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This past winter didn’t have the COVID-19 surge that the previous one did. And yet, the referral rejection rate reached an all-time high in home health care – all the way up to 76%.

All the while, patients being referred to home health have a higher acuity level on average. Nursing home referrals are also up compared to 2019, a fact that would surprise some health care experts during the peak of the pandemic.

These are just a few of the home health referral trends that are reflective of the current landscape. Those trends are especially noteworthy amid looming payment rate cuts from the Centers for Medicare & Medicaid Services (CMS).

They are also causing home health providers to redefine operational best practices.

“Referral rejections, that is still very much an issue,” Lissy Hu, the president of connected networks at WellSky, told me. “And that’s as we continue to see this increased demand for home health services.”

WellSky is a post-acute care technology company. The aforementioned referral trends come from its database, which pulls from hundreds of home health providers across the country.

It is a disheartening reality. At a time when home-based care is more in demand than ever, providers are struggling to capitalize off that because of staffing shortages, payment rate struggles and other headwinds.

That reality – and what providers are doing to adjust to it – is the topic of today’s exclusive, members-only HHCN+ Update.

The referral rejection rate in home health care has been a mounting, industry-wide problem. Prior to the pandemic, home health providers were only turning down 42% of patients referred to them, according to WellSky.

That number has increased by over 30% since.

“You’ve got to know your data,” Elara Caring COO Ananth Mohan said when discussing referral rejection rates with HHCN last year. “Your value is a big part of this. Understand and be transparent about your own operating realities — where you have the capacity and where you don’t. There’s never been a time when sales has had to be more connected with operations and the rest of the company.”

Staffing is the core issue. Providers I’ve talked to in 2023 tend to be far more focused on retention than recruiting, however.

They are leveraging new tech tools, monetary incentives, training programs and flexible scheduling to try to hold on to the workers they do have. But many of those efforts are still in the early stages.

“I don’t see the rate of rejection going down in the short term,” Hu said. “Those staffing challenges are going to take some time to address. I do think what’s interesting, though, is that when we go out and talk to providers, we’re starting to see providers really [honing in on] making their staff more efficient. They’re starting to reduce the administrative pieces of jobs so that those workers can focus more on clinical care.”

The providers that are able to reduce their referral rejection rate – thus forming better hospital partnerships – are going to do so by figuring out two things, in my opinion.

The first is around leveraging technology and proper workflow to allow staff to be as efficient as possible. The second is around figuring out how to capitalize off of part-time workers. Many clinicians are opting for part-time, flexible work since the pandemic. Viewing that as an opportunity – and not a headwind – will put providers in a much better place.

Though hospital length of stay is down compared to last year, it is still up almost a whole day compared to 2019.

“This is as a result of the pandemic,” Jennifer Hale, the VP of clinical quality and standards at Compassus, told me. “It reduced the availability of acute care. But what we’ve learned in the past few years is we actually can do more clinically complex care at home.”

The Brentwood, Tennessee-based Compassus is a provider of home health care, infusion therapy, palliative care and hospice care. It has more than 200 locations across 30 states.

“The burden on the provider community is to figure out how to close the gap between the things that are not necessarily considered part of health care, such as the social determinants, food security, access to medication, safety needs, mobility needs, those things which make a person successful in their home,” Hale continued.

Caring for more clinically complex patients puts further strain on staff, too. But the trend has been noticeable for long enough that providers have begun to successfully adapt, for the most part.

“Anecdotally, we’ve been seeing that for years,” Bud Langham, EVP of clinical excellence and strategy at Enhabit Inc. (NYSE: EHAB), told me. “It started a long time ago, but certainly accelerated during COVID because there were fewer inpatient beds and staff to take care of those patients. In the home health industry, we were asked to take care of patients who were sicker than what we were used to.”

The Dallas-based Enhabit is a home health and hospice provider. Its network includes 252 home health locations and 105 hospice locations across 24 states.

Though COVID-19 was one of the primary drivers of higher-acuity patients coming into home health, Langham believes the trend will “continue to accelerate.”

Hu agrees.

“These trends, they were accelerated by the pandemic, but they’re not pandemic-specific,” she said. “And they persisted. Now, we’re three years into this pandemic period, and we’re starting to see more adoption of technology and analytics. I think we’ll see more differentiation in terms of providers who are able to successfully do that, and successfully engage in care redesign.”

Without the appropriate level of staffing, home health providers haven’t necessarily capitalized off of increasing demand for care. At the same time, SNF referrals have climbed back. In January, referral levels were at 113% of what they were in 2019.

That’s not necessarily bad news for home health providers, however. And given the increasing prevalence of value-based care, providers will actually benefit from not having to take care of patients that aren’t fit for home health care.

“On the health system side, we’re starting to see, pre-referral, a better understanding of which patients are appropriate for home health, home care, hospice care, or a skilled nursing facility,” Hu said.

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