Willie Peterson II can’t say enough good things about the home health care services he receives, or about Lynn Adams, the registered nurse who visits a few times a week to care for him at his Decatur, Ga., home.
“If not for them, I’d be up the creek without a paddle,” he said.
Or in a nursing home. Peterson, 62, was paralyzed from the waist down by a falling tree in 1998 and needs regular skilled medical attention. Now he has personalized care that keeps him out of the hospital and feeling independent.
Peterson is at the front of a coming wave. Demographics and economics are expected to combine to cause a boom in the demand for home health services in the next two decades. The industry faces challenges as it seeks to meet patient needs, however.
According to one projection, the number of people age 65 and over is expected to increase to 72 million by 2030, when that group will make up about one-fifth of the population, up from about 40 million in 2009.
While the supply of customers should only increase — generally a blessing for any business — the financial reward for taking care of all those new patients, particularly those requiring the most care, is uncertain, according to industry executives.
Providers fret over shrinking reimbursement rates from Medicare. They say that’s put financial pressure on them. Some in the industry say the number of providers could dwindle and some people who could really benefit from home health services might not be able to obtain them.
“Providers are scratching their heads,” said Mark Oshnock, CEO of Visiting Nurse Health System, an Atlanta-based nonprofit and Adams’ employer. “With margins approaching zero, it’s a bit of a challenge.”
In a recent earnings conference call, Tony Strange, CEO of Gentiva Health Services, an Atlanta-based for-profit provider of home health care, cited an 11.5 percent reduction in Medicare reimbursement in the past three years.
Home health care advocates point to what they see as an irony in efforts to contain medical costs. The highest-cost care is hospital care: The more days a patient stays, the higher the tab. With home health, the idea is to release the patient to the home where regular care can help prevent readmissions.
Outside the industry, though, there is less concern.
The Medicare Payment Advisory Commission, in its latest report to Congress, contended that there is sufficient access to home health care, with more than 12,000 agencies, that the quality of services is generally good, and that average provider profit margins are high enough.
Margins vary widely, according to the commission, with some negative and others above 20 percent. The average in 2011 was 14.8 percent. Smaller agencies didn’t fare as well as larger agencies, possibly because of economies of scale, and nonprofits didn’t fare as well overall as for-profit agencies.
That calculation doesn’t factor in all provider costs, however, and net margins are actually far smaller and declining, said William Dombi, vice president for law for the National Association for Home Care & Hospice. Decreasing reimbursements will lead to some providers going out of business, he said, and less access to care for some people.
The industry has also faced claims that some providers overcharge, or don’t provide the services they charge for.
When it’s done right, home health care is seen as good for all parties involved.
Home health is “not only cost-effective, but really helps patients maintain their independence,” said Barbara Ballard, a vice president with WellStar Health System, which operates WellStar Home Care.
Jennifer Schuck, who heads post acute care initiatives at Atlanta-based Emory Healthcare, said in an email, “From a hospital perspective, a patient’s treatment does not stop after being discharged from the hospital. The home health agency acts as an extension of the hospital to ensure the patient continues to progress in their healing process.”
If a patient has problems at home, she said, the home health agency can notify the hospital and discharging physician and get directions on how to treat the patient there, not the emergency room or hospital.
Emory Healthcare has had a 5 to 7 percent annual increase in the number of patients discharged to home health in the past three years. In 2010, 12.5 percent of all patients discharged from the hospital got home health services. That jumped to 14.6 percent in 2012 and is expected to top 15 percent this year.
As hospitals move toward accountable care, they will be compensated based on patient outcomes, and penalized for swift readmissions.
“The plan of care needs to continue in the community, or you end up with a readmission,” said Barbara Ozmar, director of patient care coordination at Piedmont Atlanta Hospital.
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