‘We Are the Table’: The Future of Risk-Taking for Home Care Providers

The home-based care provider Care Advantage is at somewhat of an inflection point.

Last year, the private investment firm Searchlight Capital landed a majority stake in the company. With a greater access to capital, the company is determined to gain an even stronger footprint in the Mid-Atlantic U.S., and its recent acquisitions reflect that.

Overall, Care Advantage provides a mix of personal care support and skilled services through its over 40 locations in Virginia, Maryland, Washington, D.C., and Delaware.

Moving forward, the company has a lot of irons in the fire. Those include: its unique partnership with Anthem, which involves upside risk, but will likely involve downside risk in the future if everything goes as planned; a strategic growth plan that could eventually take the company outside of the Mid-Atlantic area; and further involvement in skilled home health.

Care Advantage CEO Tim Hanold has been at the helm for four years now and has heightened the company’s aspirations.

Hanold joined Home Health Care News for a conversation detailing those aspirations, including those mentioned above and others as well.

HHCN is pleased to share the recording and highlights of our HHCN+ TALKS conversation with Hanold. Read on to learn more about:

– The company’s accelerated growth plans for 2022

– How it has studied the areas it serves in order to guide its service diversification

– If Hanold sees the industry differently two years after the onset of COVID-19 in the U.S.

The below has been edited for length and clarity.

[00:00:00] Andrew Donlan: Welcome everyone to another edition of HHCN+ TALKS. I’m Andrew Donlan, editor of Home Health Care News. Today, I’m joined by Tim Hanold, the CEO of Care Advantage, which is an established – but also very much up-and-coming – home care provider in the Mid-Atlantic region. First of all, Tim, thank you so much for joining me. Let’s start with some background on yourself and Care Advantage.

[00:00:35] Tim Hanold: Andrew, thanks for having me. Thanks for having us. I appreciate it. For some quick background on myself, I was a part of SeniorBridge a number of years ago. We started a private-duty personal care company there in the metro New York area and grew quite a bit. We were eventually acquired by Humana (NYSE: HUM) and really became the first part of their platform of care in the home – “Humana at Home.” Obviously, that’s accelerated and morphed in a number of different ways over recent years. 

Four years ago, I came down to be a part of Care Advantage. When it comes to Care Advantage, we’re a home care company that serves in the Mid-Atlantic. We define that as Virginia, Maryland, Washington, D.C., and Delaware. About 80% of our volume is personal care with the remainder being our skilled home health division. Regarding the personal care, a little over 50% of the payer mix is private pay and the remainder is a mix of Medicaid and U.S. Department of Veterans Affairs (VA). We have a really sizable Medicaid presence in Virginia, as the largest agency-directed provider for the “EDCD” elder waiver here in the state.

[00:01:57] Donlan: Tim, you guys recently underwent some big organizational changes. You have the backing now of Searchlight Capital, which has changed things from a balance-sheet perspective. How has that made the organization different? How has that made your job different as the leader of Care Advantage?

[00:02:41] Hanold: Obviously, our growth plans have certainly been accelerated, to say the least, as we became part of Searchlight Capital at the end of 2021.

We put together a refreshed five-year value creation plan, and it’s been a great match. Beyond the healthy balance sheet, I’d say they’ve been terrific thought partners in viewing what is possible and widening the aperture, if you will, on what is next for our company. We’re tapping into a deeper level of data, refinement, insights and real precision with how we’re going about our work in a number of different ways, which is to be expected whenever you partner with someone like Searchlight.

[00:03:24] Donlan: With that backing, is there anything that you guys are working on that you weren’t last year?

[00:03:50] Hanold: It’s not necessarily that we weren’t doing it, but it’s just next-level precision and overall understanding of the business from insights around our caregiver utilization, which I know is important to us and all the listeners and viewers here. 

So just to understand how to really get into the details of that and see what are some of the micro-trends that are happening within our body of work, with our caregivers on the supply side of recruitment, retention and utilization. Because that’s really the underpinning of organic growth this year. It’s on the supply side.

Also, it’s just the way that we go about our investment thesis and evaluating our M&A opportunities, as it’s certainly getting broader and larger to the scope of what we want to accomplish. I can touch a little bit on that now. We plan to be highly acquisitive as you can imagine. We’ve already made three acquisitions over the past 90 days: one in Northern Virginia, one in Virginia Beach, one in Delaware, all in personal care. And we really have a nice, robust pipeline set through Q2 and Q4 of this year and beyond. And still, the fundamentals will be building out geographic density, which is still really important to us, as well as expanding our continuum of care in the home, most notably in skilled home health. You’ll see us be a little bit more assertive there.

[00:05:22] Donlan: That was going to be the next question. What are you looking for when acquiring a company these days?

[00:05:49] Hanold: We’re definitely being very intentional in our method through a number of different channels essentially, call it pipeline creation. There’s a lot of time, energy and resources that are going into it. Also, there are new components of our senior leadership team that we brought in that we’re really excited about, to focus and even hone in on our craft around M&A. I’d also say there’s more detail going into our overall integration plan.

We’re building out our current geography, but also, at expanding the said geographic region of the Mid-Atlantic, when it makes sense to us. Also, again, more so filling out the continuum of care. If you remember, a little bit over 80% of our mix is personal care and rounding out that with more of a skilled division, and possibly at some point, with palliative care and hospice.

[00:07:28] Donlan: So, do you see a time within the near-term future where you may not even be able to describe Care Advantage as Mid-Atlantic?

[00:07:48] Hanold: Yes, it’s how you define the near term. Whenever it comes to going into other geographies, you’re looking more at platforms and things of that nature. It’s something that’s definitely on our value-creation roadmap, but for the near term, certainly, what’s important to us is continuing to build out that geographic and operational density within our core markets at this juncture.

[00:08:15] Donlan: When did you guys decide that you wanted to diversify further with skilled home health? What was it that made you think that it was time to delve into those things and provide care across the continuum more than you were in the past?

[00:08:40] Hanold: It really starts with learnings in our backyard within Richmond, Virginia. For years, we’ve had a very healthy-sized skilled division here. And more and more, we got in tune with that continuum and managing the quality within the home from a longitudinal perspective on the long-term personal care side with a multitude of different payor sources. And also, then, how the interplay between that and our skilled division worked, we realized that we can control more of the quality in that way, which really prepares us for, at some point, value-based care and actually owning more of that risk proposition. Our aim is not to own every single thing that happens in the home, but to be really smart at the coordination around it and be able to impact, I’d say, the higher percentage of the activity of what happens within the home ecosystem.

[00:09:45] Donlan: Hopefully, we’re coming out of COVID. It seems, at the very least, we’re in a much better place. Now that it’s been nearly two years, how do you see the industry differently, if at all?

[00:10:47] Hanold: We’ve learned how to deal and work through even more scarcity. So it has certainly created, I believe, more direction and innovation around the supply side. Obviously, we’re all forecasting that and getting back to this rhythm of a normal, if there is a world like that, in terms of caregiver supply and the caregiver support consistency.

We’ve had a lot of learnings on how to endure a number of, I’d call them supply shocks, from the COVID environment for an array of different reasons. Omicron was unfortunately a great example of that in January, which was difficult. It’s how we essentially were able to operationalize during that scarcity.

Also, I think too, from an efficiency perspective, it’s leaning more on a virtual, remote presence. For example, for our clinical team, there’s really a hybrid approach of that virtual and in-person presence with our clients and families. It’s not swinging the pendulum too far to just rely on virtual interactions and things of that nature, though, because that human element is still so important.

I know that there’s a different landscape in terms of where people “office” now and what that looks like, so that’s also a new normal, not just for home care, but a hybrid approach across all industries. So, being able to continue something that we’ve really prided ourselves on – that really deep culture – how does that human interaction, that human “touch” continue when so many of our teams are really just much more remote at this juncture?

[00:13:07] Donlan: You brought up Omicron, and a lot of the home health providers even said on their earnings calls that there was a huge chunk of their workers who were on quarantine at any given time, and they lost a lot of admissions because of it. How were you guys able to get through that surge?

[00:13:33] Hanold: Those learnings are still relatively fresh and we’re essentially incorporating and working on the strategy around that. We certainly, like everyone else, went through a pretty significant volume crunch in a number of our branches. That was close to a 5% hairline cut on what would’ve been our typical volume.

Also, we were fortunate in that at the end of our year, we were really making up quite a bit of ground from over the last 12 months. Unfortunately, Omicron really stunted what was a really nice 90-day run for us. I’m happy to say that we got back to some normal levels and got that trend back through February and now into the beginning of March. So we’re forecasting that trend to continue in a positive direction. Certainly, you learn how to be efficient, making sure that the folks that need the most care are getting that care. You bank on the relationships you have with clients, families, the MCOs and others to work very hard at essentially keeping that continuity of care in an unprecedented type of scenario.

[00:15:13] Donlan: You mentioned earlier that you were hoping that the supply of caregivers at least normalizes a little bit. Why do you think that’s going to get better? Is there a timeframe where you think it might get a little bit better?

[00:15:30] Hanold: We’re seeing some of that progression now. I think there’s still some pent-up supply. I don’t think it’s a lot, but it was like sitting on the sidelines for an array of different reasons over the last two years. We’re getting a number of those inactive caregivers back in motion into the field.

But also, like everyone else, we experienced a number of caregivers who went on to other vocations or other parts of different industries. A lot of that too, especially when it comes to the Medicaid population and that reimbursement, is really following more generous hourly pay in other venues. From an ops perspective, we’ve really doubled down on our talent acquisition. We’ve not just dedicated senior leadership to that, but also really changed the composition of our talent acquisition team with higher investments on the caliber of experience to compete for talent in the market. I’m not just saying competing against home care, obviously, it’s competing against all the other array of different options in the marketplace.

Also, we talked about using more sophisticated tools and data insights because we have to be really razor sharp. One thing we certainly learned over the last couple of years is we have to be so good and buttoned up whenever it comes to our utilization of a tight caregiver supply. Because, the supply will probably modestly grow, but in regards to the demand and what the public will need, those are not matching up at a one-to-one ratio.

[00:17:22] Donlan: A lot of providers have thrown a lot of stuff at the wall when it comes to recruiting and retention strategies. Is there anything that you guys have utilized that has worked really well?

[00:17:47] Hanold: Sure. There’s a number of things that we’ve been certainly piloting and trying over the last number of years. Probably the most important thing that we are learning is that caregivers are motivated in a number of different ways. You really have to search for an array of very straightforward, simple engagement solutions. One example is naming “care heroes” and giving “care coins” to reward a job well done and consistency. That’s a virtual currency that can be cashed in for gift cards. I affectionately call it “caregiver candy crush.”

We’re also doing things of that nature for the family caregivers. We’re looking at different ways to tap into that same type of virtual support for those caregivers going into a case, coming off a case and things of that nature, because they’re also going through a lot. It’s a difficult, tiring job – both physically and emotionally.

There’s some others as well. I’ll just put them out there because I imagine most people are probably working with this: same-day pay; substantial referral buddy bonuses, sign-on bonuses; and more flexible schedules.

[00:19:22] Donlan: We have a pretty good question here from the audience: What technology partners are you guys looking for? Or are there certain partners that you’re looking for to take you guys to the next level?

[00:20:19] Hanold: From a broad perspective, whatever’s going to help us be smarter in the utilization of our caregivers. So, whether that’s within things like EVV, or things that can be bolted into our case management system. We’ve looked at a couple of different things.

Actually, a good example that’s not even in health care industry: utilizing artificial intelligence on when calls are coming in and which real-time prompts are the best for the highest execution on essentially serving that call immediately. That’s a bit old school in regards to the notion, but it’s really getting smarter around first call resolution because of just the number of calls.

What percentage of those calls can be essentially either taken care of right up front, or how can we be more proactive with outreach? Any way that we can get smarter in that regard. Again, going back to partners that can help us clearly understand the insights and the way that we’re tapping into our current caregiver supply, because we just have to be that much more efficient with what will be a sparse supply.

Then, data aggregators. Data is king. It’s really important.

[00:22:31] Donlan: What about providers across the healthcare continuum, is there any certain provider that may do something a little bit different than you do that is worth partnering with? Is there any model that you want to get into in terms of hospital at home or anything like that?

[00:22:49] Hanold: We’re always looking to be smart on the way those things are moving in the market. So, whatever learnings we can make to incorporate things ourselves, but then, it’s build buy, or partner. Especially for us, where we don’t have a seasoned footprint with, say, hospice – that is a natural partner point for us in those individual markets. Also too, holding each other to a higher level of accountability, them and us, for those said partners in those different markets on how we’re working together to really fulfill that landscape of care.

[00:23:41] Donlan: Let’s talk about the value-based care partnership that you guys have with Anthem. Can you, first, for the audience, give us a background on what you guys are doing with Anthem and what stage you’re at in that partnership?

[00:24:16] Hanold: Absolutely. I’ll say that it came on the tale of when the MA, at-home care stuff had been blessed by CMS, so one of those hurry-up-and-wait scenarios for home care providers. We do see some gradual uptick on that, but I think people are still getting comfortable with the ROI around it. But that, plus a number of other just entry points, I think got us into it.

On the innovation side with Anthem, just the idea of an API sharing data between a provider, which at times is a bit of a black box for them. You know, what does happen in home care companies and what’s the level of consistency? They really were very interested in getting to understand what those interactions and what that value look like. We’re a privately owned company but very quickly we were like, “Hey, we’re going to open up the door, be transparent and start sharing that data and information.”

We were working with the provider relations teams and the care coordination teams. It was a very long, consistent journey just get to the place where we were able to sit down and say, “Alright, let’s start by starting.” That was an important notion for us. Again, we’re looking to essentially innovate beyond where we’re at right now with the pay for performance, to get into a true value-based care model, which we’re going to be smart about. We need to be cautious around how much we put at risk versus the true upside scenario.

We sat down with Anthem, and talked about how we at least get this in motion. It was taking a look at something that they were really accustomed to. It’s almost like an analog to their primary care physician incentive plans, and then really just modeled into something in the home. The way that we adapted to that was putting together a scorecard based on quality results and outcome, and that was really determined based off of a baseline of our own performance and our peers’.

Those scorecard components included ER visits, inpatient hospitalizations admissions per thousand, interesting caregiver continuity and membership satisfaction scores, so kind of like an NPS. One part was very quantitative, through claims. The other part was also quantitative but was driven off of member surveys, so it was like how did we really make them feel? We didn’t over-engineer it. It was just the idea of getting started.

And most importantly, when it came to no downside, the pay for performance was essentially a mid-percentage upside benefit based upon just our total volume of attributed lives and our overall reimbursement with them. It wasn’t a big gainer, if you will, in regards to the bonus check at the end of the year, but it was certainly really important for us in regards to continuing to build the story around the credibility and the importance of care in the home.

Now we have widely circulated outcomes that we’re using with other MCOs and with our appeal with the General Assembly when they’re in budget season, which they’re in it right now. So we’re taking that information and saying, “Hey, this is real, validated claims data from Anthem, a very credible source.” It essentially helps push forward the narrative.

[00:28:27] Donlan: I think you touched on something important which is, a lot of this sort of work in the home care industry, they may not be big-time gains right now from a bottom-line perspective, but they’re really important in the grand scheme of things – both for the industry and for you as a provider. With the caveat that we are still early in this, what have you learned just from the beginning of the partnership?

[00:28:51] Hanold: Many learnings. It’s like the paradox of being patient and also being in a hurry. It’s like moving it along on a consistent basis, and that in itself really takes some time.

I’m also thinking about my experience when you’re initially sitting down, and I’m sure this is shared experiences some of the listeners here too, but the initial impression of an MCO is like, “All right, you should be really enthusiastic about this, we’re just going to find a way to send you more volume,” but it’s not the case when the unit economics are upside down.

It’s having a very authentic, straightforward view on what essentially is a micro P&L for their exact book of business. It’s like, here it is: this is what it looks like from the gross profit spread up top, to the real overhead, to some of the expected profitability, which I don’t think that expectation had been there in the past from MCOs. It was really like how you can prop that up with your Medicare, your private pay and these other lines. A point that we’ve been also leaning in on is that care in the home is going to be a game-changer for them. My goodness, if it had been personified at any point, it was over the last two years during COVID. It’s a really important moment for us. We definitely have their attention. What we’ve been leaning in on also is challenging them around the perception of what is acceptable access to care. What does an adequate fulfillment rate look like? Because we’re certainly not seeing that right now.

So, you know, budgeted versus forecasted hours, to what was actually delivered to their membership. In some states, it’s bad. There’s a 30% decline in services provided to the amount of services authorized for that membership, our said clients. You can look at this in a number of different states.

This decline in delivered services is a direct result of workforce crisis really, and when providers can’t hire a sufficient number of direct care employees, we have to reengineer the way that we’re thinking about, again, the economics of working together.

And so maybe the summary there is moving quickly but having patience, and really having crucial conversations with them. That’s probably the best way to put it.

[00:31:43] Donlan: Because you guys are able to start really showing this value that care in the home provides, are you seeing interest from any other types of partners, whether those be payers or just other people in the marketplace that want to get involved with what you’re doing?

[00:32:08] Hanold: Absolutely. That’s a reason to be really excited about the work over the last couple of years. Also, I hope that’s going to be the case, too, for other home care providers. It’s not just one company. Again, what was worth that pursuit over the last couple of years with Anthem is real, credible, validated outcomes that we can take to others and say, “This is real value creation.” It’s not something we just cooked up with our EMR or EVV.

We are starting to see much more open interest in these conversations. We are not just using this with MCOs, but also when it comes to our advocacy with the General Assembly.

[00:33:36] Donlan: For the rest of 2022, Tim, can you parse out just one thing that you really want to accomplish at Care Advantage and then one thing also you’d like to see maybe for the industry at large?

[00:33:52] Hanold: They may go hand in hand but very specifically, if I’m honing in to our value-creation plan, it’s just how important our M&A strategy is right out of the gates. That’s something that really needs to click along for it to build in the right way over a period of time. A great M&A strategy, including a great integration plan, that pulls that through, so that from the get-go, we’re having really strong positive results. That’s something that we’ve been obsessing over in a positive way.

In regards to just home care and the industry at large, it is being bold and essentially saying that we don’t just deserve a seat at the table, but in a lot of ways, maybe this is a little bit too much, but we are the table. We’re in the home. Who else has that just access to the member? We’ve talked about social determinants of health and all these things, but you don’t need a buzz term around it.

We’re living with their membership. We’re living with these people. Day to day, whether it’s four hours or eight hours per day, and depending on payer source and everything like that, but it’s there. We’re eyes on. More importantly, we’re building real trust and engagement, versus how difficult that is for any other health care vertical.

[00:35:14] Donlan: I’m already drooling at the headline of, “We are the table.” I think that’s all I got. Tim, thank you so much. Thank you to everyone that tuned in. Hope you guys enjoyed it. Thank you again, Tim, and I hope to talk to you soon.

[00:35:31] Hanold: Great. Thanks for having me.