Refurbishing home care: employers are poised to benefit from a developing trend: integrated home health care - includes related information on home health care under President Clinton's reform proposals

Business & Health, Jan, 1994 by Deborah Starr

Home health care agencies, anticipating a more competitive environment under health care reform, are pursuing strategies to price their services more attractively for employers. They are joining provider networks, offering discounted services, and marketing themselves directly to self-insured employers in an effort to coordinate an attractive spectrum of home health care services.

Providers realize that such strategies give them an edge in the post-reform market when health alliances may be more selective in choosing home care vendors. "We must form long-term partnerships with employers, payers, and traditional managed care organizations," explains Barbara Stark, director of managed care at Optioncare, a home care provider in Barrington, Ill.

"Home care agencies are changing the delivery setting by forming relationships with other providers," to capitalize on the accelerated interest in managed care, says Jill White, director of policy analysis at the National Association for Home Care, in Washington. Among the strategies home agencies have been pursuing are establishing joint ventures with other providers and joining vertically integrated provider systems. Such systems offer a broad spectrum of home care, including acute and post-acute care, explains White.

Such collaborative relationships also are developing among home care providers, employers, insurers, hospitals, and physicians, says Kathy Ziegler, president of the Visiting Nurse Health System of Atlanta, a home care agency. For example, Ziegler's group has been the preferred home care provider for the last several years for managed care services offered in Atlanta by CIGNA and Prudential Insurance Co. of America.

In recent years, the Visiting Nurse Health System has taken its preferred provider arrangement one step further. "It's also part of our strategy to contract directly with employers," Ziegler says. Because self-insured employers are the prime decision makers in home care, "we want to establish long-term relationships with those employers."

John Strapp, vice president of managed care at IVonyx, in Livonia, Mich., a provider of home infusion therapy, agrees. "As self-insured employers become more sophisticated, they are going to make more of the decisions about providers," he says. And Strapp believes relationships with employers will benefit home care providers that are poised to offer many different levels of services.

IVonyx, for example, is establishing relationships with providers of other specialty services, giving IVonyx an advantage among employers seeking a package of services, says Nancy Skinner, a case management consultant with IVonyx. In one program it initiated with an insurer, IVonyx has agreed to coordinate a range of home care services for patients with multiple needs. Because it offers only infusion therapy, IVonyx will subcontract for acute care or nursing needs with other providers if necessary. The strategy enables IVonyx to position itself as the home infusion provider when an insurer might otherwise contract with a company offering more services.

Some home care providers are finding that employers are quite receptive to their overtures. Chicago Metallic, a manufacturer of ceiling materials, offers home care as an option in its self-insured indemnity plan. Home care is provided after the company's case manager works with the employee's physician to establish an approved care plan. Joan Bruno, benefits analyst, says the case manager has been able to negotiate discounts of as much as 50% with some home care providers for specific services.

Now the company, which employs 850 people, wants to go further. Bruno wants to develop relationships directly with home care agencies and is considering establishing a home care preferred provider network to obtain greater discounts. She says Chicago Metallic is also considering hiring its own case manager.

As a large self-insured employer and health care provider, Deere and Co., Moline, Ill., is contracting directly with home care providers through Heritage National Healthplan, the company-owned independent practitioner association (IPA). Heritage operates in four states, providing health care for more than 300 employers and 230,000 members. It often home care under a wide variety of contracts with home care agencies and hospitals. Generally, services are provided on negotiated fee-for-service contracts.

Michael Hammes, president of Heritage National Healthplan, says regardless of how health reform is enacted, he will continue to negotiate contracts with home care providers to seek discounted services, especially as competition among providers grows.