Competition between hospitals and private home-care agencies has grown so intense in Mississippi that one state senator referred to the debate as a "blood bath."
Last month Mississippi hospitals failed for the third year in a row to loosen one of the country's most restrictive certificate-of-need laws for opening new home-care agencies.
Since April 1983, Mississippi has had a moratorium on new entrants in the state's home-care market and barred hospitals and private agencies with existing services from expanding.
While some of those private agencies have since been purchased by hospitals or other companies, the state has not seen the opening of a new home-care agency in more than a decade.
With mounting pressure to shift to outpatient care, hospitals in the state have intensified their lobbying efforts in recent years to change the law.
The Mississippi Hospital Association lambastes the state's "bizarre and archaic rules," which it says prevent hospitals from forming integrated delivery systems and offsetting lower inpatient stays.
At the same time, the private agencies, represented by the Mississippi Association for Home Care, argue that the current home-care providers are doing just fine, serving 89,000 patients each year at lower costs than the national average.
The hospitals grew optimistic when earlier this year the state House of Representatives passed a bill in a 95-20 vote that would have ended the moratorium.
Even though the bill safeguarded smaller providers by limiting hospitals' home-care services to a 50-mile radius, intense lobbying from private agencies killed the bill March 4 in the Senate Appropriations Committee.
"It becomes easier for the legislators to say `no' to us than disrupt an entire industry," says Brent Alexander, vice president for government relations and communications at the hospital association.
Another bill, backed by the home-care association, would have transferred control of the health department's agencies to rural hospitals in the state.
Corrie Hall, president of the home-care association, says the bill did not even come to a vote because "it was not perceived as an acceptable compromise to the home health dilemma."
State legislators have said they simply want to provide the best care for the mostly older patients who received 7.9 million home-care visits from nurses and health professionals in 1995.
The Mississippi debate over how to answer that question is being played out in other forums across the country.
In February, a federal judge dismissed a lawsuit brought by Delaware Health Care, a home-care and infusion therapy provider, against Medical Center of Delaware in Wilmington and its home infusion business. Delaware Health charged in a 1994 suit that the medical center leveraged its strong presence to monopolize the home-care market (March 10, p. 8). A similar suit filed by two home-care agencies in El Paso, Texas, against hospitals operated by Nashville-based Columbia/HCA Healthcare Corp. is pending (March 31, p. 11).
But while competition between hospital-based and private agencies has become increasingly fierce in most major markets, the Mississippi debate may be the most drawn out fight with the most at stake.
Currently, 30 hospital-based agencies, 25 freestanding agencies and 19 Mississippi Department of Health-controlled agencies serve the state. Of these, 47 are not-for-profit and 27 are for-profit.
Alexander says at least half the hospital association's 105 members want to get into the home-care business.
He says some $355 million in Medicare reimbursements is at stake. In addition, he says, the policy has prevented hospitals from expanding outpatient services that could help them recover from reduced inpatient stays.
And he says that although hospitals have had the option to buy existing agencies, the prices have been steep, costing up to $12 million for one agency.
"There's no incentive to sell," he says. "There's a cartel of Medicare millionaires who have been able to prohibit home-care expansion. Competition would improve how patients are tracked and how healthcare is integrated and would result in cost savings from efficiencies."
For its part, the state home-care association says patients are benefiting under the current system and have a sufficient mix of providers to choose from.
The association represents 34 agencies, which serve more than 70% of the state's home-care patients. Some 92% of the state's private agencies and 42% of the state's hospital-based agencies are members. Hall acknowledges that some of the hospital-based members have found it's not "politically astute" for them to take a stand against the hospital association and have supported lifting the moratorium.
But Hall, who is vice president for finance at South Mississippi Home Health in Hattiesburg, maintains hospitals don't need to change the law if all they want to do is develop continuums of care.
"They can do that now with the existing providers," he says. "There's an average of seven home health agencies in every county. What this boils down to is a debate between the haves and the have-nots over control of the home-care dollars."
Hall says if the market were fully opened to competition, the additional services would cause Medicare to spend more on home care in the state without necessarily meeting an unmet demand.
In 1995, more than 88,000 Mississippians received home-care services in the state, a 9.2% increase over 1994, according to the association. Mississippi patients received an average of 113 visits, while nationally patients received an average of 65.
At the same time, the association says, the Mississippi cost per visit in 1995 was $46 compared with the national average of $64. About 95% of Mississippi home-care visits were paid for by Medicare.
"The current providers rendering home health services are doing so effectively," Hall says. "There is no demonstrated need for other providers."
Alexander says the hospitals are looking to the next legislative session, which opens in January 1998, to try once again to gain some flexibility.