Home Health Giants Find Partners in Speeding Skilled Nursing Diversions Amid COVID ‘Fear Factor’

Home health operators aren’t the only players in post-acute and long-term care looking to capitalize on a weakened skilled nursing sector: As health systems and managed care insurers look to adapt their offerings to the post-COVID tastes of their patients, home health providers may find themselves with significant regulatory and payment tailwinds as they work to capture more share from brick-and-mortar nursing facilities.

While he was mum on the details, Amedisys (Nasdaq: AMED) CEO Paul Kusserow said his publicly traded home health heavyweight is close to unveiling a SNF-at-home partnership with a major health care player — a trend that will likely only accelerate as the vast apparatus of providing and covering senior care works to catch up with fast-moving shifts in patient preference.

“We’re feeling good — lots of conversations with people, particularly on the convener-type space, where people want to reduce the cost of SNFs and the fear factor that are associated with SNFs,” Kusserow said on his company’s fourth-quarter 2020 earnings call last week. “We’re getting a lot of interest from managed care plans.”

Over at fellow home health giant LHC Group (Nasdaq: LHC), CEO Keith Myers identified an even bigger prize that could soon come down the pike: a completely new episodic payment model, at the federal level, that would provide a SNF-free post-acute pathway for seniors.

“It would be a 30-day episode that would include — in addition to skilled home health services — personal care, food, transportation, in-home supplies, and remote monitoring, if that’s required,” Myers said during LHC’s Q4 2020 call last week. “And it has a guaranteed savings built into it, so we feel very good about it.”

That proposal, known in the home health lobbying space as “Choose Home,” would mark a sea change for the entire post-acute landscape, putting home health providers on a more equal footing with SNFs as direct hospital discharge options. LHC has proven the utility of such a comprehensive SNF-at-home model, Myers said, through a partnership with the Ochsner Health System in New Orleans.

“Adding personal care and other [services like] food and transportation to the benefit is huge, because the social determinants were one of the challenges we faced back in the early days of initiating the pilot with Ochsner,” Myers said.

Expanding that model from a localized pilot to a nationwide benefit would require an act of Congress, but Myers predicted that the industry’s Choose Home push would gain traction this year.

“2021 will also be a year in which we expect to advance Choose Home legislation, which we have begun to socialize with Congress,” Myers said. “For the first time, this important legislation will provide a time-limited, cost-effective benefit that would include Medicare-certified skilled home health services and personal care services.”

The desire to expand coverage for home health services is nothing new, and to date has been limited by a decades-old regulatory and payment framework developed when institutions were the sole option for senior care.

But with nursing homes at the center of the COVID-19 disaster in the United States, 2021 could very well prove to be the year the glacial pace of institutional change finally picks up. President Biden has expressed support for expanding home health options, and lawmakers around the country are increasingly questioning the ways that both regulations and payment models prioritize nursing home care at the expense of other options.

The COVID-era shift in patient volumes is undeniable, with both self-reported operator data and independent analyses illustrating a a clear migration to the home; last October, before the holidays brought the deadliest weeks of the COVID-19 pandemic in nursing homes so far, referral volume to SNFs was at 83% of 2019 levels, while home health agencies were capturing 109% of their prior-year share.

Occupancy at the nation’s nursing homes, meanwhile, sat at 69.2% on January 31, according to an analysis from professional services firm CliftonLarsonAllen. That’s actually a slight uptick from the start of the month, prompting CLA to speculate that the COVID-era census crash in nursing homes may have hit bottom — but without a clear path back in sight.

“I’m not necessarily surprised that we’re seeing more of a stabilization of the occupancy, and then a small trend up, because I just don’t think that it’s going to be an immediate snap of the finger: Boom, our occupancy’s back up at 75%, 80%, 85%,” CLA principal Stephen Taylor told SNN. “Because there’s a lot of occupancy that has been taken out of the system, in essence.”

The major unanswered question is how long those trends can last. Leaders at publicly traded real estate investment trusts (REITs) with significant skilled nursing holdings have spent this current earnings season repeatedly insisting that the COVID-era rush to home health is unsustainable given demographic trends and the harsh realities of aging. Some people, the thinking goes, will always require around-the-clock care, and no matter how technically advanced home health becomes, relying on individual home visits from nurses and aides will always be impractical for some portion of the PAC and LTC population.

Rick Matros, CEO of Sabra Health Care REIT (Nasdaq: SBRA), summed up the thinking during his company’s fourth-quarter 2020 earnings call last week, arguing that the overall landscape will need both expanded home health options and a robust nursing home infrastructure to meet the needs of aging baby boomers.

“Frankly, we think it’s a good thing if home health can take more patients, because we do have a demographic crisis looming,” Matros said. “We have a declining supply on skilled, and there are already access issues that are going to be exacerbated throughout the country in terms of skilled nursing. So we actually, as a society and a country, need home health to be taking more than they’ve taken historically, from an acuity perspective.”

Of course, executives at SNF landlords and home health companies aren’t impartial prognosticators, and players on all sides of the landscape have an incentive to see what they want to see in the home health-versus-SNF tea leaves. The years ahead will show whose analysis comes true, and whose amounted to something closer to wishful thinking.

But as observers from the federal government on down shift from managing the COVID-19 crisis to figuring out what went so horribly wrong in nursing homes, it’s hard to deny the momentum behind home health heading into the next decade.

“As we grow our SNF-at-home capabilities, technology innovations, and other high-acuity programs, we expect to take even more share from other post-acute providers,” Kusserow said. “It’s truly an exciting time to be at Amedisys.”