Outsourcing Wave Continues as Pikeville Medical Agrees to Sell Home Health Division

Industry News   •   June 17, 2019

Pikeville Medical Center — one of the largest hospitals in eastern Kentucky — announced last week that it’s selling its home health division to Home Care Health Services.

In doing so, Pikeville joins the ever-growing list of hospitals outsourcing their home health operations to nearby agencies, often because of workforce or financial challenges. Financial terms of the deal between Pikeville and Home Care Health Services — expected to close in toward the middle of July — were not disclosed.

Founded in 1998, Pikeville, Kentucky-based Home Care Health Services is a Medicare-certified home health agency with roughly 30 staff members. The agency, which also provides non-medical home care and in-home ventilator services, served more than 400 patients throughout Pike County in 2018.

“Home Care Health Services is one of the last-standing privately owned home health agencies in Kentucky,” the agency’s president and CEO, Sharon Branham, told Home Health Care News. “It seems like more and more agencies in Kentucky over the last several years, in my experience, have been either purchased by Amedisys (Nasdaq: AMED) or LHC Group (Nasdaq: LHCG). Those that are left are either home health agencies from large hospital groups in urban areas or based in health departments.”

Overall, Pikeville Medical Center’s home health division and its team of about 40 employees served between 1,400 to 1,700 patients in 2018, according to Branham.

Moving forward, Pikeville’s employees will be given a chance to transition over to Home Care Health Services, find new roles within the hospital or pursue other opportunities, she said. About 95% of employees have already been placed into new roles, Pikeville CEO Donovan Blackburn told local news station WSAZ.

The cost of home health services combined with the region’s competitive home health landscape triggered the deal, Blackburn said.

“It’s difficult to make the necessary investments to be able to grow this service line and to provide the equipment and all the support that our patients are entitled to,” he said.

Talks between Pikeville and Home Care Health Services began in earnest toward the beginning of April, with a deal being struck the day after Memorial Day, according to Branham. The hospital had attempted to acquire Home Care Health Services under previous leadership, she noted.

In addition to ongoing workforce and financial pressures, some hospitals may also be nudged to explore jettisoning their home health divisions due to the Patient-Driven Groupings Model (PDGM). PDGM is the biggest change to the home health reimbursement landscape in nearly 20 decades — one that demands ample investment of both time and resources.

In other words: If a home health program isn’t successful and committed to the delivery of services today, it’s very unlikely to be successful come Jan. 1, 2020, when PDGM goes into effect.

That likewise played into Pikeville’s decision to sell its home health division, Branham said.

“It was something they were not experts with,” she said. “By partnering with [Home Care Health Services], which was there ready and able to meet the needs of their patients and the community, it was a win for both.”

Apart from increasing its patient population, acquiring Pikeville’s home health operations will further push Home Care Health Services toward higher acuity levels — an advantage under PDGM.

Broadly, the main goal of the upcoming payment overhaul is to more closely align payment to the medical complexity of Medicare beneficiaries, with levels of reimbursement corresponding with how much care a certain type of patients ultimately needs.

This article originally appeared in an article in Home Health Care News.