“Didn't that go the way of bloodletting and leeches?”
That's how Steven Landers, CEO and president of Visiting Nurse Association Health Group, Inc. described the reaction to his wanting to help bring doctors back into the home.
His Red Bank-based organization is doing just that by acquiring Visiting Physician Services, an Eatontown-based group that makes house calls. Perhaps there's some skepticism because the state hasn't seen this before: a visiting nurse group operating a visiting physician service company.
This wasn't done out of some nostalgic desire to return to outmoded medical traditions; it's a move that's wholly contemporary.
But the vicissitudes of this sector — the pressure exerted by large hospital systems and lesser Medicare reimbursement juxtaposed with new demand — have made this a crucial time for these providers to try different things.
“There is nothing wrong with thinking outside the box,” said Todd Brower, head of McCarter & English LLP's health care practice. “The traditional visiting nurse organizations — particularly the small ones that have done the same thing for 100 years — may have problems surviving today otherwise.”
In the case of VNA, its November partnership — which was finalized in late December — made it the state's largest provider of comprehensive home-based primary care. The combined organization will provide a model of care that seeks to lower medical costs by keeping patients out of the hospital.
“And I think others will jump into this now that they've seen it happen,” Brower said. “For (a number of reasons), keeping health care services in the home is the future.”
Brower, after three decades of experience serving clients in various capacities in the health care industry, knows what led to this: Patients were being discharged from hospitals without post-acute care, and they were back in that expensive setting within a couple days.
As a result of the Affordable Care Act, now Medicare has started penalizing hospitals financially for readmitting too many patients within 30 days of their discharge.
“So that makes home health really important,” Brower said. “Because if you have a good home health agency that takes care of that patient post-discharge, they're likely not going to be readmitted to the hospital.”
Chrissy Buteas, president and CEO of the Home Care Association of New Jersey, spoke to another boon for home health demand: aging baby boomers.
But demand is growing alongside costs.
“One of the greatest challenges facing the industry is continually decreasing Medicare and Medicaid reimbursement rates under managed care, which currently are lower in some cases than at any point in the past 20 years,” Buteas said.
A small home health provider might find that difficult to reconcile with the need to maintain an HR director, the compliance officers required for increasingly complex regulatory protocol and the other expensive but necessary personnel.
To take shelter from the torrent of costs, these small agencies are gathering under the umbrella of larger institutions.
Ten years ago, when home health was not as in demand, “you could practically give these agencies away,” Brower said. Now these home health providers sell for millions to large hospital systems.
But if the agency prefers to remain independent?
Lani Dornfeld, a member in Brach Eichler LLC's health law practice, said this might be increasingly challenging, as hospital systems grow larger by the day. The big players are making the arrangements and partnerships necessary to offer more services and reduce re-hospitalization.
So when the associated hospitals discharge patients, they're put in the care of the system's own home health provider.
“We're seeing hospital systems purchasing home health and hospice agencies in order to provide that continuum of care and also increase the bottom line,” Dornfeld said. “Keeping referrals in-house is a big benefit for them.”
But it's a big detriment to the community home health organizations.
These organizations long relied on the referrals of local hospitals and doctors, and the relationship between the two independent entities was a priority for both sides.
How does an independent organization that has existed for 100 years, such as VNA, respond?
“To the extent that those doctors and hospitals are no longer independent and community-oriented, but are now part of larger systems, we know those relationships need to change,” Landers said. “We've embraced that; we've (taken these relationships) to a higher level by being strategic partners with health systems.”
Sherl Brand, VNA's chief external affairs officer and vice president for business development, added that there's more opportunity than ever for strong home health agencies to become partners with these health systems — instead of just vendors.
“Not that many years ago, it was very much a vendor relationship — contracting with you for this or requesting participation in that,” she said. “Now it's about sitting around the table with high-level leadership from various organizations and supporting each other.”
With this being a time in which opportunity and turmoil has arrived in equal measure, all sovereign home health agencies are doing some serious refocusing, as Dornfeld said:
“They're looking to shore up referral sources. They're looking at their marketing plans. And they're looking for creative solutions to remain independent.”
But Dornfeld has her questions about whether this overall trend toward consolidation in the industry will prove to be cyclical.
“From what I've seen over the years, sometimes these combinations get taken back apart later,” she said. “Maybe health systems shouldn't try to be an expert in everything; maybe that's too much to expect.
“Will it pan out for (these health care systems)? We'll just have to see.”
Experts agree on one thing: the emphasis for home health agencies should be on innovation.
Brower said there's no reason why these independent home health agencies can't similarly expand and offer more services, as VNA did.
“I mean, there's nothing stopping a home health agency from doing its own urgent care center, for example,” he added.
The new services that VNA's leadership instituted might seem medieval to some, but don't mistake Landers as thinking it's been done within the context of the Dark Ages.
“This definitely isn't a dark time in the history of this industry,” Landers said. “There might be new winners and losers, and that's always hard, but helping people stay healthy at home has never been more relevant.”
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A solution that clicked
The remote monitoring medical device market is expected to grow from nearly $14.7 billion in 2013 to nearly $21 billion in 2018, according to a report from BCC Research.
Some of these products are already being put to good use locally.
A few years ago, Meridian tapped medical technology developer MedApps for a way to remotely monitor patients with congestive heart failure who were recently discharged from acute care settings.
Meridian’s program provided a remote monitoring scale for patients to weigh themselves on each day after returning home. This data was then transferred to a nurse for analysis.
The application of the technology won Meridian the New Jersey Hospital Association’s first-ever Excellence in Quality Improvements Award.
HealthInsight, a nonprofit organization, ranks home health care using publicly reported data under two categories:
Neither list account for all of the agencies in the state, it should be mentioned. Regardless, here are the top Garden State agencies in both of HealthInsight’s 2014 rankings: