Home health spending continues to grow in the U.S., outpacing overall healthcare spending and GDP. CMS reported that home health spending reached $103 billion in 2017, and is predicted to grow by 6.7 percent annually by 2020, while healthcare spending overall is only expected to grow 5.5 percent each year, according to Home Health Care News.
At a recent webinar presented by law firm Polsinelli, Dallas-based managing partner Jon Henderson hosted leading experts in the field to give an update on the home health market. Cortney Marcin, a director in consulting firm BDO’s Center For Healthcare Excellence and Innovation, discussed the factors that have spurred the growth of home health nationwide.
With 10,000 U.S. residents turning 65 each day, Marcin noted that 70 percent of patients seeking home care treatment are 65 and older. The added numbers and increased preference to receive care at home has been a major influence in increasing home health investment and growth. Marcin also described how a move toward consumer driven care is impacting the move to home health. “Patients are increasingly engaged in their own care,” she says, and their preference is becoming a more important factor in the business model.
Payment models are the other big driver toward home health. As healthcare costs go up and payment reform pushes providers toward value-based care, there are more incentives to treat and connect with patients before they become too sick and need hospitalization. Home health is less costly than acute care in a hospital, giving home health providers an advantage.
With the growth of Medicare Advantage, the incentives are changing to keep patients out of the hospital. The capitated model means there is a set reimbursement level for a patient regardless of what treatment is given, so there is motivation to move toward inexpensive care in the home. With the end of life care often driving spending, Medicare Advantage has providers looking for ways to reduce costs.
Finally, a move toward bundled payments means that there is a lump sum to be shared between providers which can include a hospital, physician, and home health agency for an episode of care. That sum is also a motivator to reduce overall costs, leading providers to seek out home health care.
Many hospital systems have their own home health providers, but it isn’t always a winning combination. Mark Francis, Managing Director and Head of Houlihan Lokey’s Healthcare Group, says that while some hospitals have struggled incorporating home care, partnering with another organization that already has the expertise might provide a better model. “For a lot of systems, a joint venture is the preferred route,” he says.