Home infusion growth hits the skids
Home infusion growth hits the skids
Slowed growth, continuing A/R problems
Don’t look for a return to the golden days of home infusion any time soon. At least that’s what respondents of the 1996 Health Industry Distributors Association’s (HIDA) Home Care Financial Performance Survey says.
After several years of ups and downs, 1995 saw revenue growth at or near an all-time high for many home infusion agencies. But respondents didn’t expect 1996 to be so kind, with forecasted revenue growth falling by 50% or more. (See chart, above.)
The bad news for the industry doesn’t end there, however. Combined with shrinking revenues, accounts receivable and resulting days outstanding continue to be a problem (See chart, above.) The average days outstanding for home infusion revenue is well above the home care industry average of 82 days, according to the survey.
Those figures come as no surprise to Mike Tortorici, RPh, MS, president of AlternaCare of America in Dayton, OH. He says that home infusion companies have historically had problems with accounts receivable due to their entrepreneurial nature.
"What happens sometimes is growth is rapid or exciting, and people don’t spend the necessary time monitoring their accounts receivable," he says. Tortorici recommends reviewing your receivable weekly, in addition to putting adequate resources into billing and collection rather than concentrating elsewhere.
"A lot of IV companies have put most of their money into clinical, and it’s a mater of re-educating them that billing and collecting are one of the most important functions of home infusion therapy. It’s blocking and tackling: doing the basics and doing them well."
He says the basics come down to more than providing high-quality services. Billing appropriately and collecting are just as important, particularly considering the lack of revenue from capitated sources. Among all firms with home infusion revenue, those firms with revenue from capitated sources were receiving just 4% of their revenue from capitated sources. However, if billing and collecting is a problem for your agency, pursuing capitated contracts could be a wise move for your agency.
[Editor’s note: For a copy of the 1996 HIDA Home Care Financial Performance Survey, contact HIDA, 66 Canal Center Plaza, Suite 520, Alexandria, VA 22314. Telephone: (703) 549-4432.]
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