Home Health Giants Look to Accelerate Diversions, Capitalize on ‘Long Haul Back for the SNFs’ Post-COVID

Operators of post-acute care facilities have seen the steady diversion of patients to the home setting in recent years, and multiple home health heavyweights believe the COVID-19 pandemic will only accelerate that trend into the 2020s.

The flow of hospital patients bypassing the institutional skilled nursing facility “is picking up more steam right now,” LHC Group (Nasdaq: LHCG) chief strategy and innovation officer Bruce Greenstein told SNN’s sister site Home Health Care News in late June.

“This is something I hope sticks around long after COVID is over … whether home health is engaged formally in a SNF diversion program or unknowingly participating,” Greenstein said.

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And LHC Group — which employs about 32,000 caregivers across 35 states and Washington D.C. — isn’t alone in its post-COVID optimism.

“Even if everybody this time next year is on a vaccine, I think the idea of wanting to be home, to the safer, to be away from places of infection [will remain],” Paul Kusserow, CEO of fellow home health giant Amedisys (Nasdaq: AMED), said during a late June virtual conference held by BMO Capital Markets. “It’s going to be a long haul back for the SNFs.”

Operators that specialize in institutional post-acute care have seen a steady siphoning of patients away from the setting in recent years, as value-based payment models place a premium on the lower cost of in-home care. In addition, seniors and their families generally prefer the home option over a brick-and-mortar SNF.

Then COVID-19 attacked the post-acute and long-term care space with deadly force.

Census at the nation’s more than 15,000 nursing homes has taken a substantial hit amid the ongoing crisis, with a Wall Street Journal estimate pegging the drop at 10%. The National Investment Center for Seniors Housing & Care (NIC), meanwhile, observed a decline of 132 basis points in March alone, representing the lowest figure since the group started tracking skilled nursing occupancy in 2012.

NIC on Tuesday released an updated set of data showing 78.9% occupancy for April, compared to 84.4% the year before.

The declines were the result of several factors: In addition to resident deaths, the lower census reflects the emergency suspension of non-emergency surgeries during peak periods of COVID-19 spread, thus eroding the demand for subsequent post-acute services, as well as residents who may have voluntarily elected to return home earlier than planned.

It’s likely that home health diversions also played into those trends.

Even during the early days of the crisis, hospitals were proactively reaching out to LHC Group to arrange direct discharges home, Greenstein told HHCN.

“Hospitals were calling us and saying, ‘Hey, is there a way that you can help out in taking patients that would otherwise go to the SNF?’” he said. “So early on, we started to work with hospital partners in building this.”

After seeing months of headlines describing the staggering death toll in the nation’s nursing homes — which currently sits at more than 33,000 according to the federal government’s official numbers, though the true count is likely higher — it’s natural for potential residents and families to have serious concerns about choosing institutional post-acute care now and in the future.

For Mark Tarr, CEO of Encompass Health Corporation (NYSE: EHC), the age of COVID gives home health companies like his a chance to draw a sharp contrast between their offerings and other post-acute care settings.

“I think the whole period of this pandemic helps to really put an exclamation point on our goals and our quality outcomes,” Tarr said during a virtual conference held by investment banking firm William Blair in mid-June. “From a more global standpoint, it’s helped to point out the differences of the post-acute settings and how certain patients have much better outcomes.”

Prior to the pandemic, skilled nursing leaders emphasized that, despite the prevailing trends, there will always be a portion of the post-acute population that requires intensive, around-the-clock institutional care. But home health leaders intend to focus on the lower-acuity residents who could go either way with their after-hospital decisions — so-called “jump-ball business,” in Amedisys’s view.

“We think now, obviously, that business is going to shift into the home,” Kusserow said. “We also think there’s actually another 10% to 20% — probably close to 10% — that, if we could add some custodial care to it, we can take care of these patients quite well. We need to be able to figure out how to add that custodial piece, and there’s a big ability to steal share.”

Encompass will follow a similar track, according to Tarr.

“[We’re] developing clinical programs that would allow those patients to bypass a post-acute inpatient stay altogether, and receive quality treatment in the home,” Tarr said. “What we see during the pandemic is an acceleration of those trends that we believe will be sustainable, given the difficulty that many of the SNFs have experienced during this timeframe.”

Bailey Bryant contributed reporting to this story.

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