According to the 2020 Industry Trends Report published by Axxess and BKD, 50% of home health and hospice care agencies surveyed said the Jan. 1, 2020, implementation of the Patient Driven Grouping Model by the Centers for Medicare and Medicaid Services was the trend that would have the biggest impact on their organization in the coming years. Additionally, 55% of survey respondents were ‘somewhat concerned’ about their organization’s viability in 2020, with another 21% being “very concerned” or “extremely concerned.”

Forty-three percent of respondents cited adapting to regulatory changes as the biggest challenge their organizations are facing in 2020, followed by staffing at 29%. At the same time, 21% of respondents cited adapting to regulatory changes to be the best opportunity for growth, with 13% citing staffing as the best opportunity.

In response to the unfolding regulatory environment, home health agencies are planning to diversify and expand on the specialty services they provide. In an October 2019 Definitive Healthcare survey of 159 home health agencies, 73% of respondents plan to expand upon or begin offering specialized care services within the next two years. The specialized care areas cited most frequently for expansion were palliative care, veteran-specific care and mental health services. Therapy was not mentioned as an expansion area by the respondents. The specialized care areas cited most frequently as current offerings were wound care, cardiac disease, chronic obstructive pulmonary disease, diabetes and joint replacement.

The US’s aging population will continue to drive home healthcare demand, with the sector’s employment expected to grow 48% to 2.2 million in the decade ending 2028, according to the US Bureau of Labor Statistics. To ease the anticipated staffing challenges, 24% of respondents in the Definitive Healthcare survey plan to expand their telehealth offerings within the next two years. The telehealth services cited most frequently for expansion were remote patient monitoring, mobile applications for concierge services (e.g., eVisits, virtual visits, consultations), medication management technology and two-way video/webcams. The penetration rate of telehealth in home health is expected to more than double and reach 48% by 2021, according to Definitive Healthcare.

In the near term, according to Kaiser Health News, home health agencies have responded aggressively to the PDGM implementation and cut physical, occupational and speech therapy staff and services to patients. PDGM was intended to remove incentives to overprovide therapy services and rely more heavily on patient clinical characteristics to align payments more closely with patients’ needs. In October 2019, Humana, which owns Kindred Healthcare, announced plans to lay off more than 800 employees, representing 2% of its workforce.

As a precursor to the implementation of PDGM, home health operators have been watching similar trends unfold in the skilled nursing industry, in which CMS’s Patient Driven Payment Model was implemented three months earlier on Oct. 1, 2019. Similar to PDGM, PDPM was intended to be budget-neutral, while reducing utilization of unnecessary therapy minutes. In January 2020, accounting firm BKD found that post-PDPM implementation, most skilled nursing facilities saw an overall increase in average reimbursement based on billing data from Oct. 1, 2019 through Dec. 31, 2019.

While this could be seen as a positive sign that the PDGM implementation in home health may not create the financial losses anticipated, it appears that executives are still watching trends closely and will continue to focus on driving specialty care and telehealth expansion in order to address the long-term financial stability and staffing challenges within the home health industry.

For more information about the implementation of PDPM and PDGM, see the SIA article, “CMS to Implement Patient-Driven Payment Model for Skilled Nursing Facilities,” published on Oct. 1.

More information on healthcare trends and the key drivers of the US healthcare staffing industry is in the US Healthcare Staffing Market Assessment: 2019 Update, available to Staffing Industry Analysts’ corporate members.