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By MEREDITH BONNER
More than 200 additional home health agencies will be considered small businesses if a proposal by the Small Business Administration (SBA; Washington) takes effect, said SBA spokesman D.J. Caulfield.
The proposal, which was published in the Federal Register in early May, would raise the size standard for qualification as a small business for home health agencies to $10 million or less in revenues from $5 million or less. Based on the 1992 economic census, which Caulfied told HHBR is the most recent government statistics available, 260 additional home care firms would be able to qualify as small businesses.
The proposal includes other sectors of the healthcare services industry as well. Currently, there is only one size standard that applies to the entire industry, Caulfied said. A business qualifies as small if its annual revenues are $5 million or less. The SBA proposal would preserve this standard for eight subdivisions within the industry and increase the dollar figure for 11 others, including home care.
Caulfied said the proposal would make it easier for small agencies to secure loans, which he said is one of the most frequently cited reasons for looking for an increase in size standards.
"A lot of times, a $7 million agency can’t get a loan guarantee," he said. "Lenders view $7 million as too small to cut the paperwork and cut the loan, but with SBA backing or guarantee, they will do it."
National Association for Home Care (Washington) attorney Bill Dombi said the most significant factor of the proposal is that it will help preserve the likelihood that the Regulatory Flexibility Act (RFA) will remain a tool in any regulation affecting home care.
"With a $5 million standard, the vast majority of home health agencies already qualify as small businesses," he said. But he added that if the change goes through, more agencies will qualify for certain variances like loans or counseling support.
Dombi said the most valuable aspect of the proposal lies within protection under the RFA.
"With so many agencies closing, it is likely that many other agencies will grow in size through things like acquisitions," he said, adding that those companies would find themselves out of protection of the RFA, increasing the number of companies not under protection.
Dombi said that if a majority of home health agencies are small businesses, any Medicare or Medicaid rule would have to go through the RFA analysis, which would secure that the path that has the least affect on the small agencies be taken.
"The RFA was used as a basis for Congress convincing (the Health Care Financing Administration; Washington) to withdraw the surety bond regulation," Dombi said. "That shows the importance of it."
Caulfield said the proposed rule is subject to public comment until July 6. The SBA estimates that nearly 5,000 firms in the entire healthcare industry would benefit from the change.