The Golden Age of Home Care

In September the members of the National Association for Home Care (NAHC) gathered in New Orleans for their 19th annual meeting. This meeting coincided with one of the greatest changes that has affected the home care industry. On October 1, Medicare participating agencies shifted to a new method of reimbursement called prospective payment.

Having been through three pretty tough years, members of the home care community may not be sure what to expect from the future. It is my view, shared by many, that we are about to witness the beginning of the Golden Age of home care.

I believe that all the pain caused by the Interim Payment System (IPS) will pay off handsomely in the future. Home care agencies have been forced to cut costs dramatically and have compensated by becoming more efficient than ever before. Horrific as this transition has been, it has helped the survivors to increase their productivity. The end result, I think, will be the kind of blossoming that happens the year after the family apple tree has been pruned.

The Prospective Payment System (PPS) will untie the hands of home care administrators and give them much greater opportunities to manage and control their destiny. Under the old cost based system, accepting a Medicare patient was as risky as putting a quarter into a Las Vegas slot machine. The new system will offer a higher degree of certainty.

The new PPS will include many positive incentives that will encourage agencies' investment, growth and good care, including the potential for profit or retained earnings.

The new PPS will encourage agencies to build their own buildings and to accumulate capital rather than to accumulate debt, because under the old system, interest was ostensibly a reimbursed cost to the government. Under the new system, agencies will have the opportunity to market, which is to say to advertise their services.

The experience with IPS has helped many agencies change their culture -- to begin to think and act like entrepreneurs.

The incentives under the old system discouraged diversification and the operation of a related private pay subsidiary owned by the same agency. Under the PPS, these incentives have been reversed. What is already happening is that agencies have diversified into all kinds of services and have found customers ready, willing and able to pay privately for what they have been offering. Where these seeds have fallen, a thousand flowers will soon bloom.

Over the next few years, more and more referrals will come from the Internet and less from physicians and hospitals. The National Association of Home Care (NAHC) and its partner,, have jointly been developing the ultimate referral source, which will capture and drive referral sources to NAHC member agencies. While all of the industry will benefit, NAHC members will have a competitive advantage.

With every passing day, the impact of demographics, that is to say the growing number of seniors in American society, will only increase. This will change every aspect of American life including health care. The future is more and more about management of chronic disease and less about acute care. By definition, this means that home care will become the heart of health care.

New breakthroughs in technology will expand the reach of home care in a short period of time. The words telehealth and home care will become synonymous. This will allow agencies to provide care for homebound individuals in the remote regions of the United States. These same technologies will make it possible for home care administrators to run their agencies more efficiently and to supervise the quality that is provided in the home by home care nurses and aides.

The public demand for home care will increase with every passing year - especially as the baby boom generation has now become the sandwich generation. These individuals are worrying about how they are going to put their kids through college and at the same time manage the care of their parents, and sometimes their grandparents. What used to be called the sandwich generation is now being called the club sandwich generation.

Opinion polls demonstrate that while 60 percent of the American public believes the economy is doing well, two-thirds of the American public believes that America is going in the wrong direction. Increasingly, people will be looking for employment that is directly connected to their values. They want to help make the United States and the world a better place. This means that more people will be attracted to the opportunities presented by home care.

Home care will expand into the nation's schools because of recent court decisions that require school districts to send a nurse to accompany students with severe or chronic medical problems. Major corporations will integrate home care into their employee benefit package because of the clear evidence that so-called elder care programs help to increase productivity. States' governments will also increase dramatically the amount of money they now spend on home care for disabled citizens.

Home care continues to provide the best and most cost-effective answer to health care needs. There are significant economical advantages by using the patient's home as opposed to paying the cost to have the individual treated in the hospital at many times the cost.

Policy makers in Washington will increasingly distance themselves from the short-sighted policies which arbitrarily cut back Medicare home care benefits. The degree of harm will become more and more visible. The severity of the government's cuts will lead to and usher in a dramatic expansion of Medicare to cover long-term home care.

Finally, the world is becoming a smaller place because of the Internet. Home care agencies will be in the position to provide home care services to individuals not only out of the state, but also out of the country.

With the entire world for a market and a harness to the stars of demographics, technology and cost effectiveness, the future of home care has never been brighter. In the near future, it will seem to the world as if the chains have been taken off and a colossus has been released on the world.

All of these factors taken together will only increase what is already very high consumer satisfaction with home care. Together, they will serve to usher in the Golden Age of home care.

This article appeared in Home Health Products, November/December 2000 issue, Vol. 8, #10, pg. 16.

This article originally appeared in the November 2000 issue of HME Business.

About the Authors

Tony Kobilnyk works in the corporate development division of ZENON Environmental Inc. He can be reached by telephone at (905) 465.3030, extension 3381.

Roberta Domos, RRT, is the owner and president of Domos HME Consulting Group, a national HME consulting firm based in Redmond, Wash. Contact her at (425) 882-2035, or by visiting

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