CEO Roundtable: Home Health Care

Each month, we gather around the table with a different group of Springfield business leaders to discuss industry trends, workforce and company operations. Join us as we get a behind-the-scenes look into our business community from the C-suite.

Springfield Business Journal Executive Editor Christine Temple sits down with home health care leaders Phil Melugin, founder and CEO of Phoenix Home Care & Hospice; John Ray, CEO of Haven Home Health and Hospice; and Kim Sisk, administrative director for CoxHealth at Home.

An excerpt from the start of the podcast follows.

Christine Temple: In just about five years, the U.S. will, for the first time, have its over 65 population exceed its under 18 population, creating a large demand for the industry you are all in. How are you ramping up for that demand?
Phil Melugin: We’re encouraging people to have more babies. It is a very unique situation. We are partnering with senior living communities. As the baby boomers age, and the sting of COVID is kind of lifting, we are seeing more of them entertain the idea of going into senior living communities where they have their own apartments. It provides a unique opportunity for a home care provider such as ourselves. We can care for many more people by being able to pick up some economies of scale, some density of patient population. So instead of spending two hours in a home, which is really what the economics of home care require, it allows us to do more of a la carte type of service. Maybe we can spend 15, 20 minutes in a home, but yet our caregivers can still make a living. The numbers still work for the provider.
Temple: We’ve seen a boom in those, they’re calling it the silver tsunami, with all of these senior living places. Are there particular groups that you’re already working with?
Melugin: We do a lot of work with TLC, Miller Commerce. And then with some of the big, national-based companies, we’re working with them.
Kim Sisk: One of the pieces that we’re really focusing on because to be able to meet that need, obviously it surrounds this ability to staff it, to be able to have the manpower to do what we need to do. So, one of the things that CoxHealth is doing is in relation to the Alliance [of Healthcare Education], where we’re building that internal pipeline to be able to develop staff both now and longer term, partnerships with Springfield Public Schools and OTC and MSU to develop that. That’s going to be really viable as we go forward. And then of course the use of technology and the way that we build that in not to replace what we’re doing with our caregivers and our team, because there’s a human component that has to be there. But technology to supplement and to enhance what they’re doing, remote patient monitoring, use of AI. There’s a lot of those strategies too that I think as we go forward, we’ll continue to develop. We’ll have to meet those needs going forward.
John Ray: We built a couple of models out on what we expect to happen in the next five to 10 years. One of those models is pretty straightforward – it’s just how do we retain staff? That’s first and foremost. How do we make sure that we give them a living wage, that we make sure that they have good benefits. It’s not what it used to be. Working in fast food, the wages were very similar and the turnover rate was incredibly high. We’re really trying to focus in on trying to make this more of a profession so we can retain staff long-term, not have as much turnover and more satisfaction in their career. The other model though, and this is maybe taking a little less positive approach to it, but I’m really looking at if there’s going to be regulation around what’s happening with Medicare Advantage. We have what I call “shrinkflation” in health care. A lot of people think of the grocery store where they’ve reduced the size of things in order to make more money. Well, what’s happening currently in health care, which has been going on for a better part of a decade where they’re allowing less access to care, they’re allowing less visits. When we started in 2011, we were mostly Medicare, not Medicare Advantage. Most of the time they had 20 therapy visits that were allowed by Medicare. Today it’s five, so it’s a fourth as many that are being allowed by some of these Medicare Advantage. As the population grows, there’s more and more downward pressure on the providers and the problem gets intensified because the need is going to continue to increase. That second model is us going, the need may be there, but are they going to have access to it? That’s the part that we can’t really answer right now. Unless there’s significant regulation that changes, it’s going to be hard to tell for sure.
Melugin: In general, health care is going through massive pressure testing and so big (mergers and acquisitions) activity. There’s pressure testing of an organization’s ability to how far can you push them? How far can you grow them? How many people can they actually have flake off and still get things done? John, it is such a great term that you put out there with shrinkflation. I think payers are pressure testing health care. In our industry, we are kind of at the beginning, if you will, stage of health care oftentimes. It seems like we get tested so much and we are being tested for what John said with this Medicare Advantage. We’re getting paid a third of what we got paid. The average reimbursement for a 60-day episode of care was $3,600, and now we’re getting paid about $900. You talk about massive pressure testing. The regulation hasn’t changed – that requires us to jump through multiple hoops to still provide that care. I think that pressure testing has a desired outcome of fewer providers, more Goliaths if you will. And then to see how much over care has been provided versus how much care is actually needed, the critical mass is going to hit as you see rehospitalizations, emergency room visits, nursing home populations growing on the skilled nursing side. And I think that evolution is happening right now.