancillary issues are equally challenging for business owners. Health insurance for those employees costs a significant amount of money, and workers’ compensation can also be burdensome. For the employers on this call, you can relate to everything we have discussed. Here in Massachusetts, where I am located, we have finally received the final mandate to implement electronic visit verification. Upgrading the technology and the platform to facilitate this change while ensuring we use the best available options also incurs additional costs. This is on top of the expectations that job seekers and caregivers have regarding their necessary compensation to thrive in this environment.

Putting all those ingredients into the soup, so to speak, and coming up with something that works is a daily challenge. I don’t claim to have the formula right just yet. We’re like everyone else. We’re trying everything to get the most people delivering the highest quality of care because, right now, all of this speaks toward retention for us.

In this environment of uncertainty, the best thing we can do is provide job security through retention. This means hiring the right people, providing them with the resources they need to succeed, educating, training, supervising and supporting them. This way, we can retain our valuable employees, especially if hiring new staff would be cost-prohibitive.

What the next extension of that means is that job security for those individuals translates directly into client retention as well. If we’re losing clients and our client attrition rate is too high, there’s a good chance that if there are significant cuts, those individuals we lose – whether they go to a hospital or are temporarily suspended – may not return to us with the same service plan. I can’t rely on the volume in the same way that I once did. I’ll pause there and hand it to Trent, but that’s my rant about pressures and how they all tie together regarding the retention of people, clients and staff.

If I may, I want to hear from you, Trent, but Kevin, how has the soup changed over the past few years? Have you noticed any trends there?

Kevin Smith: Yes. We had a glut of hiring. We hired more than 250 people last year. It was basically, “Here’s the rate. Take it or leave it. Come work for us.” We had a ton of traction in attracting talent and recruiting new caregivers. The soup had only a few ingredients, to keep using this lame analogy. I don’t know why I chose the soup analogy, but let’s stick with it and ride it out. It didn’t require as much. It was basically just rolling it out, bringing good folks in, and getting them going. Obviously, we’re going to have to be a bit more discerning, not on the quality of caregivers, because we never compromise on that, but on those other considerations that I’ve just run through.

Trent, how would you describe your experience with these cost pressures and how they’ve changed over recent years?

Trent Smith: I love the soup analogy, Kevin. That was good. The answer is the soup doesn’t taste as good anymore.

I will say it’s labor. Period. It starts and stops with labor. Home Health Care News, published an article not too long ago, early last year, about turnover rates for registered nurses in home health care. The industry average is 30%. We experienced that in my agency, before some of the technology innovations we implemented, with rates in the mid to upper 30s easily. Nurses will leave for the hospital when they’re offering massive signing bonuses because they can afford it. They will leave to go down the street to a competitor for a $2-an-hour raise.

The article pointed out that we have all known about the nursing shortage for quite some time. It’s even worse in home health care due to the 30% turnover you mentioned, with half of that, or 15% of the entire workforce, leaving home health altogether. Basic supply and demand principles suggest that when fewer people are willing to do a particular job, the remaining few must be offered higher pay, directly impacting the operator’s margin.

You mentioned, Kevin, that spending on other items, like software, incurs costs. All these things require funding. Additionally, you need to hire administrative labor. You mentioned people working alongside others; I think it’s the same situation in the skilled sector of post-acute care.

The answer is that we must do more with less. We need to find a way to equip our nurses, back office and administrative staff with tools that genuinely provide an ROI, rather than merely digitizing the oasis, for instance. We can’t simply convert paper into a webpage and claim that it’s helping to speed anything up. It’s more convenient, but it doesn’t make us any faster. You still have to fill out the form.

I encourage operators to take a serious look at what they can automate, not to replace staff or reduce headcount, but to empower them to accomplish more in a shorter period while simultaneously enhancing their quality of life and job satisfaction. These goals are not incongruent with the technology available today.

That’s our bet at Choice. That’s our thesis at Apricot. I believe the industry has clearly and strongly recognized that the technology available to us lately is inadequate for the realities and pressures we are encountering, especially regarding the labor market and its current condition. It’s extremely competitive out there.

Trent, I will stay with you. Considering all the pressures you’ve mentioned,  payments and costs,  how did that affect your operating margin? How does that look?

Trent Smith: Let’s do some rough back-of-the-envelope math here. If we consider all the mandated CMS rate cuts over the last two years, which total about 10%, along with the growing shift, adoption or voracious appetite for Medicare Advantage plans that are taking over our patient population, the per-visit reimbursement rates that are approximately 40% to 50% lower than traditional Medicare seem, to me, perhaps due to my poor math, to have cost our industry over $10 billion a year.

For an agency like mine at Accentra, before our sale, we had 460 home health patients for an average daily census. Suppose you extrapolate that math from approximately 10 billion in total industry cuts across the 1.5 million lives that Medicare says were treated last year. In that case, that’s a half to a full million-dollar reduction in revenue for an agency of our size. It was suffocating. It was like, “Why are we trying so hard? Why am I in this business? I need to go start a chain of gas stations. It would be better than what we’re doing.”

That’s not going to take care of our aging population, the silver tsunami, if you will. It’s not going to slow down. It’s only going to accelerate. More people will need this care in the home. They don’t want to go to the hospital. I don’t want to go to the hospital. I want to stay in my house. I want my dad to stay in this house. You want your grandma to stay in her home. That’s where you want to receive care.

It’s just been an incredible avalanche over the last year, since 2018 and 2019, since PDGM rolled out. It feels like being waterboarded. It’s not been fun. You have to get creative because doing business the old way is not going to cut it anymore.

I’m sad we moved from soup to waterboarding. Kevin, can you share some information?

Trent Smith: Brighten us up.

Kevin, can you discuss how payment and cost pressures have impacted your operating margins or overall trends there?

Kevin Smith: I’m not even going to try to rough it out because I am not the numbers guy that anybody here wants me to be. I never claimed to be. They have hurt us. Quite simply. It has been less on the rate side for us. I’m not a Medicare provider, as I said.

We still have the ability to negotiate, to a degree, some of our rates with our state-funded home care contracts. These contracts are like quasi-government agencies that receive Medicaid funding and distribute it across their network of consumers, who then purchase the service from companies like ours.

We still have some leverage back pocketed to demonstrate to those folks that, “Hey, we’re a top-three provider of yours in this geography. Based on that, let’s get back to the table and renegotiate this thing.” We’ve had some luck on the rate side. The margin reduction has primarily come at the rising cost pressures we discussed just a few minutes ago. Still, some of the change to the margin has been self-inflicted because I have decided to take my company in the direction where we are adding different revenue streams to try and hedge for the future a bit, given the uncertainty.

We’ve added some – let’s refer to them as complementary services. We’ve launched a care management division with a significantly different billing and rate structure, allowing us to offer it to our private pay clients, who are already a captured audience, to supplement what we’re providing. We acquired a move management company to assist individuals transitioning in or out of their current locations to enhance our existing payers further.

We have just launched a private-pay nursing program with our nursing team. Again, we are focusing on our existing payers, aiming to keep them in our ecosystem for as long as possible by enhancing our services’ competency and skill levels at any given time. We continue to partner with independent and assisted living facilities to become their preferred provider, maintain an onsite presence and effectively serve as their in-house care delivery arm for their residents.

We’ve been trying to implement all of these things and integrate them in a way that separates my company from any previous notion that folks had of us as just a straight-up Medicaid, state-funded home care provider into something else. That costs a lot of money.

Much of this is focused on future outcomes and the things I’ve been willing to bet on regarding what we can achieve. It highlights that these issues are significant and that people like me are here trying to plan ahead or navigate around them in a way that hopefully positions us so that when folks join us, they’re in it for the long haul, whether they’re utilizing resources and becoming a Medicaid client of ours while retaining Mary, the home health aide, even if they previously had her when paying privately.

That’s what we’ve been modeling now. We’re not the only company that can do this. We know there aren’t many of us, but other people are doing stuff like this and adding these ancillary things as a hedge. It’s a different way of cutting into the margin. It’s born out of foresight and necessity at this point.

In efforts to drive revenue, what initiatives have you pursued, thinking about diversifying service lines and strategies to increase patient volume. It seems like you’re on that diversification service line expansion track.

Kevin Smith: We are. I spoke to Home Health Care News recently. In that conversation, I said that I’m not necessarily going into 2025 with an acquisitive mindset. Still, there continue to be opportunities for organizations or companies that are a one-person wrecking crew that’s been doing the scheduling, payroll, billing, hiring, everything forever.

Those folks, that generation of owners, they’re reaching a breaking point now, too. They will want to get out as they smell this stuff coming down the pike. There will be more opportunities for people poised to absorb or rescue those types of organizations, bring in that workforce, fold it into your operations, absorb those clients seamlessly and immediately expand through that.

I’m convinced that we’re going to see many more mom-and-pop Boomer business owners transition their companies, whether through direct acquisition or by joining another owner’s payroll. This allows someone else to manage the back office and take on the associated liabilities. We will observe an increase in this informal transition of business structures, particularly as these uncertainties and ambiguous challenges loom.

Trent, what advice would you give folks about strategies or technologies that could be implemented to enhance efficiency and reduce some of the costs we discussed earlier?

Trent Smith: Everyone’s talking about AI, AI this, AI that. Most people don’t understand what that means or how it works. Effectively, it’s a thinking, reasoning technology that allows you to interact with natural language, talk and speak to it. You should be able to talk to your data, to put it very simply.

You mentioned the Boomer population, Kevin, who isn’t known for being super comfortable with new technologies. At Accentra, the reason we sold wasn’t because of anything inside of my control; really, it was our particular size, 460 home health patients, 100 to 120 hospice patients, depending on the week, and no other service lines outside of that. We either needed to grow rapidly or shrink. We were too big to be small and too small to be big. The investment necessary to make us competitive in the marketplace required cash that we did not have.

I’m 45. I’m Xenial or Gen X. We’re borderline millennials. I certainly identify more with the Gen X side of that equation, but we had to make a choice as a company. It’s about what’s best for our nurses, what’s best for my staff who worked so hard and diligently for almost a decade as we built this from nothing to that size, what’s going to give us the best chance to be successful long-term and what’s best for our patients.

The choices were shrink, which did not sound sexy, grow organically, which is exceedingly difficult, or raise private-equity funding to become acquisitive, make acquisitions, and find some of these agencies in a similar position to us to roll up the exit.

As you eloquently mentioned, Kevin, I opted to effectively join another organization. I chose the strategic option of allowing a larger entity to absorb us, enabling us to care for our patients and become part of a bigger organization, which would drive more revenue. The solution for skilled home health providers is straightforward: increasing the number of patients per nurse serves as the multiplier. This involves minimizing non-revenue time per visit, from start to finish, including nurse documentation time.

The technology exists to do that now. The younger generation of operators should seriously look into that. They should ask questions. They should learn how to build a mental model to diligence these technologies to ensure that they are compliant and not violating any of the conditions of participation.

There’s a lot to consider, but the old playbook is dead. Suppose you are not adopting these new technologies. In that case, if you are not figuring out how to increase nurse caseloads while simultaneously improving their quality of life and finding ways to pay them more money, you will fall behind increasingly rapidly. The answers are there. The willingness to get ahead of the curve and adopt some of these new technologies is the barrier.

Trent, following up on the point about leveraging technology, a recently released McKinsey report reveals that nearly two-thirds of leaders in health systems, insurance companies and vendors who have implemented AI solutions anticipate or have already reported a positive ROI. However, only 23% could quantify their positive ROI, while 41% reported a positive ROI but could not quantify it. Given this, how should home health providers approach AI technologies like Apricot? Can you determine a specific ROI that positively impacts the bottom line?

Trent Smith: Yes, there are two ways. One is very simple. You know what you pay your clinical staff annually, per visit or hourly. You can break that down to a per-minute rate. For instance, if you’re handling home care and hold over 60% of the home health care market, they will tell you exactly how much time your nurses spend documenting outside of the home. AI will not replace a nurse’s experience with the patient in the home anytime soon. Robots aren’t quite there yet, and I believe it won’t be for many decades.

Reducing the documentation burden is essential. To calculate this, if you spend 90 minutes outside the home completing documentation and can reduce that to 30 minutes, you save 60 minutes, or one hour, of the nurse’s time. You can quantify this, compare it to the costs, obtain that gain and see if it at least breaks even.

Secondly, what if every single start-of-care clinician could take on just one additional start-of-care case each week, and you could manage that? If the average reimbursement for a 30-day period is $1,500, and it costs you $30 or $20 to achieve that additional $1,500, it’s an impressive return on investment. You should see that reflected in your gross margin, which is revenue minus direct costs, within the first 60 days. The results should be quite astonishing. If you’re not witnessing this, it’s time to explore other solutions.

My agency and I have been purchasing new technology for my staff with promised ROI for far too long. However, all I observed was my software spending increasing while my margins decreased. I wondered, ‘Where is the ROI?” If AI is to deliver on its promises and these new technologies provide the value they claim, and I believe they do, as we’ve seen in action, it should be evident and clear, not a mystery. It’s progressing rapidly.

I agree with the McKinsey study. I believe that any effective new technology solution should be able to demonstrate, very quickly and in a tangible, meaningful way, how it can lead to higher pay for clinical staff and increased capacity for your back office to accomplish more in the same amount of time.

Ultimately, most of us are on the for-profit side of this, which puts more money in the owner’s pocket. That’s why we do it. Yes. It should be a panacea. Is it there yet? Maybe not. Is it close? Very.

Kevin, I’ve been sticking with Trent for a while here. Is there anything you wanted to follow up on or hit on before we move on?

Kevin Smith: No. We can move on.

Trent, do you see any reasons for optimism about future reimbursement policies despite some of the challenges we’ve discussed, and what changes would you like to see?

Trent Smith: I’m a glass-half-full guy. I’m an eternal optimist, but I would express cautious optimism in this regard. I’m nervous about Dr. Oz and what he’s going to bring to CMS. I’m anxious about the Trump Administration and what seems like a love affair with Medicare Advantage.

I also see Medicare Advantage starting to catch the winds of the industry and that what they are doing isn’t sustainable. Eventually, it will bleed down and affect their ability to enroll new beneficiaries in their plans. I think CMS has expressed that they want to move more toward value-based care and extract and demonstrate that value. It’s all data that you will need.

It turns out that large language models, neural networks and AI are exceptionally good at handling very large data sets, which is what we encounter in our industry. Negotiating with these MA plans feels like I’d rather undergo a root canal without anesthesia. It’s extremely difficult.

We need to find ways to collaborate as an industry. We must strengthen our lobbying efforts. Our lobby at the federal level is so fragmented; they do their best with limited resources, but it’s a challenge.

We need more intelligent individuals leading these agencies and embracing new technologies. I believe that in the future, the best among us, those who genuinely care about their patients and achieve excellent outcomes, will be the ones who can demonstrate their effectiveness with data collected at home. They will ultimately emerge as the significant winners.

Kevin, do you see reasons for optimism about the policies you’re eyeing? Is there any specific advocacy work that you’d like to see done?

Kevin Smith: I, too, am an eternal optimist. At times, my jaded, cynical New Englander side will definitely emerge. To me, the entire issue comes down to demand. The youngest Boomers are in their early 60s. Every person you talk to wants to age in their own home. If you poll anyone, do you think anyone will ever raise their hand and say, “Yes. I want to go to a nursing home”? No.

There also aren’t enough places for everyone to go. The demand from the aging population, which is growing at an unprecedented rate in human history, indicates that people prefer to age at home. Regardless of funding cuts, this challenge will continue to present itself to society and our industry more specifically.

My optimism is rooted in the fact that nobody wants to go anywhere. From a problem-solving standpoint, it’s impossible to ignore. I know that’s less prescriptive than what Trent was discussing, and it may skew more anecdotal. Suppose you’re viewing it from that perspective and in that context. In that case, I remain optimistic because, to Trent’s point, we are tens, if not decades, away from non-human beings actually performing tasks that human beings still need to do. We still need humans. We can develop whatever types of supportive technological tools we can keep up with and fund in the background, but we still require human beings to go into those homes to care for others.

That demand will eventually lead to a crisis, which will need resolution. We’re still at a point where only human beings can resolve it. Suppose you’re looking at it purely from that place. In that case, I remain optimistic that people in our industry, if they can hang in, will have their place and will be needed for a very long time to come because the number of people who want help is only increasing by the day. They don’t want to go anywhere.

Fewer people can afford this care, so they will be looking for Medicaid. They will be looking at their Medicare as they age into that resource. There is no other solution. We’re it.

Kevin, I’ll stay with you and ask you to be a bit speculative next. What trends do you see emerging that could influence reimbursement models over the next few years? Managed Medicaid, the continued rise of bundled payment models, the pressures created by an aging population, as you mentioned, and so on.

Kevin Smith: I live in this fee-for-service world where you only get paid for exactly what you bill. There is a fantasy that many people in my industry have, believing we are providing salaries to caregivers. Imagine hiring someone and saying, “You’re getting paid for 40 hours a week.” The people who are billing acknowledge this. We can essentially build these blocks of time instead of the small, fragmented units that we’re constrained by in this Medicaid reimbursement system. The authorization is strictly one-to-one. Mrs. Smith is authorized to receive 10 hours of care a week. Therefore, Mary, the home health aide, is there for 10 hours.

If, for some reason, you have her working elsewhere and she has overtime, that detracts from your situation. Imagine a world where we could establish a salaried model for hiring our caregivers. The demand to work in our industry, where employees have paycheck security and a predictable income, would enable them to start families and live their lives. This would represent the biggest change ever for this industry.

All of my caregivers work for three or four different companies. They have to, because if Mrs. Smith dies tonight, they need their 12-hour overnight shift to start tomorrow. Otherwise, they won’t be able to make rent or pay a mortgage. Imagine if we could approach it from the caregiver’s perspective, building it from the ground up, asking, “How could we support the workforce and then adjust the model accordingly?” That would be the biggest change.

That’s a way out there thing, I know, but it is something I think is worth considering from a speculative standpoint. Maybe, at some point, people will come around and acknowledge this, looking at it from a value perspective rather than just the small tit for tat exchanges. If we could solve that somehow or contemplate it better, it would change this industry forever.

Do you feel real momentum on the value side?

Kevin Smith: Put simply, no. I don’t. I told you it was out there, so I gave you the disclaimer.

No. I appreciate it. It’s worth talking about. Trent, what about you? What trends do you see emerging that could impact reimbursement models?

Trent Smith: I think the biggest one is probably one that will happen faster than most providers are ready for, and that’s the shifting of risk to providers, whether it’s bundled plans, MA plans, consolidated MA plans or all these things. It’s all coming if it’s not here already.

Building the infrastructure today to operate at MA speed and precision is a top priority. We have customers nationwide, some in areas with a 100% Medicare population in their payer mix, while others have 25% Medicare and the remainder being MA or private. This trend is also occurring in other regions of the country.

If you look at the heat map of Medicare Advantage adoption, it’s slowly turning bright red everywhere across the U.S. It won’t stop or slow down. The most agile, lean providers are the ones that are going to reap the biggest reward from this. It’s becoming more about volume, which means more nurses, which means having nurses with higher caseloads without burning them out, without ruining their quality of life. I don’t know if it’s a trend. It might actually already be here, Morgan.

We have something happening now that we can look forward to. That’s pretty comprehensive, so thank you both. The title of this TALKS episode refers to building financial resilience. What does financial resilience mean to each of you? Kevin, what’s one goal that you have to improve financial resilience? 

Kevin Smith: Financial resilience, to me at our company, is predicated on volume. As I said, volume is king in our industry because everything is billable hourly. To acquire market share, you need volume because the margins are thin enough.

We trade on volume, as I’ve said. To remain financially viable before you even talk about resilient, you need to be able to sustain that level of volume because, to what Trent said earlier, his company was, I forget the analogy, whether it was too big to be small or too small to be big or something along those lines.

When your company reaches that point, you absolutely require a certain baseline of volume because you have modeled everything at your business on that: your overhead, your expenses, your projections, your budget and your two-year and five-year projections. Financial resiliency has to be rooted in financial stability to begin with.

For us, that is absolutely volume-based. With Medicaid cuts and uncertainty, if we can’t hang our hat on X amount of service volume per year and X number of billable hours, that throws our company’s equilibrium way off kilter.

When we cannot predict how much service we will deliver and what it will be billed at, it becomes quite difficult to operate a company of our size, which has grown to about a $25 million annual revenue company spread across the state.

Keeping our arms around that, I think the situation could get a bit shaky regarding what these potential cuts might mean for my volume. The rate is going to be the rate that’s negotiated, and I know what that’s going to be. It’s not going to be reduced to my level in terms of what I’m billing, but I would like to know what it means for those future authorizations and enrollments. That’s where things really begin to feel uncertain.

From a resiliency standpoint, I mentioned this earlier, which is why I’m trying to diversify. We’re also working to streamline our new platform with Access Care and become a more efficient company to maximize the value of every dollar we spend right now. Resiliency serves as a safety word for us rather than something we’ve had to demonstrate so far, thankfully.

Thank you so much. Trent, what’s your definition of financial resilience, and what is something providers can do to foster it?

Trent Smith: To me, financial resilience, when I put on my operator hat, is the ability to absorb these macroeconomic shocks while still finding ways to grow and remain margin-positive. Reducing your unit costs on a per-patient basis, seeking ways to grow your back office without increasing headcount by becoming more efficient in your processes; this essentially means asking, “What are the requirements? What do the Medicare conditions of participation actually state? What do you truly need to do?”

We have agencies that have built out and spent tons of time and money on their custom physical assessment questions and building all these custom care plans and pathways. That is not required. All you have to do is present a coherent care plan that matches skilled needs to medical necessity and homebound status. That’s really all you have to do. There’s more to it, obviously, than that. I’m oversimplifying.

I was a victim of this at Accentra. We had QA staff who, for whatever reason, over a five- to ten-year period, toward the end of our clinical diligence, were like, “Why are we spending so much time QA’ing charts?” We have all the prerequisites needed to ensure a positive outcome with a Medicare claim or to get a Medicare Advantage patient paid. Why are we adding all these extra requirements? Let’s eliminate them. Remove things that are not requirements.

That’s how you can still grow. It’s not just about technology. As providers, especially from the upper echelons of executive leadership, we allow many aspects to occur at the lower levels within our QA and nurse education departments, which unnecessarily complicates life for nurses. A comprehensive care plan is essential and is not difficult to implement.

If we can find ways to reduce the burden on our back office by eliminating unnecessary requirements that do not align with the conditions of participation, that would be a great place to start looking as well.

Fantastic. Well, that’s just about all the time we have. Thank you, Kevin and Trent, for making the time. I really appreciate it. It was a great conversation and nice catching up with you.