Let me begin this with one simple fact – this article is merely one person’s attempt to lay out the facts and help educate the public on the situation. Nothing in this post is indicative of the point of view of the Board of Commissioners, the Health Department, or the Consolidated Human Services Agency.
UPDATED: This article has been updated since it’s original posting. Please scroll down to the “Updates” below.
My mail box has been inundated with more letters on this topic than any other in the brief time I’ve been a commissioner for Stanly County. To date I’ve received about sixteen letters from people whom directly benefit from the Stanly County Home Health’s services or their loved ones. A few threads are common across all the sentiments expressed from all parties. Those that use the services of SCHH are incredibly appreciative of the wonderful service they’ve thus far received from Stanly County’s program and don’t want to see it go. They unanimously applaud the amount of time spent going over and above what’s required by the staff when it comes to being sure that people are doing all they can to help those in need of the program. They all fear the a decline in the quality of service if SCHH were to be sold, disbanded, or if their services were to be replaced by another company.
After half a dozen conversations myself with people from the Board of Health, the County Manager, my own fellow members of the board of commissioners, and two separate board meetings on the subject, there is still no answer yet as to what to do, but the inevitable fact is that something will be have to be done. I’m going to attempt to lay out some facts in this article, and explain some of the challenges, so the people of Stanly County know what we are facing and might come to understand that those in County government are doing all they can to come to a solution that works for Stanly County.
I’d like to address the rumor that’s been going around first. Before the Board of Health even had it’s first meeting on the subject, my phone rang with a voter asking me if we were “planning on closing down the Home Health program.” We hadn’t even had a published agenda yet for me to even know what he was referring to, but apparently word had spread that some in Stanly County government were actively planning to shutter the home health program. That much, I can tell you, couldn’t be farther from the truth. I’m on both boards that would address an issue like that and nothing about that conversation had even made it to a board meeting yet. The topic of Home Health hadn’t even been broached yet.
I’ll skip the play-by-play of phone calls and events that led to where we are now and try to clarify the situation as best I can.
Stanly County Home Health has had a recurring problem for a couple years now. The program simply spends more than it makes. I’ll break down the numbers for you from 2010 until today so you can see for yourself.
- 2010 : the fund balance (or the amount in the savings account for the SCHH) was $455,633.00
- 2011: They brought in more than they spent by $62,650, bringing the balance up to $517,983.
- 2012: They brought in more than they spent again, this time by $67,233, for a total of $585,216.
- 2013: Costs went up significantly. They spent $91,616, leaving the account with $493,600.
- 2014: Again, the program spent more than it made by $15,634, leaving a balance of $477,966.
- 2015: The program profited by $359, leaving the balance at $478,325.
- 2016: It spent more than it made again by $70,509, leaving the balance at $407, 816.
- 2017: It spent more than it made again by $83,103, leaving the balance at $324,713.
- 2018: It spent more than it made again by $32,607, leaving the balance at $292,106.
Now, what you don’t see in those numbers are the revenue. Think of the fund balance like a savings account (because in essence, that’s exactly what it is.)
When the revenue (money from services they offer) doesn’t equal the amount they spend providing those services, they have to dip into the savings account. Makes sense, right?
So where does Home Health get it’s money?
Stanly County Home Health gets its revenue just like every other medical practice does for the most part. The revenue in this case comes from three sources:
- Private Pay
Medicaid hasn’t ever covered the cost of providing its services. That’s ok, because Medicare usually does. When added to private pay, the program has historically been able to pay for itself. One section of the services doesn’t make much money but the other two sources of income usually float the program. Ok, we’ve got that straightened out.
Medicare/Medicaid are changing
This is where Stanly County’s problems start to become evident. You saw the numbers for previous years above, right? Well, the services are provided on a calendar year but the financials are done on a fiscal year, so that gets confusing, but this will still make sense when I tell you the numbers.
At the end of Fiscal year 2018, we had $233,513 in the savings account. For the last three years we’ve been spending on average about $62,073 more than we make. (I averaged the previous three years overexpenditures to get that number.)
If you just use those numbers alone I can see why you’d argue that it’s jumping the gun to discuss this now. If we’re averaging spending $60,000 a year over, but we’ve got a $233,000 savings account, then we can go on for another four years or so, right? We can use that time to figure out ways to solve this money problem in four years, right? Wrong.
Medicare and Medicaid changes have been going on across all levels of government these past years. The goal of any program is to be more efficient and these programs are no exception. There are some significant changes to HOW money will be distributed to health care agencies as well as how MUCH will be distributed. Ok, so how does that factor into Stanly County’s Home Health care program? Let’s look at the projections.
At the end of fiscal 2018 we had $292,106 left in our savings account. We already know we’re spending about $62,000 per year more than we take in, so you’re probably expecting that number to be around $233,000 for the end of 2019. We are too. But remember, fiscal 2019 ends in a few months. It’s not a calendar year. We won’t actually have the final numbers for 2019 for a few more months, but we’e got some pretty great financial analysts whose job it is to forecast this kind of thing. That’s how we budget everything.
Based on the changes to Medicare and Medicaid affecting our state, we’re NOT going to have $233,000 left in the account at the end of 2019. We’re currently expecting to have approximately $58,593. Let that sink in for a minute. How would you feel if I told you that your business wasn’t going to have the quarter million you expected to see in your savings account, but instead were going to have about sixty-grand. Oh, and by the way, I expect you to continue to operate the same way you have been. Just figure it out!
That’s a pretty horrible blow isn’t it? Well, sit tight because it’s about to get worse.
Thanks to the changes to Medicare and Medicaid that we know about, I’ve got more good news for you. At the end of fiscal 2020, which is only slightly more than 12 months away, you’re actually going to be in the hole another $168,000 because of Medicare/Medicaid restructuring. Yup!
You’re going to have a bank account with $53K in it, if you’re lucky, but the income is going to drop from your main funding source to the tune of $168k more than it did last year. Now what are you going to do?
Now you know how we feel… welcome to our party.
The History of Home Health in Stanly County
Stanly County got into the Home Health care in the late 70’s for one reason – there wasn’t a private enterprise providing the service. We didn’t get into it because we thought we’d do it better. Government provided the service because no one else was around to do it.
Let’s fast forward almost fifty years. Today there at least 13 different agencies in Stanly County that provide the services Home Health provides. Those are all private enterprise, not government agencies.
A fellow commissioner stated something the other day that stuck with me. I think it was actually in the context of another conversation, but the applicability is relevant in this discussion as well. Commissioner Morgan said something along the lines of:
“Government shouldn’t be in the business of competing with private companies.”
He was right. That sentiment has stuck with me the entire weekend while I’ve stewed over this in my mind.
Let’s use another industry as an example. Maybe there weren’t any places to change your oil in Stanly County in 1979 and it was costly for residents to drive to Charlotte for an oil change. To alleviate that burden, Stanly County opened up a public service mechanic’s shop people could use if they chose – to avoid that long burdensome trip.
Today we have small operations, such as mechanics, Jiffy Lube, Walmart, and a dozen other private companies operating in that space. Do you want to be the government body directly competing with those private businesses to provide oil changes? When you put it into that perspective, no, I wouldn’t.
Let’s go back to some numbers so we can put this into perspective for Home Health. Below is a chart detailing how much of Stanly County’s home health services are provided by which companies over the last few years.
Out of a total of 1,953 customers of home health services, Stanly County’s program serves a total of 15% and that’s the highest percentage we’ve served in recent years. That means 85% of customers are served by one of the other 13 agencies (not all of which are listed by name here).
Almost a full half of the county is served by one entity, Healthy at Home (which is basically Atrium – owned by the Hospital).
The reality of private enterprise
We need to be in agreement on one thing before we go much further here. I’ve shown you above that all the competitors for this service are private enterprise. What does private enterprise think of a government agency operating in their space? One word – Competition.
At the end of the day, we are competition for them.
What does private enterprise do to competition? You outspend them until they go away.
That’s just a fact.
If you go to the hospital and end up in need of home health services, the hospital isn’t going to say “there are a variety of agencies out there to serve your needs. Here are some pamphlets so you can pick the one you like best.” No way.
They’re going to say “We have a great program at Atrium called Healthy at Home. You’ll love it. Here’s how to contact them.”
They don’t talk about Stanly Home Health, or Gentiva, or Bayada, or anyone else. None of these agencies do that. Maybe you think that’s wrong, but I urge you to put yourself in their shoes.
If someone comes into your store to buy tennis shoes, do you ply them with pamphlets about all the other great places they can buy shoes in the area? No, you grab them while they’re in front of you and show them to your showroom! That’s how businesses work.
I’m telling you this to set the stage for the next part of the conversation.
What are our options?
Stanly County has three options, with a potential fourth that’s a pipe dream. I’ll lay them all out so you can have the same information those of us having these discussions do.
- Convince EVERYONE to use Stanly County Home Health
- Make no changes until the fund balance is depleted and then close up shop.
- Invest county tax dollars to remain viable.
- Sell the Home Health entity.
That’s it. And really, I came up with option 1 on my own, but I know it’s not viable. If you can think of another option we haven’t thought of, Stanly County is open to ideas, but thus far the department heads, budget people, and even the outside financial analyst we hired to come help us figure this out all agree – those are our only options.
Option 1: The pipe dream
We can’t advertise more than we already are. There’s simply no budget for it, and even if we DID pull fund money to advertise, the competitors in the market could outspend us ten times over with their own advertising.
So the pipe dream solution would be that if everyone of YOU out there convinced every single person in the county currently using these other services to magically switch to Stanly County Home Health overnight. If we sucked away every single patient from every single competitor, the medicare and medicaid dollars would shift to the county’s program and we’d maybe reverse this huge decline in the short term.
In reality though, we’d just overburden the 8 employees and 12 contractors we have serving Stanly County currently, not to mention the administrative staff, and they’d never be able to provide a decent level of service to 6 times as many patients as they have now.
That would be death by overtaxing the resources because in a matter of months people would blame the program for providing sub-par service (which would be accurate) and we wouldn’t generate enough revenue fast enough to ramp up services to meet the demand. So that one would be an abject failure…
Option 2: Make no changes for now
In this option, we just keep doing the best we can for the next 12 months until the money runs totally out. We know it’s going to run out and we even know about when it’s going to run out. There’s no avoiding it.
When that happens, the staff goes to find other jobs and we stop paying our contracted professionals, and the program dies anyway. It just dies a slow miserable death over the span of 12-18 months instead of a quick demise.
Option 3: Invest county tax dollars
This is where the politician in me wages war with the fact that I’m human and have to think that maybe one day my mother might needs this care. My wife might need this care. I might need it myself.
Please make no mistake – I want this program to succeed, but the fiscally responsible person in me has to weigh this from the office in which I was elected to serve.
Stanly County has roughly 70,000 people. Of those, 295 people use SCHH as a resource. That 0.4% of the population. Less than half of one percent of the county the service, so…. how do I make the other 99.6% convince themselves that they want to pay for it?
I don’t mean that to sound like I’m reducing human beings to a math problem, but that’s.. well, that’s the math.
So, we can do two things in this arena.
Option 3A: We can take the funding from another program.
This option involves shuffling money from one program to another. We can’t hit the budget of required government programs, so that leaves discretionary spending.
Do we take a quarter million dollars from the library budget? Do we take it from the Agri-Civic center’s budget? Do we take it from senior services? There are probably a variety of discretionary budget programs we could pull the money from, but we’d have to do so knowing full well that this program would never again be able to fund itself due to the changes in medicare/medicaid that caused the problem in the first place. We’d have to tank programs permanently to pay for something that would most likely continue to require more and more financial shoring-up every year.
Option 3B: We can raise property taxes.
Stanly County hasn’t raised property taxes in twelve years if memory serves. We’re the only county around that hasn’t. A one cent raise in taxes from .67 to .68 would result in a $478,000 boost to the budget.
What do you think happens to the entire board that votes to raise county property taxes by one cent to fund a program that many are going say benefits less than one half of one percent of the people we’d be taxing?
We’d be run out on rails…. We would lose any ability to use our influence to perform any other kind of good for the rest of our terms in office because we’d be slapping a county that is by and large conservative in nature with a tax increase that benefits only 295 people, and we’d do it knowing those numbers would continue to decrease each year against the competitive marketing of the other private agencies.
To put in the simplest terms I can think of – the people of Stanly County won’t stand for that.
Option 4: We sell.
The option to sell, even if we could do it, has a limited shelf life. If we were going to sell, we’d have to sell it quickly.
Why is there a rush?
The fact that we even have a home health care department is due to something called a “Certificate of Need.” The state legislature some years ago decided there was a “need” for home health in areas around the state. At it’s highest, 80 counties in the state developed programs to serve home health. Today, our program is one of twelve that remain in operation. All the others have closed up shop or sold to private industries.
Home health care is a market with an abundance of options today. There are over thirteen agencies that provide the service in our county. We are fully expecting that as part of this medicare/medicaid restructuring that the certificate of need itself will go away. In short, the state will say that there is no longer a need for counties to provide this service due to the abundance of other companies offering the service. Therefore, we become superfluous overnight and no one needs to buy our agency anymore… because the state will simply legislate us right out of the market with the stroke of a pen.
What would happen if we sell?
If we were to sell the agency, the county would more than likely hire an outside firm to help us shop and broker the deal. From there it becomes like the selling of any other business. Maybe we can work into the contract that the 8 employees can stay on with the new agency for one year, three years, whatever. Maybe we’d get pushback on that item and have to drop it to close the deal at all. We would of course sell any assets such as vehicles and equipment that belong to the program,etc.
What would happen with the money?
First off, no one knows what it’s worth yet, at least not to my knowledge. It depends on the prospective buyer. Some people have the fear that if we sold, or closed up shop, that the people using the program wouldn’t be served. The reality seems to be a little different in this scenario. We already know Atrium dominates the market here, so some would say to sell to them. I’d argue that’s a bad idea on paper. I’d rather sell to the #2 player in the market. If we were to sell to Gentiva instead, our patients combined with theirs gives them a much better foothold on the Stanly County market and puts them on almost even ground with Atrium’s program. With that in mind they would REALLY want to do their absolute best to keep all the customers they could and treat them well because they would really NEED them to help grow their business.
Back to the money – I can’t 100% speak to what would happen to it either. Let’s say we sell for $100,000. Maybe we have three employees with less than six months until retirement. Maybe we’d agree to find somewhere else to let them work and we fund their payroll so they can retire in four months. Things like that could eat up a portion of the revenue. Other costs would surely crop up that I haven’t thought of yet as well.
Ideally, since the money was originally earmarked for health care, I’d be happy as long as the revenue from the sale, however much it was, is directed back into a health care item on our budget. I certainly wouldn’t vote for the proceeds from the sale to go towards building upgrades for the commons, etc.
So where are we now?
Well, now you know what I know. Congratulations! We’re all on the same page now. You literally have all the information that we as commissioners have at our disposal on the subject.
- The program is going to run out of money very soon.
- We might be able prop it up short term to get through the end of next July, but we’d have to make a long-term decision on what to do with it before the end of next budget year.
- No one is going to want to pay for it with county taxes.
- Someone is going to argue that the county doesn’t care for its people no matter what we decide.
That’s where we are right now. No one is voting on anything this week, this month, or even in the very near future to my knowledge. We ARE trying very hard to figure out possible solutions, ramifications of those solutions, and are trying to get as much information to inform a decision as we possibly can.
The changes to Medicare/Medicaid in the last 18 months took something that we thought of as a minor item to tackle in future budget years and turned it into a major hurdle that will drastically change our county’s ability to serve these customers in less than a year. This isn’t an issue where one department head knew about it and buried their head in the sand. The state changed the rules and those changes are being deployed across the state one area at a time. My assumption is that the other eleven programs still in existence across the state are struggling with the same solutions we are.
If you, as a member of the public, have any thoughts, questions, comments, please leave them below and I’ll be glad to respond if I know the answer. Maybe there is a solution out there that one of you will have that we haven’t thought of.
Update #1: March 19, 2019
I hope you will forgive the delay in publishing this update, but it’s been a hectic couple of weeks since this article was first published. Rather than change any of the previously written material, I felt it would be more “true” to the process to leave it intact and append new information as I receive it.
Thanks to some of you out there in the community who read the article and did your own homework, and further took the time to reach out to me directly with your thoughts and information, I’ve been busy. I don’t have an answer yet, but I thought it fair to you to show you what can happen when YOU get involved in YOUR government. So, here we go…
A few people who shall remain nameless but who work within the healthcare community reached out to me. Their conversations bore one common concern. They all worked in healthcare and they all assured me that they knew for a fact that while all the information above was true, there was one singular point that needed to be clarified to those of us making decisions on how to proceed with any recommendations or resolutions. That fact was this: Regardless of the fact that there are 14 total agencies serving the Home Healthcare market in Stanly County, SCHH is the ONLY one serving pediatric patients.
Let that sink in for a moment. There is only ONE entity serving the entire age range in home health from infancy through eighteen years old in home-health. One.
To be honest, I thought they must have been mistaken. That’s just not even possible is it? So, I made some phone calls…. how hard can this be to verify, right?
The first answer I was given was that as of 2017, there were 21 pediatric patients seen by Atrium, and 81 (I think) seen by SCHH. Ok. That’s great…. if we were having this conversation in 2017. We’re not. I made it clear that 2017 information wasn’t good for much of anything and asked them to re-poll all the providers for current data. After all, if there are only 14 agencies and we’re one of them, then it should be at most 13 phone calls.
The information I received back confirmed what I had been told by others. There are in fact zero other agencies serving the pediatric market in home health in Stanly County. None.
I relayed this information to my counterparts in the Board of Health at our next meeting. I was away in Nashville at a conference but they were kind enough to set up a conference phone for me to dial in to the meeting.
As of this time, the facts are still the facts. We still don’t have the money to keep going the way things are. Something will still have to change. The program might still be sold. It might be closed down. Any number of things might happen, but this kind of information is critical, in my humble opinion, to making a good decision.
At the direction of the Chairman of the Board of Health, they have formed a subcommittee of professionals in the healthcare industry to work together and brainstorm some outside the box thinking. I too am working with my own contacts directly to see what I can come up with. Everyone I know that can do something IS doing something. We just don’t have the answers yet.
I can tell you some ideas that I think have merit though.
Shut down competitive services?
One idea being considered is to find a way to sell off or shutter parts of the program that are served by other private companies. If there are 13 companies that serve XYZ area, let’s stop spending time and resources on that sector and direct those patients to clinics that have resources for that need so we can preserve the dwindling fund balance for caring for the unserved pediatric market.
You might think that solves the problem, but nothing in life can be that simple. I mentioned before that SCHH is funded through private pay, Medicare, and Medicaid. Well some of those other programs are the ones that actually make a small profit for themselves. The pediatric market doesn’t.
The truth is that a significant majority of the pediatric population we serve are Medicaid patients and Medicaid already loses money and is about to lose even more under restructuring because we can’t compete with the larger hospitals for the marketshare. Will that idea work? I don’t know yet, but I’m hoping we can extrapolate some numbers to make an educated guess.
But the short answer would seem to be (without seeing the numbers and only knowing general facts at this time) that maybe we could shut down some services with the goal of keeping enough in the fund balance that it would stretch longer, allowing us more time to come up with a solution for pediatric patients. Note that nothing in this idea thus far has any hope of keeping the program open long term. This would just be a bandaid to keep the program serving those that can’t be served elsewhere until we find a solution.
Find someone to serve pediatrics?
Here again, YOU the public helped out. Thanks to an email sent to someone who sent it to someone who sent me a Facebook message, I ended up on the phone with the CEO of a pediatric therapy company that specializes in… wait for it… pediatric home health. In fact that’s all they do. That’s their ONE specialty. Divine providence? Too soon to tell. But I can tell you that I’ve spoken with the CEO and put them in touch with our Health Director and the conversation can at least be had. That’s more than we had before.
This company is actively looking to move to Stanly County, already does this full time, has an established practice in other areas, isn’t a huge mega-conglomerate like Atrium, is a private owned small business, AND we might have a perfect market of customers to provide them with. Did I mention they’re even open to hiring our existing staff members to work with them?
Again… this is important to take note of… this wasn’t politicians or paid professionals doing what they do. This was the general public working to help solve a problem. Will this be the solution? I have no idea. It’s way too soon to tell and I’m not going to mention who it is or give any more information about it, but I CAN say with certainty that neither myself nor the Health Department, nor the CHSA, nor the Board of Commissioners would have known about the opportunity if it weren’t for members of the public taking an active interest in helping their community. So, whether this goes anywhere or not – you have my sincerest thanks and you know who you are.
Restructure and Hire More People?
I know, sounds crazy right. Maybe it is, but hear me out, ok?
I made some calls and did some digging on my own. We have contractors and we have health dept employees that work with pediatric patients. I wonder how many of these nurses and clinicians are staff and how many are subcontracted from other agencies.
It turns out, 100% of them are apparently outsourced contractors. Our subcontract staff seems to provide all the services for pediatrics in the SCHH program.
If that’s true (and I’ll find out for sure later) then truthfully WE don’t actually have anyone ourselves in-house that serves the market either, but we’ve been doing a good job of seeing their needs met through outsourcing.
If my numbers are right, we’ve outsourced in 2018 to about twenty-six different nurses and staff through subcontracting at a rate of about $800,000 for the year. Someone was kind enough to compile for me a list of the minimal needs we’d need to have in-house to try to perform those tasks ourselves with employees, supposing we actually had the employees. That number is around 8 people. Based on working actual salaries for those types of positions locally, we could potentially hire those people as employees for the county at a total cost of somewhere around $500,000 a year including FICA, benefits, salary, etc.
That could shave off another $300,000 a year from the health care budget, and possibly extend the program another couple years, or maybe permanently. I really don’t know. What I DO know is that there is more information to be had, more research to be done, and that people in all the related departments are doing what they can to come up with solutions and ideas to meet the county’s needs, serve its people, and do both while trying to craft a financially viable solution.
So thanks… my sincerest thanks.. to ALL of you out there that read this article, shared it, and pondered over how a solution might be found and took the time to share it.
Interesting Article From the Office of the Inspector General
Want to get your panties in a tizzy? This is some of what we’re fighting…
Maybe you didn’t know this, I certainly didn’t, but when you’re discharged from the hospital and you need follow-up home health care, its actually illegal for the medical facility to only recommend their service. It’s called the anti-kickback statute.
The idea is to prevent them from creating their own monopoly. Since you’re IN the hospital and you’re asking them who to refer yourself to for further care, it would give the hospital an unfair market advantage if they didn’t tell you about ALL the providers that might be able to care for you. They’re supposed to give you all the options and let you decide whom you want to use. That makes sense, right?
The office of the inspector general (OIG) just released a statement stating that they know hospitals are referring patients to their own services. They also know it’s illegal. They also know there’s no safe-harbor clause that makes this in any way legal.
Further, they have no intention of making them stop.
Yup, you heard me right. They know hospitals do it and they know it’s against the law, but to quote the OIG’s office, there were a couple main reasons they weren’t going to pursue any action against them:
- The benefits of the program outweigh any risks of inappropriate patient steering that the anti-kickback statute was designed to prevent.
- If the program works as intended, it is unlikely to lead to increased costs to federal health care programs or patients through over utilization or inappropriate utilization.
- Risk that the program will interfere with or skew clinical decision-making is low.
- The hospital does not advertise or market the program to the public, including on its website.
- The scope and duration of services provided by the paramedics appear reasonably tailored to accomplish the hospital’s goals of increasing patient compliance with discharge plans, improving patient health, and reducing hospital inpatient admissions and re admissions.
Remember when I mentioned before that competitive facilicies that want to shut down SCHH could simply outspend us if they chose to? Turns out they don’t even need to. The federal government just said it’s totally OK to continue to leave patients in the dark that SCHH or other programs even exist to care for their needs.
This is the kind of thing that’s being done. The Medicaid money (which funds these programs) is drying up, being restructured, and the programs are going to become so intentionally competitive for dollars that only a few big players will eventually be left in the Home Health market. That’s an intentional effect. It’s NOT a side-effect. It’s how the government thinks patients will be better served in the long run.
I won’t pretend to be an expert in Medicaid reform. God knows it hurts my brain to even absorb what I’ve had to learn thus far just to be able to have a simple discussion on the topic with healthcare professionals. But I do feel comfortable saying this much: Regardless what decision the SCHA or the Board of Commissioners eventually comes up with – the life of programs like ours is almost over. They will eventually all be either gobbled up by larger companies or simply run out of money. Anything done on the county level is, in my opinion, a short term solution.
I think we need to be directing our efforts towards figuring out viable solutions for home health patients for the long term, regardless what it does to our program today.
I’ll gladly update this article again later when I know more information. For now, I hope you’ll continue to be engaged on the topic and continue to help all your local officials as they do their best to come up with a solution.