VNA Versus Bayada: Is Home-Care Competition Good for Vermont? | Health Care | Seven Days | Vermont's Independent Voice

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VNA Versus Bayada: Is Home-Care Competition Good for Vermont?

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DANIEL FISHEL
  • Daniel Fishel

Vermont's nonprofit home-care providers did everything in their power to prevent a for-profit, New Jersey-based competitor from setting up shop in the state eight years ago. They failed to stop Bayada Home Health Care but later succeeded in getting lawmakers to enact a 10-year ban to prevent any other home-health entities from following its lead.

Since its first year in Vermont, Bayada has quietly quadrupled its revenues to become one of the state's largest home-health care providers, with more than 500 employees making approximately 25,500 house calls each year.

That's good news for residents, according to Dr. Adam Groff, Bayada's chief medical officer and a part-time hospitalist at Dartmouth-Hitchcock medical center. Now "patients have a choice," he said in an interview last week, "and they deserve a choice."

But when patients choose Bayada, does it hurt the state's 10 nonprofit Visiting Nurse Associations, some of which have been serving clients for more than a century? That's not an idle question. One of the reasons for the legislature's 2010 moratorium was ostensibly to give the state time to assess Bayada's impact on the VNAs before opening the door to more competition.

Home-health care encompasses an array of services: checking blood pressure, monitoring medications, dressing wounds, speech therapy, nutrition advice, even household chores. Most beneficiaries are elderly or have a disability and rely on Medicaid or Medicare, federal health insurance programs that reimburse health care providers at below-market rates. When a patient becomes terminally ill, he or she can qualify for hospice care, also offered by the VNAs and Bayada, which includes everything from medical services to bereavement counseling for family members.

By definition, the home-health industry operates in the privacy of people's homes, out of public view, but it has gained favor as a more convenient, cost-effective alternative to caring for people in hospitals and nursing homes. In Vermont, which has a rapidly aging population but an unusually low hospice utilization rate, there's potential for growth.

Mark Baiada started his business in 1975 with $16,000; today Bayada is a billion-dollar operation with more than 300 offices in 23 states and in Germany, India, Ireland and South Korea. Baiada still presides over the private company, but he is in the process of converting it to a nonprofit and handing it over to his son, David, who will become CEO in August.

The elder Baiada claimed in a phone interview, "I've kind of been operating like a nonprofit for a long time," meaning he's prioritized clients over profits.

Bayada got into the Green Mountain State by purchasing a company that was on the verge of collapse. But in order to buy Professional Nursing Services, the only for-profit home-health agency in Vermont in 2008, it first had to get a "certificate of need" from the state.

The arduous process dragged on for more than a year, as nonprofit agencies went before the state agency in charge — the now-disbanded Department of Banking, Insurance, Securities and Health Care Administration — to argue that Bayada threatened their survival. A for-profit company would cherry-pick the cheapest-to-care-for patients, they predicted.

Ultimately, BISHCA decided those fears were unfounded. Its approval letter in summer 2009 noted that Bayada had pledged to serve patients regardless of their insurance status and made assurances that Medicaid patients would constitute a significant portion of its clientele.

Another benefit: Bayada would ensure that the nearly 1,000 Professional Nursing Services clients wouldn't lose services.

"Allowing the purchase of PNS by a nationally recognized, high-quality home-health provider will facilitate both the quality and stability of the current system, as well as increase capacity for that system to grow as needs continue to grow," the department concluded.

It also gave Bayada permission to operate statewide. VNAs collectively cover the entire state — and make approximately 1 million house calls per year — but each independent organization is confined to a distinct territory.

Bayada has steadily lengthened its reach in Vermont and is now larger than Professional Nursing Services ever was. It has employees working in every county out of offices in Bennington, Brattleboro, Essex, Norwich and Rutland, according to Groff.

And although its for-profit status raised some eyebrows initially, there's no evidence that Bayada has skimped on care — which is highly regulated at the state and federal levels — to improve the bottom line. "From my perspective as the state survey agency director, both Bayada and the [VNAs] have to provide the same services," said Suzanne Leavitt of the Department of Disabilities, Aging and Independent Living, which makes sure home-care providers adhere to the law.

"As far as the services they provide or their reputation, I guess I don't see any difference," said state long-term care ombudsman Sean Londergan, a Vermont Legal Aid advocate for residents receiving long-term care at home and in facilities.

Last October, when Bayada was seeking a certificate of need in Maryland, it touted its track record in Vermont. Noting that Vermont's hospice utilization rate was the second lowest in the nation at 36 percent in 2010, it stated, "Bayada Hospice improved this low utilization trend in Vermont. By 2014, hospice utilization increased to 48 percent in the state ... The only factor that differed between 2010 and 2014 was Bayada Hospice's market entry and targeted outreach and education efforts." It claimed to be the largest hospice provider in the state.

According to Groff, 39 percent of the company's annual revenue of $26.5 million comes from Medicaid patients — the people VNAs say they lose money caring for.

How does Bayada do it? Economies of scale. Its 300-plus locations all rely on the same technology, billing department, administrative staff and training resources, which reduces overhead costs, Groff said.

The skepticism hasn't gone away entirely, he acknowledged. But it might if the company can successfully convert to nonprofit status. Mark Baiada's reasoning for the change: "Nonprofits tend to last longer than businesses," he said. "Businesses are bought and sold like real estate ... This will give us a greater chance of being here in 100 years."

Short-term, Groff said, the process "should have no direct impact on employees or patients." Baiada said there are no plans to start seeking donations in Vermont.

If the VNAs are concerned about the soon-to-be nonprofit competition, they weren't letting on to a reporter. Seven Days called all 10; two responded, providing little to no insight about what impact Bayada has had on their operations. In a statement, Judy Peterson, president and CEO of the VNA of Chittenden and Grand Isle Counties, addressed Bayada obliquely: "We see continued growth in the number of patients seeking our home-health and hospice services," Peterson wrote. "We are focused on providing the highest level of patient care and innovative programs in homes and other community settings rather than on what others may be doing."

Orleans/Essex VNA & Hospice executive director Lyne Limoges said simply: "In our neck of the woods, we don't see an awful lot of Bayada." While it's true that the company does not have an office in the Northeast Kingdom, its clinical team members currently travel from Burlington and Norwich to care for an increasing number of patients there, according to Groff.

Jill Olson, executive director of the VNAs of Vermont, a trade association representing the agencies, declined to discuss Bayada. The group has refused to let the company join.

Whether or not Bayada is to blame, many VNAs are struggling to stay in business. According to data from DAIL, nearly all of them would be operating in the red, if not for charitable and annual town-meeting donations from municipalities. Even with that supplemental funding, several have experienced losses during the last several years.

Like many home-health agencies across the country, a handful of VNAs in Vermont have merged or affiliated with one another, capitalizing on resource-sharing arrangements. Home-health services in Bennington, Rutland and Manchester are now provided by a single VNA organization, while the White River Junction-area VNA has affiliated with Dartmouth-Hitchcock.

Just last week, the VNA of Chittenden and Grand Isle Counties announced that it is pursuing an affiliation with the University of Vermont Medical Center. "In general, I think that if it helps improve coordination ... it's a good thing," Groff said of the possible affiliation.

In the past, the VNAs have been able to make up for what they lose caring for Medicaid patients with money they get from patients on Medicare, which pays a better rate. But Medicare reimbursement rates have been slashed repeatedly over the last decade.

That decrease makes it challenging to offer employees a decent wage and to find people willing to work for what the VNAs can pay.

Groff said Bayada's remuneration is comparable to the VNAs', but the company has worked hard to recruit and train new employees, as opposed to poaching from other organizations. "I don't think there's any question we've dramatically expanded the pool" of qualified workers, he claimed.

Sen. Ginny Lyons (D-Chittenden) said she and her colleagues are "very sensitive to the fragility" of the VNAs and "want to make sure they stay whole, because the services they offer are absolutely critical." That's why, last year, she helped lead a successful effort to pass a bill extending the moratorium on certificates of need for new home-health and hospice agencies — until 2020.

Have lawmakers determined whether Bayada has had an adverse effect on its nonprofit competitors or whether there is still unmet need in the market?

"It's an excellent question, and I don't know it's one I could answer off the top of my head," said Lyons, who wasn't aware of any concerted effort on the state's part to do that research.

Since no one is applying for a certificate of need, there's no external mechanism to make it happen. "It's a catch-22, isn't it?" Lyons observed.

It isn't even clear which government entity would undertake such an analysis, if one were sought. BISHCA no longer exists, and the Green Mountain Care Board, which took over health care regulatory duties in 2011, doesn't oversee home-health agencies, in part because the moratorium predates its existence. DAIL inspects individual agencies, but it doesn't evaluate the industry as a whole, according to Leavitt.

Londergan, the ombudsman, did note that, "We hear of situations where people aren't getting the services they need because, the VNA would say, [their organizations] don't have adequate staff."

Groff's take: "This is not a zero-sum game when it comes to home-health care. There's a tremendous amount of demand for our services."

As for the state's other providers? "I'm eternally hopeful that the VNAs feel the same the way," he said.


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