Home Health Care Businesses in this Scrutinized Climate

We have seen a significant change this past decade in how home health care businesses operate. The agencies that fail to adjust are doomed for failure. Owners of home health care agencies are must take the following steps in order to survive:

1. CONTROL OVERHEAD. Too many agencies behave as if there is an endless supply of cash. They hand out jobs to their siblings, spouses, friends, cousins, nieces and nephews, and anybody else that they know who may need a job. Owners of agencies need to understand that any dollar that is wasted with an unnecessary position in the company is one less dollar that can be used towards the successful operation of the business. Moreover, it takes away profits from the owners. Individuals should only be hired for positions that are necessary to the operation of the company.

2. SALARIES. Consistent with point one above, the salaries for the various positions within the company should be fair market value salaries. Owners have to realize that revenue is limited. There is no need to pay an administrator $150,000.00 a year when another equally qualified individual will accept the position for $75,000.00. Such overpayment of compensation diverts cash away from operations and/or profits.

3. COMPLIANCE. The Office of the Inspector General and the Department of Justice have renewed their focus on agencies that fail to comply with Medicare guidelines. Patients that are admitted for home health care services must be homebound and a physician must certify as to the medical necessity of skilled nursing care. Furthermore, all of the required documentation must be included and contained in any patient file with all the required signatures, dates and other appropriate information. Agencies must realize that their documentation will be reviewed. If an agency has skipped any of the above requirements, they will be penalized either with an assessed overpayment, followed by an extrapolation or worse, loss of provider number.

4. MARKETING. It is not illegal for a Medicare provider to retain the services of a marketer. They can do so either in an employer/employee relationship or with an independent contractor. However, any agency that does retain the services of a marketer has to do so in a way that is compliant with applicable regulations and in particular under the Anti-Kickback Law. The Anti-Kickback regulations are very complicated and all agencies should consult with an attorney to ensure that they are compliant. A failure to comply with these regulations could lead to imprisonment.

5. TECHNOLOGY. Technology is becoming a bigger part of the health care industry and home health care is no different. Agencies should be comfortable in investing in an efficient software program that allows its nurses and other skilled professionals to conduct their services. Nevertheless, agencies must consider the cash flow needs of any software program before blindly entering into such a relationship. Otherwise, an agency may purchase more computing power than needed and as a result waste valuable cash flows.

More and more agencies are failing for various reasons, including the failure to adhere to the above principles. That creates a tremendous opportunity for those agencies that do operate efficiently, as the numbers of patients eligible for home health care services continues to climb. With fewer providers, there should be no reason why an agency cannot successfully operate in this field.

Should you wish to discuss these issues or learn more about operating a successful home health care business, please feel free to contact the author, attorney Theodore McGinn at 847-750-7555 or tmcginn@lavellelaw.com.