Emerging Industry Overview: Home Health Care Services

Industry Snapshot

Health care organizations recognized a number of advantages in offering home health care services. First and foremost, such services offered significant cost savings compared with similar services conducted inside hospitals. Patients, moreover, tend to prefer to receive treatment in the comfort of their own homes rather than in a hospital or nursing home, provided adequate and appropriate care is maintained.

Home health care, however, faced a grim reality as a number of setbacks rocked the industry and caused its players to seriously rethink their home-oriented operations. The industry was devastated by the implementation of the Balanced Budget Act in 1997, which included measures to slash Medicare and Medicaid reimbursements to home health care providers. In part this was seen as an effort to reduce the levels of fraud--a charge leveled frequently at the industry--and in part as indicative of Congressional leaders' calls for reduced government spending. But no matter what the intentions, the effect on the industry was clear. More than 3,500 agencies had either closed their doors or simply no longer accepted Medicare patients by early 2002, according to the National Association for Homecare.