SMG surveys hospital, home health alignments
Are more agencies looking to hospitals for help?
Are more home health agencies looking to align themselves with hospitals and integrated health care networks? That was the question posed by Chicago-based SMG Marketing Group in a recent survey of home health care agencies. According to the group’s findings, the number of affiliations between agencies and either hospitals or integrated health networks is up 29%, from 777 in April 1998 to 1,097 a year later.
SMG’s premise is that more agencies are looking to larger health care systems as a means of staying afloat in increasingly unfriendly waters. Yet Dexter Braff, president of The Braff Group in Pittsburgh, a post-acute health care merger and acquisition firm, says there could be another explanation.
"At first I found it strange that they were saying the numbers were up. But then I realized that it’s probably not so much that the home health agencies suddenly want to align with hospitals. They always have wanted to because they are always looking for affiliations with referral sources.
"I think what’s different about it in 1999 and the end of 1998 is that we are seeing hospitals questioning their own ownership in their relationships with home health agencies," he explains. "When you start talking about what comes first, the chicken or the egg — in this situation, I think what came first is that hospitals are having less of a commitment to home health and that has allowed for a different type of expanding relationship between the institution and agency.
"We’ve had a few calls from hospitals wanting to get out of home care, and it’s been my experience that that is usually just the tip of the iceberg," Braff says.
Different places, different voices
Depending on where in the country you look, you might see a completely different picture of home health care. North Carolina, for instance, has seen a lot of home heath care agencies either merge or be involved in acquisitions, notes Dottie Moseley, RN, BS, MPH, director of the home care program for HomeCare Providers of Alamance Regional Medical Center in Burlington.
"There is a lot happening in the state," she says. "We have seen a lot of consolidation in home care. They have aligned themselves with hospitals in a sense that there has been a reduction in the number of branches that were out there, and that over the course of the past three to four years, all the hospitals in North Carolina have acquired a home health care agency."
Sherrie Thomas, director of clinical and regulatory services with the North Carolina Associ-ation for Home and Hospice Care in Raleigh, notes that "up until the interim payment system, we did have a good number of health department-based agencies become hospital-based through either partnerships or cases where the hospital would purchase the agencies. That lasted until probably sometime in the fall of 1997. And since then, in the last year anyway, we haven’t had so many hospital acquisitions."
Thomas points out that as North Carolina is a "certificate of need" state, largely the only way for them to break into home care was through an affiliation with a pre-existing agency.
Certificates of need, she explains, are defined by the state, and in North Carolina’s case, "it mandates that before any type of health care facility is developed, its organizers must prove that, based on usage data, that this entity is needed. It goes from there that if a facility is developed based on need, what happens to those patients when the agency closes? It’s naive to assume other facilities in the area can pick them up."
Elsewhere in the state, home health agencies are trying to offer themselves for sale to hospitals, says Karen Rowe, RN, BSN, director of home care for Roanoke-Chowan Hospital in Ahoskie. "We have seen more hospitals that want to be in home care because they want to provide that full continuum of care," she explains. "It’s been my experience that hospitals are buying Medicare-certified agencies, and despite the Medicare cuts, they seem to think it makes good sense when working with patients in the hospital that are going to need ongoing care."
Other areas of the country haven’t seen quite as rosy a picture, says Paul Bishop, president of Wellmont Lonesome Pine Hospital in Big Stone Gap, VA, part of a large three-hospital system. In the past, he says "going back a number of years there has been some consolidation, but in most recent times, we’re not finding smaller agencies approaching us. It just so happens now that it’s been a rather quiet period for organizations approaching us." Bishop says he’s been a little surprised by this because "it would make sense for agencies to want to affiliate now."
Still he recognizes that some of the more modest-sized home health operations in the area are probably finding it difficult to even stay afloat, "what with the turn down in reimbursement."
Somerville (MA) Hospital Home Care is seeing even quieter days, explains agency administrator Laureen Mazzone. "We are closing our doors. The majority of the decision can be traced to the Balanced Budget Act of 1997. Reimbursement has gone down in all aspects, and home care is not the primary business of our hospital. Pouring money into the home health care agency wasn’t something they could do," she continues, adding that OASIS acted as the final nail in the coffin. "When they saw the investment we would have to make for that and JCAHO regulations and how labor-intensive it would be, the hospital had to make a tough fiscal decision and in trying to save their primary business, it was decided we would close."
She adds that in her area, most home health care agencies "are barely hanging on. They all want to be preferred providers, but they can’t really do that in these days of referral regulations."
On a somewhat brighter side, Braff says that just because hospitals may no longer be interested in owning home health care agencies, that doesn’t spell the end of the hospital-home health care relationship. "Rather than wanting to own an agency, they just want to affiliate. The upswing in numbers of affiliations may not be a function of more agencies seeking these affiliations just that now hospitals are more open to it."
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