Hospice operators closely watch industry transformation by big payers

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For better or worse, the growing presence of large insurance companies in palliative care and home care could be transformative for the industry.

Two transactions demonstrate the growing interest of payers in ownership of the home care assets that serve their beneficiaries. Humana Inc. (NYSE: HUM) in 2021 acquired 100% ownership of Kindred at Home from its former private equity partners Welsh, Carson, Anderson & Stowe and TPG Capital.

But UnitedHealth Group (NYSE: UHG) subsidiary Optum was hot on Humana’s heels with a deal to buy LHC Group (NASDAQ: LHCG) for $5.5 billion.

While these deals weren’t either company’s first foray into the provider arena, the size, timing and scale of these transactions indicate that payers are among the stakeholders. seeking to capitalize on moving more care home at lower cost.

Controlling these assets also allows payers to better manage the financial risks that come with value-based payment models that many believe will overtake traditional health insurance in years to come.

The full impact of these transactions will be felt over the next few years. In the case of Humana, it is currently focused on home healthcare. The company has signed a definitive agreement to sell a 60% stake in the palliative care and personal care businesses of Kindred at Home (KAH) to private equity firm Clayton, Dubilier & Rice (CDR) for $2.8 billions of dollars. Humana will retain the remaining 40%.

Hospice News spoke to three hospice leaders about the disruption they expect to see in the industry as payers expand their roles as providers, including the CEO of a nonprofit organization California-based nonprofit, the senior executive of America’s largest hospice company by market share, and the leader of a growing Midwest-based for-profit provider.

Despite the differences in the size and business models of their organizations, each of these CEOs expressed concerns about how these transactions and their consequences could change the way palliative care is delivered. Some also saw potential new opportunities for collaboration and innovation, as well as a highlighted need to invest more in palliative care.

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There is no doubt that the changing landscape will create disruption for other vendors, especially independent vendors in highly competitive markets. The real question is, to what extent?

For providers and patients, some disruption will be good; some will be bad. It depends on what organizations choose to do with a changed and disrupted future. Ideally, players in the nonprofit space would be in the best position to adapt, pivot, and plan for these changes if their institutional ego did not become an obstacle.

I also expect big payers to have more influence nationally. They will have an impact on policy at the federal level. This could mean a less friendly environment for smaller legacy hospices that want to fight for their independence. Many autonomous hospices will no longer be able to operate on their own.

This is absolutely a game changer. The big networks will set the rules. If vendors want to be in the game, they can be expected to cover larger geographic footprints with smaller reimbursements – all while ensuring quality. This may require a reduction in programs and services that have historically made nonprofit care more robust and responsive to individual community needs.

However, how it will all play out is still somewhat unknown. Pushing vendors to do more with less will foster even more collaborations, mergers and affiliations. It is likely that more organizations will come together to consolidate work and functions that are invisible to patients and families (i.e. finance, IT, human resources, education, quality, purchasing).

Plan now! To be open minded. Be more willing to collaborate, affiliate and work with other like-minded organizations. This is one of the reasons the California Hospice Network was formed – to plan for this future and ever-changing environment.

Hospice palliative care leaders need to remember why we are here. We need to stay connected to the reason we exist. We are here to care for patients. We are not an insurer that only looks at numbers. End-of-life care grew out of a great American crusade for social change. It was born out of a force that intends to challenge and reshape the national culture.

What began as a struggle for social justice in the 1950s and 1960s turned into a struggle for the rights of people with life-threatening illnesses. The voices and wishes of the dying and those caring for them needed to be heard. Hospice has become an organized effort to achieve equal access to care and to infuse end-of-life care with the power of choice, quality of life, respect, compassion and dignity.

At the time, health systems from coast to coast were failing in their attempts to properly care for dying patients, imposing ineffective and often unwanted treatments that robbed patients of valuable time and voice. about how and where they would spend their final days.

In short, people’s values ​​did not match their care. The things most important to this patient population were not considered in the provision of end-of-life care. The hospice movement changed all that. We need to stay connected to the spirit that gave birth to this model of care.

Craig Dresang, CEO, YoloCares

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When observing transactions, hospice leaders need to keep an eye on the density and size of their market.

If there were opportunities for value-based or alternative payment joint ventures with payers beginning to operate in the post-acute space, palliative care leaders must remain vigilant to ensure they capture the right value of the resources they devote to high-quality end-of-life care.

At Transitions, we believe the addition of a large group such as UnitedHealth Group or Humana could provide additional resources and opportunities for patients and providers across the space.

However, these organizations must make quality of care a priority in these transactions in order to benefit both the patient and the organizations with which they contract.

— Jim Palazzo, CEO, Transitions Care, a Transitions Group portfolio company

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For over 40 years, palliative care providers have played a critical role as a partner to all healthcare partners across the continuum of care in ensuring the seamless transition and management of eligible patients into care. palliatives across the country.

This approach both respects the wishes of the patient and alleviates the associated costly and time-consuming care transitions (rehospitalizations, etc.) for patients, which are often unnecessary.

As large payer organizations continue to enter the space through direct ownership, only time will tell the impact and disruption this may have on palliative care. It’s important to note that this isn’t the first time some of these big payers have entered the space (i.e. UnitedHealth Group).

Ultimately, each palliative care provider must understand the goals that their health care partners in the communities hope to achieve by referring appropriate patients to their organization.

Additionally, many of the sub-delegated risk-taking organizations also belong to these large paying organizations. This needs to be considered when setting appropriate expectations for specific patient populations for whom they have taken risks in their community.

While the goal of lower cost, higher quality care can be achieved through transparent and aligned partnerships, an independent palliative care provider really needs to be sure they can provide disease-specific care. that the population will need to co-manage this patient through the rest of their journey.

Additionally, independent providers need to understand whether referring entities have a stake in their market, which could lead to patient referrals over time.

We continue to be concerned about design flaws in the Value-Based Insurance Design (VBID) model, which has not released any positive outcome information since its inception and whose participating payers also own/operate a hospice care company .

We continue to advocate for the VBID model to be discontinued until community-based palliative care is defined, a comprehensive approach is implemented, appropriate quality measures are developed, and operational issues are resolved.

Arguably, palliative care delivery was the first value-based reimbursement model that has been independently proven to reduce costs in over 40 years. To that end, we are optimistic that there will be a path over time where appropriate partnerships with aligned incentives can lead to broader and earlier identification of appropriate patients at hospice through complementary care delivery. hospice and community-based palliative care, resulting in high quality, cost-effective care across our nation’s footprint.

Nick Westfall, CEO, VITAS Healthcare, a subsidiary of Chemed Corp. (NYSE: CHE)

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