Medicare moratorium turns focus to private duty
Medicare changes mean more opportunities
The federal moratorium on the admission of new providers into the Medicare program may mean increased competition for private duty agencies. But the changes in the program may ultimately result in increased business opportunities.
The moratorium has caught in the lurch many health care providers preparing for certification. Several that have established themselves in other areas of the business will continue with what they have been doing until the moratorium is lifted. Others, though, are left biding their time.
"One of my clients had established his niche in the market by offering bilingual staff to the VNAs and proprietary home cares," says Valerie Donnelly, RN, BSN, MS/HSA, a health care management consultant with Donnelly & Associates in Winchester and Weymouth, MA. "He had all of these policies and procedures in place and was ready [for certification]. He’s going to continue what he is doing until the moratorium is lifted."
Another client who is an occupational therapist, though, was not so far along in the process. "He’s not sure financially if he wants to go on and do private duty or if he wants to wait and start doing certified home care."
This client, as well as others caught in the same position, can turn to private duty in the interim. Medicare-certified agencies that want to expand the business geographically also might turn their attention to private duty.
"If an agency wants to grow, it has to look for an opportunity. If it can’t set up a new branch or subunit or expand its territory in the Medicare side of business, one possibility is to expand in the private duty side," says Stephen Tweed, health care strategist for Tweed Jeffries LLC in Louisville, KY.
Does this automatically mean increased competition for existing agencies?
"I am certain that private duty will see increased competition from now on," says Charles V. Homan Jr., vice president of development for HealthCare Visions, a Hollandale, MS-based management services firm that provides solutions for health care facilities through outsourcing and consultation. But Homan is not speaking solely about the moratorium. He’s also referring to the change in Medicare reimbursement.
"The payment structure for Medicare is changing to reward efficiency," he explains. "Naturally, those agencies that were doing mostly Medicare business are going to go after the private duty market with these new leaner, meaner operational structures."
"As Medicare reimbursement gets reduced, agencies will look at other sources of revenue," Tweed adds.
Instead of branching into private duty themselves, though, many Medicare-certified agencies may want to subcontract with existing private duty agencies. "The private duty side is a significant opportunity to grow the business," Tweed says. "If you look at the demographics and the economics, it says that private duty home care has a great future if you learn how to do it well."
As the number of visits that home care provides decrease, families also are going to be more willing to come up with private funds to continue care, says Donnelly. "A lot of times the care that is needed is at the level of the home health aide type of support."
Preparing for the onslaught
In the future, then, look for more competition but also more opportunity. The key is to establish yourself and stay in the game, and the the best way to do that is to capitalize on your agency’s strengths.
"Get ready for more competition by evaluating your market strengths, weakness, opportunities, and threats. Then, outline the best products that you offer with relationship to these variables and concentrate on being the best in that field," says Homan.
There are two ways of evaluating your strengths, he explains. One is to look at your primary data and write a profile of your typical patient. "Try to see if this profile is echoed throughout your caseload. If it is, you may have a predisposition to treat these types of cases for which you were unaware. [Then] develop the pathways needed to service these patients more efficiently and more effectively than your competition."
Another way is to conduct simple surveys of patients to spot trends. "This is valuable to ascertain the agencies kudo’s list,’ and it will also give insight into the areas that need improvement," Homan says.
"All of business is about how to gain competitive advantage how to differentiate ourselves in the marketplace and encourage people to work with us," Tweed adds.
Find out who’s competing with you, Donnelly says. What kind of staff do they have and what services do they offer? "What can you offer that’s a little bit different or value-added from your competitors?"
For example, her client was able to offer several different languages. "He was able to establish a niche in that market."
One way to fight off the competition is through an aggressive marketing campaign. "Get the word out that you exist," Donnelly says. "Try to reach as many people as you can who will be able to spread the word or use your service."
Prepare marketing materials before contacting referral sources. Donnelly suggests printing up fact sheets about your agency with your phone number and a few, quick eye-catching words printed in big letters such as "for your private care needs" that explains what you are offering.
Fact sheets are easy to post, she says. "[Referral sources] would look on the wall for a phone number before they would look for a brochure."
Target skilled home care agencies, senior centers, assisted living centers, and even seniors living independently who might eventually need some assistance. Find out who makes the private duty referrals and then visit them face-to-face.
"If people don’t see you and they don’t have a face to your company, they’re less likely to refer to you," Donnelly explains. After a referral, ask how the service went and if the clients were happy with the care.
"Take care of any concerns upfront; show that you are there to give an extra value of service. If you want to build a reputation of quality care, you need to establish relationships."
For potential private duty agencies, make sure the need is in the area you plan to cover. For example, you might try a questionnaire of the people you are trying to target. "Get a sampling and see if people would be interested in that kind of service."
Next, crunch the numbers and see if you can afford to provide the service for what people are willing to pay. If not, "you are going to spend a lot of money and maybe not get it back," Donnelly says.
If private duty agencies are considering becoming Medicare certified after the moratorium is lifted, Donnelly suggests keeping records as though you are certified already. For example, agencies can set up visit notes and work with a plan of care that is approved by a physician. (For help with your private duty policies and procedures, see story, p. 141.)
In the new Medicare environment, agencies with a private duty background may have an advantage over agencies that have only provided skilled care. "I think that any agency that operates with a private duty-type business model from the beginning will more likely see success in the new Medicare system being evolved," says Homan.
But Tweed thinks that profitable private duty providers might do better staying put. "If a company is really good at the private duty business, they may do better staying there than trying to move over to the other side. It’s going to be tougher and tougher to break into the Medicare business."
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