HUNTSVILLE, Alabama — Help at Home employs nearly 800 caregivers across Alabama counties to assist 1,100 seniors and clients with disabilities with activities such as bathing, housekeeping, and meal preparation. I am receiving it.
And suddenly it was gone.
Alabama's largest provider of home care services last year because the state's “reimbursement system and regulatory environment” made it difficult to recruit and retain enough workers, said Kristen Trenaman, the company's vice president of communications. In the fall, he suddenly announced that he was withdrawing from the state. After the facility was withdrawn, state officials scrambled to find new caregivers for the people who used it.
Help at Home's departure from Alabama has had a “huge impact,” said Debra Davis, deputy director of the Alabama Department of Aging Services. Davis said her agency worked with former Help at Home clients to find a replacement on the spot.
Help at Home, owned by private equity firm Centerbridge Partners and Vistoria Group, continues to provide home- and community-based care. a dozen other states, has 49,000 caregivers and 66,000 monthly customers. The company is aggressively expanding outside of Alabama, acquiring home care companies and listing thousands of job openings on its website. Neither company responded to Stateline's requests for comment.
Proponents of private equity investment in health care argue that capital injections can help small businesses expand into new markets, streamline costs and pay for new technology.
But critics say Help at Home's withdrawal from Alabama could happen if a state that spends little on health care relies on private equity-owned providers to care for its most vulnerable residents. He points out that this is a warning bell.
At the end of the day, it's about money, and unless policy has guardrails in place to prevent such withdrawals, they will continue to occur.
– Mary Bugbee, Senior Research and Campaign Coordinator, Healthcare, Private Equity Stakeholder Project
Private equity-owned healthcare companies are focused on generating solid returns for their investors. Typically, they want to cut costs, increase cash flow, use debt to finance expansion, and sell within a few years for maximum profit. In health care, especially in less regulated industries such as home health and hospice care, critics say the business model can reduce the quality of care, increase costs and reduce access for patients.
“We leave much to the whims of the market, allowing private companies to determine the access and quality of health care. The case of Help at Home is a great example of this,” said Senior Research and Campaign Manager Coordinator Mary Bagby said. Healthcare for the Private Equity Stakeholder Project, a research and advocacy group.
“At the end of the day, it's about money, and unless there are guardrails in policy to prevent these withdrawals, they will continue to occur.”
Private equity firms pool investments from pension funds, endowments, sovereign wealth funds, and wealthy individuals to purchase controlling interests in companies. As they expand their influence in U.S. health care companies, they are drawing increasing legislative scrutiny and public outrage.
And while much of that negative attention focuses on hospital and nursing homemany private equity firms are also turning to the lucrative and less regulated home health care industry.
“There are positive trends in the aging of the population, and we will continue to see an aging population,” said Ankeet Patel, vice president at private equity firm Shore Capital Partners. told the audience April 2023 Home Healthcare News Capital + Strategy Conference. “When you combine that with the fact that the home environment is cost-effective and a favorable environment for those receiving care, there are many opportunities.”
around it 10,000 baby boomers turn 65 every day. By 2030, 1 in 5 Americans People aged 65 and older will make up the largest proportion of Americans in history. This means that tens of millions of people will need care in the coming years, and most older people say they will need care. prefer to their age at homenot a nursing home. as long as possible.
As long-term care for the elderly moves from nursing homes to home care, private equity is following suit.
increase in demand
Meaning of home care various things. Home health care often refers to more skilled care provided by licensed nurses and therapists, such as wound care and medication management. Personal home care typically refers to non-clinical services provided by professional aides, such as assistance with bathing and dressing, and performing household tasks such as cleaning, cooking, and laundry.
It's not just aging consumers who prefer home care to nursing homes, but insurance payers too. For both public and private insurance, this is a potential cost savings for those who do not require 24-hour monitoring.
'Shell game': Hospitals could see cuts or closures as private equity comes to town
Monthly cost for home care Average about $5,000 The latest long-term care cost study from the insurance company Genworth found that 40 or more hours a week in a nursing home can cost between $8,000 and $9,000 in a nursing home. The investigation is quoted By agencies such as the U.S. Department of Health and Human Services.
However, costs vary widely by state. In Mississippi, home care averages about $3,800 a month, while a private room in a nursing home costs nearly twice that amount, about $7,300 a month. In Massachusetts, home care can cost nearly $6,000 per month, while a room in a private nursing home can cost more than $13,500 per month.
For people who need 24/7 care, home health care is much more economical, averaging about $19,000 per month, more than twice the cost of a private room in a nursing home.
Analysis of 2019 Medicare claims reveals total costs 90 days after emergency department visit lower in patients treated at home Comparison with people treated in hospital. Readmission rates for home health patients were also lower.
As consumer demand grows and insurance giants like Humana and UnitedHealth Group enter the picture, step into the market Unique home health agency, partnered with private equity Continue Acquire small home health care companies and integrate them into regional networks. From 2018 to 2019, private equity almost half Some of the deals in the home health industry.
debt piles up
Private equity firms typically aim to buy companies to increase profits and then sell them within five to seven years. They often buy companies with borrowed money, using the company's assets as collateral for loans.
Help at Home's private equity owners, Centerbridge Partners and Vistoria Group, partially funded the company's 2020 acquisition. Has $745 million in debt. Currently, Help at Home, rather than private equity owners, must service debt and interest, which could make it difficult to generate a healthy profit in states like Alabama with low Medicaid reimbursement rates. There is sex.
Accumulating debt in companies to finance additional purchases or pay dividends to investors is a hallmark of private equity. Bugbee, of the Private Equity Stakeholder Project, said the industry tends to use debt more recklessly than publicly traded companies, which need more financial transparency. There is also the idea of high risk, high return.
Private equity-owned companies struggling to service large amounts of debt may make business decisions to unload services in one state and expand in states that are more effective at keeping the business afloat, Bagbee said. said.
Some states support hospital mergers despite record of service cuts and price increases
Michael Fenne, senior health care coordinator at the Private Equity Stakeholder Project, said overindebtedness leaves companies financially vulnerable and more likely to cut unprofitable service areas.
“This is a great example of how much private equity can shape a state's health care landscape,” Fenne said of Help at Home's sudden exit from Alabama. “They can do it in different ways. Sometimes they cut staff, sometimes they cut real estate.
“What is striking about this situation is that we have taken more lenient steps toward complete removal from the state.”
Help at Home accounts for a high percentage of revenue I came from Medicare and Medicaid.They remain vulnerable to regulatory changes and national budget challenges, according to a 2022 report from credit rating agency Moody's Investors Service.
“It's possible. [for a business] “It's possible to make money from Medicaid even at low reimbursement rates, but it's going to be much harder to do that if you're in a business that's loaded with debt,” Bagbee said.
Help at Home's Trenaman told Stateline that the decision to leave Alabama was not made lightly.
“We take our responsibility to provide the safest in-home personal care services to our customers very seriously,” she said in an email. “Given that responsibility, we believe we have been forced to make the very difficult decision not to renew our annual contract effective September 30, 2023.”
Alabama's Medicaid policy for home care makes it difficult to recruit and retain employees, and “Alabama has not been able to overcome these challenges,” she said.
Alabama is one of 10 states that has not accepted federal funding to expand Medicaid eligibility to people making up to 133% of the federal poverty level. The state has some of the strictest income-based eligibility requirements in the country.
Get the morning headlines delivered to your inbox
Help at Home also operates in Florida, Georgia and Mississippi, none of which have expanded Medicaid. About a year before leaving Alabama, Help at Home acquired an Alabama home care company. georgia, Indiana, new york, Ohio and pennsylvania. As of late January, 2,700 job openings Most of them are for caregivers.
However, Alabama has particularly low Medicaid reimbursement rates for home care services.The state reported paying salaries to home health agencies. $27 per day According to KFF, a health policy research organization, the cost of home personal care is not made public, although it is per Medicaid recipient receiving care. Home health reimbursement is the lowest daily rate for home health agencies among the 26 states that report patient volumes to KFF.
Texas and Wyoming also have not expanded Medicaid, but they reimburse home health agencies about $181 and $58 per visit or day, respectively.
“Medicaid and the state's failure to expand it is definitely a valid reason for businesses to suffer,” Bagbee said. “But there are similar examples of private equity-owned health care companies pulling out of some states and not others, because at the end of the day, it's about profits.”
Possibility of regulation
Because private equity operates similarly across the healthcare sector, state and federal laws promoted by private equity involvement in hospital systems and other healthcare sectors may also operate in home health agencies.
last year, 24 states According to the National Conference of State Legislatures, an advisory think tank for lawmakers, it has enacted legislation related to health care system integration and competition.
States consider increasing pay and benefits for home care workers as demand increases
“Change of Ownership [of companies owned or being acquired by private equity] “This is a window of time that regulators can use to really look at companies and who is acquiring them,” Bagbee said. “If they do their due diligence, it can go a long way in protecting patients and workers.”
Improving transparency, mandating certain staff-to-patient ratios, and increasing wages for health care workers will also help protect patients and communities.
This year, California will begin implementing a 2022 law that requires health care providers to: Notify you of the status of major financial transactions, including mergers and acquisitions. January, New York Increased minimum wage for home health care workers From $17.55 to $18.55, depending on location. These wages will continue to rise every year until 2026.
Efforts to enact new rules are often delayed by years as policymakers want to see evidence of harm to workers and patients before enacting changes.
“But we have a good idea of how private equity typically works, having spent decades observing how private equity investments play out in the healthcare sector. There are still ways regulators and policymakers can be proactive,” Bagbee said.
