PDGM ‘Not as Difficult as It Was Cracked Up to Be’: Longtime Hospice Provider Enters Home Health Market

To borrow from “A Tale of Two Cities,” it’s the best of times and the worst of times for a provider to be entering into the home health space.

On one hand, COVID-19 — and the business and clinical complications that come with it — pose unprecedented day-to-day challenges. As the biggest payment overhaul in two decades, the Patient-Driven Groupings Model (PDGM) presents its own nuanced hurdles as well. 

Yet on the other hand, more patients and families are looking to be treated in the safety of their own homes than ever. And even before COVID-19, the U.S.’s aging population and the cost-saving ability of home-based care were providing tailwinds for providers of all shapes and sizes.


Hospice by the Bay — a longtime provider of hospice care in San Francisco — is currently learning about that duality firsthand. Three years ago, it tentatively began exploring home health in an effort to eventually establish a continuum of care within its network, effectively meeting patients earlier on in their care journey.

“We decided many years ago that we wanted to expand the way that we were thinking about delivering care at home, and we wanted that to include home health care,” Hospice by the Bay CEO Kitty Whitaker told Home Health Care News. “We felt that we were in a position to be able to do this, because we’ve been delivering care in the home for about 45 years.”

Founded in 1975, Hospice by the Bay was the first hospice provider in California and the second in the entire country. It has a total census of around 1,000, with its home health arm accounting for just about 300 patients. Along with home health and hospice, the agency also provides palliative care and bereavement services.

Hospice by the Bay’s entrance to home health was deliberate, but it was meant to be taken slowly. Once two agencies within its footprint were in the market to be acquired, however, things began moving faster. First came InCare Home Health in October 2017, then Healing at Home a year later.

With those acquisitions, Hospice by the Bay brought on advising home health management and more staff. All of a sudden, Hospice by the Bay was as much a home health operator as it was a hospice provider.

Building a one-stop shop

The swift movement on home health — and the overall vision — has ended up paying dividends. Since May, Hospice by the Bay’s home health census has increased by 25%.

In addition to its entrance into home health, Hospice by the Bay is also anticipating tailwinds from other post-acute care trends: explosive growth in Medicare Advantage (MA) and rising demand for palliative care among them.

“We’ve been pretty deliberate in our strategic initiatives,” Whitaker said. “We’ve made intentional, strategic decisions that we think [align us] with the future of health care. … We’re having to work more with the Medicare Advantage programs. And they will be looking to work with organizations like ours that have different service lines that are a one-stop shop for them. And we have deliberately really tried to set ourselves up to be ready for that.”

Aiming at being on the frontier of the future of health care started with home health, but it didn’t end there. 

Pairing palliative care with its home health and hospice service lines makes sense from a clinical standpoint, Whitaker said. At this point, it’s more about waiting for the right payment models that reward good palliative care to take shape.

“The Medicare Advantage programs — and private insurance in general — have shown a real interest in palliative care, whereas Medicare to some degree has kind of sat on its hands,” Hospice by the Bay CFO Denis Viscek told HHCN. “But I think the private insurance and Medicare Advantage programs see it as a real valuable benefit to their patients and beneficiaries.”

Eventually, Viscek believes that palliative care could greatly outpace the hospice market in the U.S., which he told HHCN sister site Hospice News in December.

Palliative care in the United States has been steadily increasing this century, growing by 178% in hospitals from 2000 to 2016, according to the 2018 Palliative Care Growth Snapshot issued by the Center to Advance Palliative Care (CAPC).

Community-based palliative care is becoming more prevalent as well, especially since these types of services became reimbursable through MA plans. That provides an opportunity for agencies like Hospice by the Bay to step in.

More than 60 MA plans across the country are offering in-home palliative care as a supplemental benefit in 2020.

The challenges of home health

While COVID-19 has been a challenge, it has also clearly added interest in Hospice by the Bay’s home health business.

But the company didn’t skate by without any help. In order to keep all of its staff on board, which it did, Hospice by the Bay applied — and received — upwards of $5 million in Paycheck Protection Program (PPP) money, according to publicly available data from the Small Business Administration (SBA). 

And home health’s boogeyman — PDGM — was daunting in theory, but not in practice.

“PDGM was not as difficult as it was cracked up to be,” Viscek said. “It was certainly a change. But we weathered that pretty well. And one reason we weathered it pretty well is that we were not driven by therapy before.”

Instead, for a longtime hospice provider, the main challenge was more of a mindset-related one. It wasn’t about just learning PDGM, but also embracing the thin margins that come with home health, generally.

“We had to learn right away with PDGM,” Whitaker said. “I also think that you need to really look at this service line as one where you’re not going to have huge margins, and you need to be okay with that. You really need to look at it as being part of your system of care.”

Because home health margins are thin, the company is investing in areas it never has before, like intensive, technology-driven data tracking.

It’s currently building out its data plans through software company Epic’s technology.

“There’s really two parts to the data,” Viscek said. “One is the metrics necessary to manage the business efficiently. We’re ahead of that game — we started that process six or eight months ago. … The second is the data that we need to give to payer sources on why to choose us and why contract with us. And we’ve managed to get that kicked off recently.”

The only thing holding Hospice by the Bay back from it’s home health destiny now is Hospice by the Bay — its name, that is. 

“Taking hospice out of our name will allow us to better attract referral sources that really understand that we’re an organization that has these different systems of care that we can deliver at home,” Whitaker said.

A name change is underway, but for now, it’s secret.