Finger pointing at market analysis with digital monitor

Home care providers should be preparing for a possible recession, even if U.S. economists can’t agree if one is on the horizon. That advice comes from Kristin Pothier, KPMG’S global healthcare and life sciences deal advisory and strategy leader.

In a recent McKnight’s Home Care Newsmakers podcast, Pothier advised providers to develop an action plan and address costs line by line to determine what excess expenditures might be reduced in the event the economy contracts.

Kristin Pothier, KPMG

“You need to look at the addressable cost baseline,” Pothier said. “Line up all of your costs: labor costs, indirect and direct procurement costs … that whole thing has to be looked at.” 

The healthcare industry seems to be bracing for a recession as it struggles to emerge from the COVID-19 pandemic. In a recent KPMG survey,77% of healthcare and life sciences leaders polled believed there was a greater than 50% chance the U.S. would fall into a recession within the next 12 months. 

To prepare for a downturn, Pothier advised providers to examine all supplier contracts to ensure the terms are favorable and renegotiate them when possible. Labor tends to be the biggest expense for most home care agencies. She said outsourcing some in-house jobs, such as billing and communication, could be money savers. Technology, such as remote patient monitoring, also could be used to stretch available staff, but not tax them. Pothier also recommended cross-training workers for more than one job.

“You pay them more, but they are cross-trained in a number of different areas, so there is the ability to flex your workforce,” Pothier said. 

While a recession could be another headwind for providers, it could also provide opportunities. Recession fears and the proposed Medicare payment cut to home health firms have prompted some larger companies, such as Amedisys and Addus HomeCare, to temporarily pause merger and acquisition activity. However, Pothier home care remains a hot spot for investors.

“COVID forced us into the home, being able to stay at home, needing care in the home and having to stay put,” Pothier said. “It allowed us to create ecosystems and overall processes that allowed seniors and chronically ill people to be able to stay in [their homes].”