The nation's two largest for-profit hospital companies took steps in recent weeks to renew their ongoing exits from the home-health business.
Columbia/HCA Healthcare Corp. sold Columbia Homecare of Northern Virginia, a hospital-based home-care agency operated by its 121-bed Reston (Va.) Hospital Center, on Sept. 13.
The sale leaves Columbia with four home-health agencies, down from about 500 at its peak. The company began divesting the agencies in 1997 as part of a restructuring program undertaken in the wake of a federal fraud investigation of Columbia and its executives.
Of Columbia's remaining home- care businesses, three are part of joint ventures, and one was inherited with a hospital purchase, said Columbia spokesman Jeff Prescott.
The buyer in the recent sale was Adventist HealthCare, a Rockville, Md.-based not-for-profit company that operates three hospitals in Maryland and New Jersey, seven nursing homes in Maryland, and one large home-health agency, called Adventist HealthCare Home Health Services.
Adventist sees the purchase as a way to earn additional revenues while cutting costs per visit, said Robert Jepson, spokesman for Adventist. He declined to provide financial background on the Columbia agency but said it had been profitable.
"With the Medicare cuts that have come, it's important for home-health agencies to lower their costs per visit," he said. Having more agencies allows for greater efficiency, he said.
The acquisition also expands Adventist's presence in Northern Virginia, he said.
Farther up the East Coast, a Tenet Healthcare Corp. hospital in Massachusetts announced it would close its home-health business. Saint Vincent Healthcare System, parent of 369-bed Saint Vincent Hospital, in Worcester, Mass., announced its home-health agency, Certified Nursing Services, would close Nov. 27.
The hospital became a Tenet property in 1997, after Tenet bought OrNda HealthCorp, which bought the Roman Catholic hospital in 1996. Tenet is building a replacement facility for the hospital.
Tenet's home-care holdings have dropped to about 35 agencies from about 100 in a year and a half.
"It's how the reimbursement has changed," said Tenet spokesman Lance Ignon, in reference to payment changes mandated by the Balanced Budget Act of 1997. "It made it very difficult for all providers to meet their costs."
Ignon said the decision to consolidate or close home-care agencies is left up to regional operators within the Tenet system, but that in general, the company began to consolidate agencies after the budget law took effect.
Nationwide, about 2,486 home-health agencies closed between October 1997 and August 18, 1999, according to the National Association for Home Care.
The number of for-profit home-care agencies tripled between 1990 and 1997, and for-profits represented 84% of new home-care agencies, according to a General Accounting Office report released in May. For-profit agencies also accounted for 83% of the closures between October 1997 and January, according to the GAO. The bulk of home-care agencies-72%-are freestanding, with only 28% hospital-based.
As for Tenet, it also announced recently that it is closing a St. Louis nursing home affiliated with its Forest Park Hospital. Deaconess Manor will close Oct. 20, Ignon said.
The company has sold a number of nursing homes in the area.
"It's just not our focus," he said. "We needed to concentrate our resources at Forest Park Hospital."
Ignon declined to provide information about the financial performance of the nursing home but said a nursing home operator in the area has acquired the bed licenses.