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Home Health Care is Here to Stay

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Gloria ``Jo'' Floyd has seen a lot of changes since she first started working with home health agencies.

The registered nurse-turned-consultant and self-described ``survival strategist'' went through the explosion of home health into one of the most opportunistic moneymaking businesses in the medical field. And she saw the gold rush come to an end as the government reined in the industry.

Now, she said, the industry has become about survival under a new system and keeping new opportunists at bay while experienced providers try to eke out a living serving home-bound patients.

And despite the blows to the system and fluctuating government reimbursement, Floyd said home health, the cheapest form of long-term care, is here to stay.

There now are about 1,000 home health agencies in Texas licensed to do business with Medicare. About 140 of those are operating in the San Antonio area.

That's more agencies than four years ago but a far cry from the numbers that existed when home health was considered a gravy train. Although it now is considered a fairly low-margin business compared to the years before 1998, aging baby boomers are expected to keep the industry going.

The biggest complaints of the industry now are similar to those of most others in the health industry - federal reimbursements not going up fast enough, underfunded state programs and nursing shortages.

``Payment rates are not keeping up with inflation, and most of that is coming from labor costs,'' said Heather Vasek, the Texas Association of Home Care's head of policy and regulatory affairs.

Medicare reform didn't treat home health as well as some other parts of the medical industry.

Home health reimbursements from the federal government were to have increased by 3.3 percent over the next few years, but that has been reduced to only 2.5 percent each year from 2004 through 2006.

The industry was decimated in late 1990s by a change in payment methods. An interim payment system was put into place and reimbursements per patient dropped from many thousands a year to less than $3,000. Many home health agencies cried foul.

They were left with high overhead costs and not enough income to do much more than break even. That put many mom-and-pop agencies started by registered nurses with an entrepreneurial spirit out of business and even drove large providers such as the Methodist Healthcare System to abandon its home-health care arm.

By some estimates, nearly a third of all home health operations closed down and others struggled until they learned to operate under a new system.

Floyd said the system was flushed of many opportunists who saw home health as a cash cow because the more that was spent, the more that could be made.

Exploiting the old rules meant a path to lavish salaries, plush offices, leased cars and big bank accounts for owners who had been carpenters, firefighters, legislators, lawyers and even bingo parlor operators.

The industry, because of access and free flow of money ... had a lot of characters become involved for the money and really hurt it a lot,'' Floyd said.It created an environment where fraud could occur and really hurt a lot of people.''

Rather than try to stop the problem of fraud through an enforcement

push, the federal government addressed it with rules under the Balanced

Budget Act.

It had the effect of weeding out those just out for the quick profit,

Floyd said. She wasn't sad to see those operators go.

``They didn't have the sense of commitment for people,'' she said.

The industry stabilized after a more permanent payment system was put into place and some members of Congress pushed for better reimbursement rates under that system.

Vasek said a couple of years of 10 percent increases in Medicare rates helped get agencies healthy again, but increases since have dropped back to below the rate of inflation. Those who survived the rate roller coaster are learning to grow their business again within the system and start to eke out a profit. 

All the standards are in place to keep things on the up and up, Floyd said, and she expects the industry to expand again for the next 18 months to three years. Ruth Perschbacher, a North Carolina-based lecturer on home care and trainer of family caregivers, said one of the problems with home health is that the model is wrong.

``I am concerned about our lack of understanding of chronic illness,''

Perschbacher said. Home health agencies, in large part, are set up for ``sick care'' and people who aren't going to get better.

Instead, she prescribes dealing with chronic illness through therapies

and treatments that deal with continuing life instead of just maintaining.

Our reimbursement system is set up to pay for certain things that are geared to sickness rather than wellness,'' she said.We don't reward that'' even though therapies could be a cost savings over just prescribing a drug and standard home health regimen.


(The San Antonio Express-News web site is at

C.2004 San Antonio Express-News


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