Rising Costs, Stagnant Reimbursements: How Home Health Providers Can Navigate the New Normal

Home health costs are on the rise. As noted by Home Health Care News, home health costs rose more than any other provider setting last year. In part, this stems from a growing labor shortage — providers must pay more to retain top-tier staff and recruit new talent.¹

Rising costs are also tied to stagnant reimbursements, which haven’t kept pace with inflation.² As a result, home health providers face a tough decision: Increase costs to cover the difference, or risk going out of business. But increased costs also come with the risk of reduced client demand, if patients and their families find the price of home health care prohibitive, they may look for other, more cost-effective solutions.

It’s not all bad news, however. When it comes to navigating the new market normal, home health providers have several options to help address these cost and reimbursement challenges.

Take a Multi-Pronged Approach to Staff Retention

The median cost of hiring a home health care aide rose 12.5 percent in 2021 as these care professionals saw demand for their roles significantly increase.³ Coupled with a market marked by ongoing attrition — 20 percent of healthcare staff have left their jobs since the pandemic began — providers must make staff retention a priority.⁴

The most obvious answer is more money. If organizations can afford to pay staff more, they’re more likely to retain key employees. But money isn’t the only driver of staff satisfaction. By prioritizing workplace environments that look to actively address staff issues with work/life balance and ensure they have the tools they need to effectively do their jobs, providers can boost overall employee engagement and reduce the risk of turnover. 

Asses the Impact of Current Investments

Where are current investments paying dividends, and where are changes necessary? Consider the rise of telehealth visits. Rough around the edges at the start of the pandemic, telehealth appointments and patient assessments now offer a way for providers to control costs without sacrificing service. 

The challenge? Not all tools are created equal. As a result, it’s critical for home health companies to take stock of current operations and investments. This starts with a use case analysis. How often are telehealth other solutions being used? How much do they cost per month versus the revenue they generate? It’s also important to consider patient and staff satisfaction. If caregivers and patients find current solutions complex or cumbersome, spending on an upgrade may drive increased revenue over time.

Implement New Technologies to Maximize Efficiency

Providers can also control costs through better management of existing resources with robust home health software tools and home health scheduling. By using a centralized, cloud-based platform for scheduling, staff members are able to connect and collaborate on patient schedules from anywhere and reduce the risk of double-booking an appointment. By using a software solution with robust offline capabilities, staff always have the whole medical record at their fingertips, creating an accurate care plan from day one, thereby improving outcomes with streamlined resources. These solutions also make it possible for staff to easily enter patient details and complete key documents to help provide unified, patient-centered care. 

Why is home health so expensive? Driven by rising labor prices and reduced reimbursements compared to inflation, long term care cost increases were necessary for providers to stay viable and remain operational. The caveat? Higher costs may lead to a catch-22 that drives reduced client demand. 

While it’s impossible to avoid cost increases, home health providers can take steps to mitigate the impact with new approaches to staff retention coupled with digital solutions that help them make informed investment decisions and improve overall efficiency.

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Note: Net Health makes no representations as to accuracy, completeness, correctness, suitability, or validity of any of the information presented herein. All information is provided on an as-is basis. It is the viewer’s responsibility to verify any and all information presented herein.

Resources:

¹ Home Health Care News, “Home-Based Care Costs Increased More Than Any Long-Term Care Setting in 2021,” February 6, 2022.
² Health Leaders, “Rising Costs, Dwindling Revenues, Inflation Among Top Healthcare Challenges for 2022,” December 21, 2021.
³ Barrons, “Long-Term Care Costs Rise Sharply During Pandemic,” February 17, 2022.
⁴ Becker’s Hospital Review, “About 1 in 5 Healthcare Workers Have Left Medicine Since the Pandemic Began — Here’s Why,” November 17, 2021.