For Home Health Providers, Finding The Right Revenue Mix Is Increasingly A ‘Balancing Act’

Home Health Care News | By Andrew Donlan
Consolidation in the home health market has been forecasted for years.
While the amount of home health agencies has declined over the last couple of years, larger consolidation has yet to hit the industry.
But the fragmented and growing home health space could finally begin to experience it in the near-term future, likely due to declining traditional Medicare payment rates and a growing Medicare Advantage (MA) population.
Those factors are troublesome for almost all home health providers, but they also offer M&A opportunity.
“I think the the rate environment that we’re experiencing, whether it’s through Medicare or Medicare Advantage, is going to put some pressure on small players,” VitalCaring CEO April Anthony said on a panel at Home Health Care News’ FUTURE conference. “I think if you don’t have some of those Medicare Advantage relationships, at a point, that becomes a limiting factor to your ability to grow. I anticipate a fair amount of consolidation, in spite of the fact that this might not be the highest multiple era that we’ve experienced in our last few years.” …
The Balancing Act
When it comes to poor payment rates, Anthony chose to focus on MA plans’ rates for home health services, as opposed to the Centers for Medicare & Medicaid Services’ (CMS) fee-for-service payments.
“It’s frustrating to see where Medicare is going with their rates, and what they’re trying to do with clawbacks,” Anthony said. “But, if one of our managed care partners came to us with those [traditional Medicare] rates, we would be jumping for joy. We’d be saying, ‘This is the greatest contract we could possibly hope for.’”
Healing Hands Healthcare CEO Summer Napier – while recognizing that MA’s presence is growing quickly – warned other home health providers in the room about getting “into network” with an MA plan.

Being within a network can be beneficial for some providers from a referral perspective, but the risk-reward needs to be calculated on an individual basis.
“You can be so eager to get into network or go after a contract that it ends up worse for you than you were without it,” Napier said on the panel. “I think some of the smaller organizations here want to be like the bigger organizations. And so you go after a contract, and then you get into the network. And then, you’re making a third of what you were making being out of network.”…

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