Tuesday, March 10, 2009

Hospitals losing Money. What will be the impact on Home Health Care?

According to a report from Thomson Reuters, U.S. hospitals maintained their operating margins through the third quarter of 2008. But steep investment losses pushed 50 percent of them into the red for 2008, resulting in a “near-zero” median margin for the industry. The bottom quartile of hospitals posted average losses of 7 percent or more for the year.

Meanwhile, the recession-fueled increase in the numbers of uninsured and Medicaid patients is making hospitals’ financial position worse this year. The rout has been compounded by a drop in the number of surgeries, which have affected 44 percent of the hospitals in the survey.

What are you seeing with hospitals in your marketplace? How will this impact home health care?

One trend we observe is that when hospital census is down, home health referrals drop off as well. Are you seeing a decline in your hospital referrals?

Another trend we have seen in the past is that when financial performance lags, hospital executives decide to exit the home health business. With many hospital based home health agencies losing money anyway, look for some executives to cut their losses and get out of the business. If so, this will be a great time to pick up some market share. It will also be a time for strategic buyers to move into your marketplace, acquire the hospital based agency, and become your new competitor.

What are you seeing? Give us your comments below.


  1. In 2010, how hospitals view home care could dramatically change. For three Medicare DRG's--heart failure, Acute Myocardial Infarction and Pnemonia, hospitals will no longer be paid if the patient is re-admitted within 30 days.

    Hospitals will begin to care about re-admission rates and could start referring to the home health agency with the lowest re-admission rate for those 3 DRG sets. Hospitals may look to use home care as an insurance policy against re-adnission, since patients at home with home care are less likely to be re-admitted than those who go home unsupervised. Ber prepared to help your hospital idetify these at-risk patients and look for tele-monitoring capability to be mandatory.

  2. Anonymous2:48 PM

    Our hospital has threatened to shut down our home health and hospice department. We are the only home health and hospice agency in the county. With the cuts in Medicare reimbursement for home health, I fear that this will become the trend. Those of us in rural areas will not have the needed services.