Home Health Utilization: A Decade Look, A Declining Trend

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Every year, we spend a lot of time analyzing utilization trends for you. It begs the question “who cares?”!  Utilization is important, because it is the starting point in answering the question “How do I grow?”  There are several choices – find new patients, take share away from competitors and increase the “order size”.  By benchmarking your agency’s utilization against high levels of utilization, you can determine how much opportunity there is to find new patients.

And, when you’ve looked at home health utilization rates for as long as we have (more than a decade!), you see distinct trends.  This is why this year we say that the market is flat to declining.  Since 2010 when home health utilization peaked at 10.8%, it has been on relatively slow but steady declining trend. This is concerning, because utilization is a key indicator of how agencies can grow in their market. However, pay for performance efforts, Accountable Care Organizations and readmission penalties each bring Home Health organizations to the forefront as a partner for hospitals and ACO’s and can mean increased usage of home health services.

Slide1Digging into a state-by-state analysis, we can compare utilization from 2014 to 2015 to find:

  • 19 states experienced utilization growth from 2014 to 2015. These states were equally distributed between the top, second and third quartiles (5 per) and three states with growth were in the bottom quartile.
  • Of those, 9 states had less than 1% growth with 3 more experiencing growth between 2 and 3%.
  • The top states – North Dakota and Minnesota – experienced growth in excess of 8%
  • In terms of utilization decline, eight states experienced declines in excess of 4% with Alaska, Ohio, Florida and Puerto Rico topping the list at 9+% declines. Here too, declines ranged between low and high for all quartiles. However, the top and bottom quartiles had average declines of 1.5% and 1.9% respectively, whereas the two middle quartiles averaged 0.8% decline.

Slide2Further, a quartile analysis shows significant variation between each of the four segments:

  • The bottom quartile is half of the second quartile.
  • The top quartile is pulling the entire national average up. If we eliminate the top quartile, the home health utilization would be only 7.3%.

 

2017 and Beyond

Increased regulatory barriers and Additional Development Requests signal a continuation of this gradual decline.  However, pay for performance efforts, Accountable Care Organizations and readmission penalties each bring Home Health organizations to the forefront as a partner for hospitals and ACO’s.

 

Local Impact

While a national outlook is interesting, it is more important to understand what is happening at the local level.  Here a quick tutorial on how to calculate utilization locally:

Divide patients served into the Medicare fee-for service enrollees.  Both of these metrics can be found in the Revenue Impactors Report.  Once you have that percentage, you can benchmark your agency against other agencies in that geography.  A “good” utilization rate is not an absolute number, but rather should be compared to other geographies, which you can view in the state-by-state utilization chart or by looking at the quartile chart above.

Remember that a lower utilization rate means that there are patients who could be in hospice that are not.  Other metrics can be used identify those opportunities.  These include of competition, hospital site of care mix, re-cert rates, % of dual eligible, SNF LOS and HH discharge rate, MD billing level for certifications and home/group home visits and source of admission mix. (All of these metrics can be found in the Market Profiles Report Set)

 

State-by-State Utilization Chart

If you would like to see the 2006 – 2015 state-by-state utilization chart used for this blog, just click here for access to it.

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Calculation Notes:

  • Home Health utilization rates are measured by Medicare home health patients served divided by Medicare fee-for- service enrollees for each state.
  • Puerto Rico and Washington D.C. are also included in this analysis.