And now even hospitals are getting out of the home-care business.
Shands HealthCare in Gainesville, Fla., which operates six acute-care hospitals and is affiliated with the University of Florida system, last month agreed to sell 10 of its 14 home-care sites to Flagship Healthcare, a post-acute-care company in Miami Lakes, Fla.
Terms of the sale, which is expected to close by mid-May, were not disclosed.
Like many national post-acute chains and home-care agencies, Shands blamed Medicare payment changes stemming from the federal Balanced Budget Act of 1997 for making its home-care business unprofitable.
Nearly 1,100 home health agencies in 23 states have closed since October 1997, according to a report released in March by the National Association for Home Care.
Last year, Shands Home Care, the system's home-care subsidiary, lost $10.4 million. So far this year, the loss is $15 million.
"We had this post-acute-care system that was geographically dispersed and difficult to manage," said Shands spokeswoman Angela Foote, who blamed the losses on budget act changes, HCFA's interim payment system and high system overhead.
"We're selling branches where we don't provide acute-care services," she said. "Instead of serving the whole state, we will focus on what we do best."
Among Shands' hospitals are 564-bed Shands at the University of Florida in Gainesville. Shands will consolidate its remaining four home-care sites into two, serving the Gainesville and Lake City markets.
The 10 home-care branches it will provide home infusion and home nursing services to more than 1,000 patients.
Flagship Home Health, Flagship's home-care division, treats 8,000 patients annually through its statewide system of six home health branches.
Flagship Chief Financial Officer James Murphy said his company already has a statewide presence, which will be augmented by the Shands acquisitions in the Fort Myers, Jacksonville, Ocala and Tampa-St. Petersburg markets.
Murphy said the Shands' branches should increase Flagship revenues to near $100 million in 1999. Privately held Flagship does not release profit statements.
"We've been able to focus our operations to make money under the current limits and deal successfully in the managed-care environment," he said. "The acquisitions from Shands give us an existing business base that we can essentially manage within our existing overhead."