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Workforce, FInancial Challenges Prompt Hospitals to Outsource Home Health Care

Hello everyone, thanks for checking in.  This week, we're reproducing an article from Home Health Care News by Bailey Bryant.  Trends point to more and more hires in the Home Health Care industry, and as such it makes sense to make sure that your hires are being vetted for tax credits.  

 

As more types of care move into residential settings, an increasing number of hospitals and health systems are turning to outside home health agencies to either replace, reinforce or manage their own operations. Workforce challenges and financial struggles are often the catalysts behind their decisions to outsource home health offerings, M&A experts say.

“It’s a definite trend,” Mark Kulik, managing director at mergers-and-acquisitions advisory firm The Braff Group, told Home Health Care News. “The theme is [that] it’s hard to be great at everything. Your core competency as a hospital is acute care. Home care is very different.”

From 2016 to 2018, 177 hospitals or health systems acquired home health agencies, according to proprietary data from The Braff Group. Additionally, during the same period, there were at least 25 joint venture announcements between home health companies and hospitals or health systems.

When the deal is finalized, Lafayette, Louisiana-based LHC Group will take majority ownership and management responsibility of Pennsylvania-based Geisinger’s home health and hospice services, as well as Geisinger affiliate AtlantiCare’s New Jersey locations.

LHC Group also teamed up with Searcy, Arkansas-based Unity Health for a JV in January.

LHC Group will take over both of the health system’s home health locations, which employ about 50 full-time workers who care for nearly 300 patients.

While many hospitals and health systems have chosen to augment their home health businesses by acquiring or partnering with home health agencies, several others have also opted to sell their businesses to up-and-coming providers outright.

On Jan. 1, Beaumont Health — one of Michigan’s largest health systems — teamed up with Kettering, Ohio-based Alternate Solutions Health Network to form a new JV to take over its home health and hospice offerings. Alternate Solutions Health Network is a national provider of post-acute solutions.

With a net revenue of about $4.5 billion, Southfield, Michigan-based Beaumont had more than 175,600 inpatient discharges in 2017. Alternate Solutions, which will manage the JV’s daily operations, has more than 20 JVs under its belt in Florida, Ohio, Virginia, West Virginia and — now — Michigan.

The goal of the joint venture is to deliver care at a reduced cost to roughly 16,000 patients in southeast Michigan, John Kerndl, executive vice president & CFO of Beaumont, told HHCN in January.

“Working with a specialized provider with home health and hospice expertise improves our ability to serve current and future patients,” Kerndl said, noting that Michigan has a “challenging commercial reimbursement market.”

One way the JV will presumably tackle those challenges is by cutting payroll costs. Under the new model, employee compensation will be structured “more like a home health company” than a health system, Kerndl said.

While most hospitals pay employees hourly, home health agencies commonly compensate workers based on visits per day, with varying compensation rates for travel and mileage, Kulik said.

“[Home health agencies] have engineered the economics differently to accommodate reimbursement so that they can stay in business,” he said. “A lot of the hospitals have kept the symmetry inside and outside the hospital the same, and that makes for a very difficult time trying to keep your head above water.”

Financial struggles also contributed to Oregon-based Samaritan Health Services’ decision to outsource its home health offerings earlier this year, according to President and CEO Doug Boysen.

In February, the nonprofit healthcare system — which operates five hospitals throughout Oregon — sold its home health division, which served patients in the state’s Benton, Lincoln and Linn counties.

Wilsonville, Oregon-based Signature Healthcare at Home — which provides home health, hospice, personal home care, palliative care and rehabilitation therapy to patients in the Pacific Northwest — took over March 1.  

Ultimately, workforce challenges made Samaritan’s business model difficult to sustain, Boysen said when the news was announced.

“It is a challenge to recruit and retain the specialized workforce needed,” Boysen said. “In addition, the size and scope of our three-county service area requires significant staff travel time and prevents us from leveraging economies of scale. The result of all these factors is annual financial losses over multiple years, with no indication that the situation will improve.”

Meanwhile, home health agencies build their around businesses around those economies.

Outsourcing from the start

University of Maryland St. Joseph’s Medical Center (UMSJMC) was an early adopter of the home-based care outsourcing trend.

Rather than attempt to tackle workforce and reimbursement challenges alone, UMSJMC chose to outsource its home-based services from the start four years ago.  

The decision came after the state of Maryland created a readmission reduction incentive program in an attempt to lower the state’s historically high readmission rates and, in turn, cut Medicare costs.

UMSJMC turned to Maryland-based Maxim Healthcare Services — a nationwide provider of home health, medical staffing and other services — for help.

As part of the partnership, Maxim pairs recently discharged high-risk patients with community health workers who provide personal care and help clients tackle social determinants of health.

“For us to have done this initially on our own with no experience with regard to what’s really going on in the home, we wouldn’t have anticipated the workforce challenges — how to go about creating the workforce, the issues with licensing in the home, the rules and regulations around that [or] the healthcare needs of patients in their homes,” Dr. Gail Cunningham, chief medical officer at the UMSJMC, told HHCN. “This allowed us to pretty quickly stand up a program that provided immediate benefit to a lot of patients.”

So far, the program has cut high-risk patient readmissions in half and reduced hospital spending for the same group by 35%.

As the health care system shifts toward value and the home-based care landscape becomes more complicated due to the caregiver shortage persisting and reimbursement models changing, the outsourcing trend will likely continue, Kulik predicts.

“Don’t be surprised if you see more announcements coming this year,” Kulik said. “I think you’ll see those [hospital and health system] CEOs more and more seeking partnerships or at least evaluating the benefits of those partnerships today in 2019 and 2020.”

Commitment to Inclusive Workplaces Brings Strong Benefits

Greetings everyone, and Happy Valentines Day!

I wanted to share an article that we received regarding inclusivity in the workplace and the benefits that making your corporation friendly and accessible to individuals with disabilities brings.  This article nicely addresses a piece of the beneficial circle that we're always talking about.    

 

Comptroller DiNapoli Calls on Major Corporations to Report on Disability Inclusion

Commitment to Inclusive Workplaces Brings Strong Benefits

New York State Comptroller Thomas P. DiNapoli today announced that he has called on 49 of the largest U.S. companies, including Apple, McDonald’s, Nike and Twentieth Century Fox, to report on their inclusion of people with disabilities across the enterprise.

“We want the companies our pension fund invests in to be desirable places to work for everyone,” DiNapoli said. “Studies have shown that businesses that commit to disability inclusion outperform their peers. Companies should seize the opportunity to join the growing number of corporations that recognize the benefits of disability inclusion and are reporting their efforts.”

In his letter, DiNapoli urged the companies to register and participate in the Disability Equality Index (DEI), an initiative of the American Association of People with Disabilities (AAPD) and Disability:IN. The DEI addresses the lack of information and disclosure of corporate policies on disability inclusion by creating a benchmarking tool that allows companies to self-report their disability policies and practices. It can also identify areas where they can improve their policies and strengthen their reputations as inclusive companies and employers of choice. The deadline for participating in the 2019 DEI is January 31 and any inquiries can be sent to This email address is being protected from spambots. You need JavaScript enabled to view it..

“Including people with disabilities in the workplace is not just the right thing to do – it’s also good business,” said AAPD Board Chair Ted Kennedy Jr. “Companies should be aware of the significant economic and shareholder benefits of hiring and promoting people with disabilities in the work force. Corporate participation in the DEI is a concrete step for executives to communicate to investors that they are serious about the issue.”

“It is crucial to have people with disabilities working as part of your talent pool to ensure your products and services work for everyone including more than one billion people with disabilities,” said Jenny Lay-Flurrie, Chief Accessibility Officer, Microsoft and Disability:IN Board Chair. “Our own inclusive hiring programs at Microsoft has brought untold benefits to Microsoft. We encourage every organization to focus on this space and leverage the Disability Equality Index in that learning journey.”

“We’re honored to be among the companies included in the 2018 DEI, and to be recognized for our efforts to support people with disabilities, as well as their families and caregivers,” said Voya Financial Chairman and CEO Rodney O. Martin, Jr. “We know that disability inclusion everywhere, including the workplace, is good for our customers, our employees and society. People with disabilities have a right to equal opportunities and they have a right to unlimited opportunities. Voya’s inclusion in DEI validates our efforts to make a real difference in the lives of our employees and customers living with disabilities.”

Research has shown that disability inclusion is a financial benefit. A recent report from Accenture, AAPD and Disability:IN, “Getting to Equal: The Disability Inclusion Advantage,” concluded that companies with best practices for employing and supporting people with disabilities in their workforce outperformed their peers. The report found that persons with disabilities remain woefully underrepresented in corporate America, representing 10.7 million potential skilled employees. Strong company policies are needed to ensure their workforce is inclusive of people with disabilities or risk missing out on an enormous pool of talented employees.

Samples of the letters DiNapoli sent are available at https://osc.state.ny.us/press/docs/disability-inclusion-sample-letters.pdf.

Tax Extenders Bill introduced to Congress

November 27, 2018

 

Chairman Brady introduced his tax extenders and technical corrections bill last night, and the Rules Committee has scheduled the bill for a House vote this week.

The bill extends most expired provisions—including Empowerment Zones Employment Credit and Indian Employment Credit—to the end of 2018.

Brady’s playing his hand means we can give our full attention to the Senate Finance Committee to get a better bill.

A copy of the bill is attached. 

  

Provisions related to WOTC:

  • Section 138 extends Indian Employment Tax Credit for 2018.
  • Section 143 extends Empowerment Zone Employment Credit for 2018.
  • Section 203 authorizes an employee retention credit for disaster areas, including Hurricanes Florence and Michael, designated wildfires, and Hawaii/Pacific territories.  Check the bill for disaster areas and dates for which the credit is allowed.

The bill contains matters other than extenders and technical corrections, such as retirement funds and electronic filing with IRS.  There’s an up-front index you can check for matters of interest.

 

Should you have any questions, write or call 703-587-4566.

Elections Improve WOTC Position in Congress

Democrats’ taking control of the House increases the odds of winning permanent WOTC in the new Congress that’s seated in January.

 

Current Ways and Means Chairman Kevin Brady will become the ranking member of Ways and Means, and Congressman Richard E Neal (D-MA), the present ranking member, will take the chair.

 

Contrasted to Congressman Brady’s declared aim to end WOTC, Chairman Neal and committee Democrats rallied around Congressman Ron Kind’s amendment to make WOTC permanent during markup of tax reform last year.

 

Now Democrats will form the majority of Ways and Means in the 116th Congress and Chairman Brady may be leading the minority without two strong allies, Dave Reichert (R-WA) who is retiring, and Peter Roskam (R-IL) who is in a race too close to call.

 

Overall, we can expect a favorable attitude toward WOTC by Ways and Means Democrats provided we continue to stress its effectiveness and stick to evidence-based statements when communicating with members and staff.

 

We don’t know who’ll form the leadership of the House next year—there may be a challenge to Minority Leader Pelosi.  However, we can be confident the Ways and Means tradition, of advancing by seniority, means that Congressman Neal will succeed to the chair and currently-serving Democrats will retain their seats.

 

In sum, the odds have improved significantly for winning permanent WOTC when 116th Congress takes up an extender measure next year, when several tax provisions including WOTC expire. 

 

This doesn’t mean our job will be easy.  Democrats who voted against the tax cuts of TCJA made hay during the election by denouncing the resulting budget deficits; they’ll make deficit reduction a top priority when they take charge of the House.  In that situation, Congress chose in the past to extend WOTC a few years at a time, impairing its effectiveness over the years.

 

Congress returns on November 13th to take up a “technical corrections and extenders” bill to deal with expired tax provisions, including  Empowerment Zone employment credit and Indian employment tax credit.  Members should also continue pressing the case for applying WOTC to the recent hurricane disaster areas, to the new Opportunity Zones, and to repeal the BEAT tax or remove its impact on WOTC.

Do the Right Thing

****Make November the Hire Veterans Month.

With Veteran’s day on November 11th, let’s be proactive and hire a veteran for an open position in your company.  Not only is it the right thing to do considering all they gave for our freedom, but the Work Opportunity Tax Credit program will help pay for the hiring/training of the vet by giving the company a federal income tax credit as per the below schedule.

For-profit companies can get the following tax credit when they hire an unemployed veteran:

A.     If unemployed for at least 4 weeks but less than 6 months, with no service connected disability, the company will earn a tax credit equal to 40% of the first $6,000 paid to the vet - $2,400.

B.     If unemployed for more than 6 months with no service connected disability, the company will earn a tax credit equal to 40% of the first $14,000 paid to the vet – $5,600

C.      If the vet has a service connected disability and is hired within 1 year of separation from active duty, the credit is 40% of the first $12,000 - $4,800

D.     If the vet has a service connected disability and has been unemployed for more than6 months, the credit is 40% of the first $24,000 - $9,600

* unemployed periods are within the year prior to being hired and do not need to be consecutive.  Employees must work a minimum of 120 hours to qualify

Non-profit companies can also take advantage of this incentive as a reduction in the employer’s portion of Social Security (FICA) taxes.  Refer to the categories above:

A.     26% of the first $6,000 in FICA Earnings or $1,560

B.     26% of the first $14,000 in FICA earnings or $3,640

C.      26% of the first $12,000 in FICA earnings or $3,120

D.     26% of the first $24,000 in FICA earnings or $6,240

* unemployed periods are within the year prior to being hired and do not need to be consecutive.  Employees must work a minimum of 120 hours to qualify.

There are many organizations that can help you hire the right veteran including the Veteran organizations in your city or town, online organizations like www.Veterans2Work.com and others.

Veterans bring discipline, teamwork, mission focus and the ability to learn quickly.  Hiring a vet is just good business.  We want to make sure you also get the icing on the cake – all the credits you’re entitled to. If you need help in qualifying a veteran for the Work Opportunity Tax Credit program, please let me know.

Sincerely,

Ken Brice, President

EmployerIncentives.com

US Navy, Vietnam Vet