11 home health agencies unite to win bigger pacts

April 13, 1994|By Patricia Meisol | Patricia Meisol,Sun Staff Writer

Eleven small Maryland home health agencies are banding together to bid for managed-care contracts in an effort to improve their ability to compete.

The home health care companies, eight based at hospitals, collectively do about $20 million in business annually and serve about 9,000 patients. The group, incorporated this week as the Maryland Home Health Network Inc., is the single largest home health care provider in the state.

But members say the attraction for managed-care companies is the network's geographic reach, not its size. It stretches from the Eastern Shore to Western Maryland, and patients could be served by companies with knowledge of local health conditions and needs.

Member companies signed up primarily to stay in business, not to attract new business.

"It's to keep us all in the game," said John Mistrangelo, administrator of Maryland General Home Health Agency, which initiated the idea. "It's to keep us competitive for national contracts."

Home health, a $158 million industry in Maryland in 1992, is the fastest growing segment of the health care industry. Managed-care companies are increasingly using it to lower their costs by providing care for people at home rather than in hospitals or other facilities. And, providers say, insurance companies prefer one contract to cover an entire state.

In addition to a single voice, the network would allow members to offer deals they couldn't make on their own because of the increased volume, said Adrian Price, president of Eastern Shore Home Health Agency, a network member.

"We would have more buying power if we networked together and offered a more competitive rate," she said. Her company, with annual revenues of more than $1 million, is the largest such provider on the lower Eastern Shore.

The challenge for network members is to devise a way to set rates that are both competitive and cover members' costs, which range widely because of differences in labor costs and other expenses. "That's something we are going to meet about and discuss," Ms. Price said. The group plans to hire an outside firm to handle billing and patient referrals.

Until now the largest home care provider in the state has been the Visiting Nurses Association, which had 14 percent of the market in fiscal 1992, the last year for which Maryland statistics are available.

But the market is in flux, growing and shifting as managed-care companies begin to purchase home health services in bulk.

Publicly traded HomeCall Inc., in Frederick, with about $14 million in annual revenues, is the single largest provider to customers of MD I.P.A., the largest managed-care company in Maryland. Bay Area Health Care of Baltimore, a doctor-owned company with about $5 million in revenues in 1992, recently won an exclusive contract to serve managed-care customers of Blue Cross and Blue Shield of Maryland.

In addition to Maryland General in Baltimore and Eastern Shore Home Health Agency, the network is made up of the independent firms of Potomac Home Health and Southern Maryland Home Health Services Inc., and home health agencies affiliated with the following hospitals: Memorial Hospital at Cumberland, Washington County Hospital, Fallston General, Frederick Memorial, Montgomery General, Anne Arundel Medical Center and Doctors' Community Hospital in Prince George's County.

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