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By MEREDITH BONNER
A recent study shows the number of home health agencies that are aligning themselves with hospitals is increasing. But some analysts say the jump in alliances has been caused not by a change in the agencies’ behavior, but by a change in the hospitals’ behavior.
"There could be an explanation of what the study is saying in that hospitals want to be aligning with home health agencies instead of owning them," said Dexter Braff of The Braff Group (Pittsburgh). "Hospitals that may have previously owned one or considered owning one might now be saying they don’t want to own, but want to align."
The study, conducted by SMG Marketing (Chicago), found that within the past year, the number of affiliations between home health agencies and hospitals or integrated health networks has increased 29% to 1,097 in April 1999 from 777 in April 1998. SMG data also indicates that 362 home health agencies are located within or owned by a hospital.
The study reported that the agencies are aligning themselves with hospitals or health networks to counter the effect of the interim payment system.
One of the big advantages for home health agencies in linking to a hospital is easy evaluation of the hospital admissions and discharges, the study reported. Agencies can use this information to decide what kind of services and staff they should maintain in order to deliver cost-effective care.
"Because (agencies) know what services are needed, patients that need more care don’t have to stay in the hospital," Demetris Anderson, project manager for the extended care team at SMG, told HHBR. "The agencies know who is leaving and who needs more care. They can also save space for hospitals and save money on staff and on services that are not needed."
While Braff agrees with the reasoning of SMG’s Anderson, he called the report "a very interesting finding."
"I will tell you what I thought the result would have been if you hadn’t told me. I would have thought it would have been the reverse of what the study found," he told HHBR. "I am not seeing that. In 1998 and prior to that we never would have received phone calls or requests from hospitals about them being interested in divesting their home health agencies, but we are now getting those.
"Many hospitals are reevaluating if they want to be in the home health business at all," he said. "A good number I don’t want to say a majority, but a good number of hospitals are saying, We can’t do this. We don’t want to do this if we own any home health, we want to divest it.’"
Agreeing with Anderson, Braff said that from an agency’s standpoint, they would want to align because they would want to increase their unduplicated census.
"Also, by aligning with a hospital, I suspect the idea is that they would have access to referrals, but home health agencies were looking at that before," Braff told HHBR.
The agencies, he said, couldn’t get access to referrals before because the hospitals then preferred to own them instead of being aligned with them, he said. But now, agencies are seeing the opportunity because hospitals don’t want to own anymore.
"The point is, I don’t think the strategy is any different, but the opportunity is now there because hospitals don’t want to own. Many hospitals are saying, We’ll align, but we don’t want to do it ourselves.’"