The opportunities Medicare Advantage (MA) plans offer home care firms could literally come at a cost, according to Solic Capital Managing Director Matt Caine. In a recent McKnight’s Home Care Newsmakers podcast, the healthcare industry mergers and acquisitions adviser said as MA plans exceed 50% of the Medicare market, they will have more financial leverage in negotiating contracts with providers.
“They’ve got market heft and they’ve got power, so they’re going to exert it,” Caine said. “You’ve got to demonstrate your quality of care to be a participant in these plans. Obviously, your leverage is a little bit weaker than it was years ago and it’s only going to get weaker moving forward in contracting with their views with what is a reasonable reimbursement rate.”
Approximately 45% of Medicare-eligible seniors have MA plans, but that number is expected to exceed 50% within the next few years. The plans are popular with aging baby boomers because they are on average about $2,000 a year less expensive than traditional Medicare plans. About 1,300 plans (25%) currently offer supplemental benefits that include home care.
Caine said home care firms can increase their currency with MA plans by offering additional services, such as hospital-at-home. However, he said building strong referral networks could be even more important.
“That is a key piece to trying to grow the business,” Caine said. “As you look to diversify your services, can you enhance that customer concentration as you look to enter into new service offerings like hospital-at-home?”
Caine also believes non-traditional healthcare companies that are expanding into new service areas, such as CVS Health and Walgreens Boots Alliance, offer potential opportunities for home care firms.
“There is a race to get closer to the consumer,” he said. “Everything is on the table.”
