Expand your business by partnering with hospitals

Are hospitals courting private duty businesses?

You’d think — given the financial consequences to home care from the 1997 Balanced Budget Act — record numbers of hospitals would be rushing to open private duty home care divisions to offset losses in their Medicare/Medicaid-certified components.

Not so, according to Anita Porco, RN, president and CEO of Nurses Today in Dallas. "A lot of hospitals don’t have the private duty component. In fact, a hospital in Dallas sold its private duty component after several years because it wasn’t making any money for them. Don’t ask me why; I never have understood it because a hospital has a built-in referral source."

One reason may be that while all hospitals seem to have the Medicare/ Medicaid component, their home care management just may not know how to run a private duty arm. "Their mindset is so totally different," says Porco. "The spend as much as you can — don’t give anything back to the government’ kind of mentality doesn’t serve you if you’re trying to run a moneymaking organization. Yet you would have thought that there’d be a lot of staff coming out of that Medicare market who would be willing to do private duty, and yet they’re not there. Many nursing assistant training programs are folding, so the pool of people we have to work with is lower. I don’t know if this is happening throughout the country, but it’s certainly happening here."

Porco observes that there are a lot of people who know home care, but private duty nursing is really a different animal.

"The traditional model is the per-visit kind of home care in which staff is in the home for a very short period of time to do whatever treatment is necessary," she says. "Private duty means being with someone for eight hours, possibly 24 hours, a day. Now, you’re really getting a much closer look at the client over a longer period of time, and all the social interaction that goes with that. Along with client interactions, there are also interactions with the client’s family, attorneys, CPAs, bank trust officers, and other people within the hospital setting if care is being delivered there. The relationships are a lot stronger in private duty care."

Well then, are hospitals recognizing these factors and moving to bring in more revenue by partnering with private duty agencies in some fashion? That doesn’t seem to be happening, either. Lea Wilson, RN, MBA, executive director of Henry Ford Extended Care in Southfield, MI, says that though the certified care division of the Henry Ford system receives the bulk of its referrals through the system, her private duty arm does not. "I know a lot of our referrals come to us because of the Henry Ford name recognition, but because the private duty arena is predominantly self-pay, the client base comes from all venues."

Wilson, whose private duty case system is Joint Commission-accredited, says private duty care providers in her state receive a lot of support from the private duty forum of the Michigan home health association. The forum, which Wilson chairs, meets monthly to look at issues common to the industry — staffing, numbers, and difficulty in recruitment and retention.

Who’s actually succeeding and why?

Yet Gina Dodson, administrator for Vanderbilt Home Care Services (VHCS) in Nashville, TN, says her hospital-affiliated private duty home care venture is very successful. "It’s making up income for the nonprivate pay division. We do several things that support the hospital’s needs in our private duty or extended care side. For example, we do care partner relief, which is certified nurse technician [CNT]-level training. We bring in and train CNTs to be care partners for the hospital. When the hospital is short-staffed and needs some fill-ins, we provide them with that staff. We have been able to tailor our program to the hospital because of our tight affiliation."

Dodson’s group actually operates two private duty agencies under the same umbrella. "We have one agency that does traditional Medicare visits that has a private pay extended care division, and we operate a second agency that resulted from a merger with a very small company, and we operate some private pay business out of that."

Hospital-affiliated PDs may acquire others

Perhaps due to its strong affiliation with a large medical center, VHCS has been able to acquire programs that grew out of the hospital and ended up in home care.

For example, Vanderbilt Children’s Hospital and the Nashville Junior League manage a respite program for parents of children who are technology-dependent. If their parents want to go out of town for a weekend, a trained private duty nurse goes the home to take care of them.

"When the respite program began, children had to come to the hospital," Dodson says. "But the program directors soon realized that children who don’t need to be in the hospital don’t want to go there. Also, their families have a lot of equipment and supplies that need to be with the children, and taking it to the hospital wasn’t customer-friendly. They have now rolled that program out to home care."

Dodson sees definite benefits to a hospital having its own private care agency, rather than dealing with one in the community. "Vanderbilt Hospital is committed to the continuum of care, so they find value in that home care program along that continuum. The benefit to us is that we provide them a resource; as they do program development and building within the hospital, you can pull in your home care people to help plan for patients."

Hospitals that would derive the most benefits from a private duty component or partnership are the larger, possibly research-allied institutions that have the capacity for a number of different arms. "There are lots of different niches where you can pull home care into your strategic plan," Dodson says. "I think for smaller hospitals, there are probably still some strategic issues, such as the need for post-acute care. It may be a little harder to get at the issue in a smaller hospital. You really have to look at each hospital system individually."

Dodson recommends that hospital managers who are contemplating creating a private duty component or partnering in some fashion with an outside agency begin by developing strategic plans for their facilities. This process can also be used by private duty agencies looking to partner with hospitals. "Given the current volatility of all of health care, it’s a great time to look at what you’re going to do with a health care system," Dodson says.

Research target facility, make a strategic plan

Either way, accurate research is imperative. If you run a private duty agency and want to expand and partner with your local hospital, you should:

Assess where private duty home care might fit in to the hospital’s plan. Reviewing the Joint Commission’s standards for private duty home care accreditation is a good place to begin. Private duty might benefit your target hospital greatly by making enough money in the private duty sector to offset its losses in the Medicare sector.

Look at all markets for private duty care. Dodson’s group provides a large number of sitters for Vanderbilt Hospital, suicide precaution, child abuse cases, and families who want someone in the room with their ill relative all the time. You can also do some work in senior high-rise communities. It gives you a chance to do something beyond traditional care.

Remember that each hospital has its own policies, procedures, and standards of care. Patient bases differ greatly from hospital to hospital.

Present your partnering proposal as helping the hospital to build a moneymaking infrastructure. Get hospital administrators out of the mindset of the traditional Medicare home care business and show them private duty can be prosperous.

Any information you get from inside the hospital will help to give you an idea of what you’re getting into, but the key will be to have someone on your team who thoroughly understands the private duty business getting together with someone on their team who understands the hospital.

Create a strong network between your agency and the hospital’s peer group. Make connections to organizations with which the hospital is affiliated. State and regional hospital associations often have home care alliances. Even on an informal basis, it’s great to have people in the same business in the same geographical area with whom you can share information.

Rural areas have harder time with private duty

Dodson observes that while many of the hospitals in large urban areas have successfully done private duty home care, hospital-based programs in rural areas have a much harder row to hoe. "Staffing has become such a difficult thing," Dodson says, "and rural areas have a smaller population from which to draw. You have to have a much larger pool to staff a small number of cases, because you’re looking at 24 hours a day, seven days a week. I staff on a full-time basis for 500 to 600 patients per month in the visiting division. I probably have between 70 and 80 caregiving staff in full-time positions. Our temporary business may have a caseload of 60 patients per month, and we run a temp roster of probably 250. People choose temp work for flexibility — it takes many more people to staff a case than in a visiting job."

"Hospitals have traditionally wanted their home care to be known as hospital-based, so that they would be able to allocate hospital overhead to the cost of the home health agency. If the management goes to someone else, it’s going to be hard to keep your home care as hospital-based, and you may not get the financial break. There are certainly still hospital-based agencies that contract out for management, but it’s slowing down dramatically," says Covington, KY, attorney John Gilliland. He says that hospitals wanting to get out of home care would probably be happy to sell their home care arms, but not many people are interested in buying certified agencies these days. He points out that some hospitals like to keep their home care anyway because they find it easier to bid on managed care contracts if they have it in-house.

"Everybody’s different," Gilliland says. "I find that in working with clients, they’ll want to start by asking if they should form another corporation. I’ll say, That’s the end of our meeting. Let’s talk about what you want to do. Don’t talk corporations, don’t talk where it is; tell me what your goals are. At the end of that, I and your accountants and other professional advisers will come back with a structure or options that will accomplish your goals. Change your goals — the structure’s going to change.’"