Study identifies traits of successful agencies

Therapy services linked to success

In a study of 42 clients representing all areas of the country and different types of agencies, Lewis Computer Services in Baton Rouge, LA, discovered that it is impossible to say that providing home health services in one particular way is the key to success.

"Prior to the study, we believed that agencies with a high case-mix level would be more financially successful because they were receiving higher payments," says Jeff Lewis, president.

"We found, instead, the greatest concentration of profit was in the group of agencies that routinely had the less complex cases," he says.

The only area in which case mix did affect profits was when therapy services were included, Lewis says.

"A high level of therapy services is a good indicator of profits. Agencies that have included therapy in 20% of more of their cases are generally more profitable," he explains.

This presents a challenge to rural providers, however, because they often don’t have access to as many therapy resources as an urban agency and they also meet the therapy threshold of 10 visits per episode less frequently than urban agencies, he points out.

Since case mix did not drive profits, Lewis and his staff then looked at costs.

"There was enormous variation in visit levels among the agencies surveyed," he says. For example, 20% of the agencies providing the most skilled visits for home health-related group C0 patients provided 15.3 skilled visits per episode as compared to the 20% of the agencies providing the fewest skilled visits at 7.6 per episode.

Good care plans made a difference

Lewis points out that all of the agencies were reimbursed at the same level, but the agencies that had care plans that call for fewer skilled visits made more money.

After seeing similar variations in the number of aide visits, Lewis looked at the agencies’ policies and realized that the differing numbers of visits were determined by the care plans.

After evaluating data that compared agencies with care plans that addressed the same primary and secondary diagnoses, he discovered that the agencies that were on budget or making a profit according to reimbursement levels obviously designed their plans while keeping reimbursement levels in mind.

"Two-thirds of the agencies we evaluated were aware of their costs and their reimbursement levels and kept them in mind as they developed care plans that produced good outcomes for the patients and the agencies," he says.

Agencies that have set up a mechanism for budgeted care plans will be able to better prepare for the 15% Medicare cut if it is implemented, Lewis says.

"Because they already know their costs, they can adjust the reimbursement level to determine how it will affect profitability and to see if the care plan can be adjusted and still provide good patient outcomes," he explains.