As the federal government has continued to cut funding for home health care through the Medicare and Medicaid system, it has placed increasing pressure on many businesses operating within the industry. Smaller agencies that rely heavily on Medicaid funded clients have felt the brunt of these cuts more acutely than larger companies that have a broader spectrum of clients, but even large companies have been forced to make some changes to the way they operate and that means, for some, selling large stakes of their home health and hospice businesses.
One case in point involves Beaumont Health selling 90 percent of its home health and hospice business. Beaumont Health operates in seven counties throughout Michigan and has created a joint venture with an Ohio-based company. The new venture is called Beaumont Home Health and Hospice LLC and is partnered with Alternate Solutions Health Network, based in Ohio.
Crain’s Detroit Business reported in its blog, Beaumont to outsource home health, hospice business in joint venture deal, written by Jay Greene:
“Four of the sources, who are Beaumont employees, told Crain’s that home health and hospice staff were told of the joint venture and company transfer during meetings in late November and this month as Beaumont employees begin to sign job offers and transition to the new company. The sources said Alternate Solutions executives explained that Beaumont was making the change because the eight-hospital system has had “difficulties with reimbursement.””
Larger companies that operate within the home care sector can more effectively absorb some of these Medicare and Medicaid cuts at the federal level, which may be one reason why Beaumont Health has decided on this joint venture. The article also noted:
“Over the past decade, Medicare has cut home health and hospice payment rates several times. Since 2014, Medicare, which is home health industry’s largest payer, has reduced home health payments by more than $520 million. For fiscal 2019, the Trump administration has proposed to further cut home health payments, converting to an unspecified bundled post-acute care payment model and spending more on fraud investigations of home health companies.”
As the effort to crack down on fraud continues to ramp up, it has left some aging and disabled adults in a difficult circumstance, struggling to either pay for home care support on their own when they have limited financial resources or find providers available and willing to step in and help. It’s unclear how this new joint venture will positively impact residents in and around Detroit, but it highlights the continuing challenge, even among large corporations operating within this industry.