Industry Trends: 2017 Home Health Care 10/19/2016
Fast Facts:
- Home Care began in the US as early as the 1880s. *NACH.org
- Patients average three or more impairments with daily living activities, 4.2 medical diagnoses each
- Over 3.3 million Medicare beneficiaries receive home health services
- Over 400,000 licensed or registered nurses, aids, and other practitioners provide care *HarrisWilliams
- The number of older persons has tripled over the last 50 years; it will more than triple again over the next 50 years Population Aged 60 and Over 1950-2050. *UN.org See Figure 1 for a breakdown by year
Key Numbers:
- 12,400: number of HHC agencies (2014 cdc.gov)
- 80%: Proportion of agencies with for-profit ownership (2014 cdc.gov)
- 70% of home health patients are senior citizens
- 89% of seniors prefer care at home
- 88.5 million: population projection by 2050 *IFA
- 5 billion: Miles driven by HHC workers *NAHC.org
- 5 million: Number of patients who received and ended care any time during the year CDC.gov 2013
- See Figure 2 for a breakdown of home health care spending which amounts to $78 billion.
Overview:
- Companies in the HHC industry provide a range of skilled nursing, health care, and personal care services to patients in their homes.
- Major companies include AMEDYSIS, Apria Healthcare Group, Gentiva Health Services, and Lincare Holdings (all based in the US), Allied Healthcare (UK), LVL Médical Groupe (France), and Revera (Canada).
- Although patients are the users of home health care services, marketing is focused on those who authorize or pay for treatments, including doctors, hospitals, insurers, and managed care companies. *Hoovers
- Total home health care spending: $78 billion *Hoovers 2016
Industry Forecast & Growth:
Other broader industry insights support Figure 5 below. According to a recent non-profit report, health spending growth in the United States is projected to average 5.8 percent for 2014–24, reflecting the Affordable Care Act’s coverage expansions, faster economic growth, and aging population. The health share of US gross domestic product is projected to rise from 17.4 percent in 2013 to 19.6 percent in 2024. *Healthaffairs.org
Industry Challenges
Fraud and Increased Regulation
A number of companies and individuals have been prosecuted for billing fraud and other illegal practices. As with other health care providers, home health care companies are facing greater regulatory scrutiny, especially as the aging of the US population leads to increased Medicare spending on home services. *Hoovers A recent report by the Department of Justice brought charges against 301 individuals alleging $900 in false billings. Read more.
A number of companies and individuals have been prosecuted for billing fraud and other illegal practices. As with other health care providers, home health care companies are facing greater regulatory scrutiny, especially as the aging of the US population leads to increased Medicare spending on home services. *Hoovers A recent report by the Department of Justice brought charges against 301 individuals alleging $900 in false billings. Read more.
“The Medicare Fraud Strike Force operates in nine locations and since itsinception in March 2007 has charged over 2,900 defendants who collectively have falsely billed the Medicare program for over $8.9 billion.
Including today’s enforcement actions, nearly 1,200 individuals have been charged in national takedown operations, which have involved more than $3.4 billion in fraudulent billings.” Justice.gov
Dependence on Reimbursement Rates
Reimbursement rates that insurers allow for specific home health care services, especially Medicare, are vital to providers. Efforts to reduce national health care costs have made Medicare reimbursement a political issue. The industry already operates with low margins, so any cuts in reimbursement rates directly impact profitability. *Hoovers
Reimbursement rates that insurers allow for specific home health care services, especially Medicare, are vital to providers. Efforts to reduce national health care costs have made Medicare reimbursement a political issue. The industry already operates with low margins, so any cuts in reimbursement rates directly impact profitability. *Hoovers
Industry Trends & Opportunities
Remote Data Monitoring
St. Jude Medical recently announced results of a five-year study that found patients with cardiac devices who use remote monitoring have significantly fewer hospitalizations and lower overall healthcare costs than patients who do not use or adhere with the technology. Remote monitoring can also dramatically improve patient follow-up care and clinical outcomes for patients. *SJM.com
St. Jude Medical recently announced results of a five-year study that found patients with cardiac devices who use remote monitoring have significantly fewer hospitalizations and lower overall healthcare costs than patients who do not use or adhere with the technology. Remote monitoring can also dramatically improve patient follow-up care and clinical outcomes for patients. *SJM.com
Accountable Care Organizations
ACOs, are designed as a way to coordinate all of a patient’s care. ACOs will eliminate redundancies and inefficiencies and deliver better care, since all doctors will be notified of patients' medicines, treatments, and progress. Participating home health agencies will be eligible to receive a portion of savings that result from the program, which Centers for Medicare and Medicaid expects to add up to $940 million in the program's first four years. *Hoovers 2016
Regulatory Horizon
“The Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would update the Medicare Home Health Prospective Payment System (HH PPS) rates and wage index for calendar year (CY) 2017. The proposed updates to the HH PPS rates include implementing the final year of the four-year phase-in of the rebasing adjustments to the national, standardized 60-day episode payment rates, the national per-visit rates, and the non-routine medical supplies (NRS) conversion factor as required by law. In addition, this proposed rule would reduce the national, standardized 60-day episode payment rates by 0.97 percent in CY 2017 to account for nominal case-mix growth between CY 2012 and CY 2014 (i.e., case-mix growth that does not reflect changes in patient acuity), which was not accounted for in the rebasing adjustments finalized in the CY 2014 HH PPS final rule. The CY 2017 proposed rule would result in a 1.0 percent decrease (-$180 million) in payments to HHAs. CMS is also proposing changes to the methodology used to calculate outlier payments. As required by the Consolidated Appropriations Act of 2016, CMS proposes changes in payment for Negative Pressure Wound Therapy (NPWT) performed using a disposable device for patient’s under a home health plan of care. CMS also proposes an update to the Home Health Quality Reporting Program. Lastly, in addition to providing an update on the progress towards developing public reporting of performance under the HH VBP Model, CMS proposes several changes and improvements related to the model.” *CMS.gov
Figure #1. Population Aged 60 and Over 1950-2050 *UN.org
Figure #2. Total home health care spending: $78 billion *Ncbi.gov 2014
Figure #3. Revenue by Service *Hoovers 2016
Figure #4 Spending Dynamics by Age. *KFF.org
Figure #5. Industry Forecast & Growth. *First Research 2106
