By Stephen Tweed
You’ve worked hard this year to grow your home care business. If you are like the typical company, your revenue is probably up by 15 to 17%, your total revenue is just over $1,100,000, and your owners income and net profit was around $130,000. If you are above the median, your revenue and your personal income are higher.
What can you expect for 2013? Well, we’ve been watching the trends, and paying attention to the changes that are taking place that will affect owners of home care businesses. Here are the top five trends you can watch for next year.
1. Tax Increases
Not a big surprise here. The President and the Congress are in daily negotiations to come up with a plan to avoid the so called “fiscal cliff” of increased taxes and decreased spending. The President wants to solve the problem by taxing the rich. The Republican controlled congress wants to reduce spending.
For sure, you can expect to pay more taxes even if you are not a part of the 2% of Americans who earn more than $250,000 per year. First of all, there are 21 new taxes in the Patient Protection and Affordable Care Act and many of them go into effect next year. Things like pharmaceuticals, medical devices, and health insurance all have new taxes.
As I’ve watched this ongoing process of kicking the can down the road regarding taxes and spending, I keep reading some interesting articles that help us understand the bigger picture of the economics of our country.
I read a very interesting piece by a professor from the University of Georgia who tells a story to make the point about who pays for our government. He lays out clearly what happens when the rich are forced to pay a higher and higher portion of the total tax bill. Read this article.
Then speaker and author Tony Robbins gives us a real graphic picture of the problem of spending and taxing the rich. You’ve got to watch this video.
2. Increasing Competition
Since we designed and implemented the very first private duty industry benchmarking study in 2008, we have been watching the growth of competition and the number of companies providing home care services. We estimate that there are over 18,000 companies providing private pay, non-medical home care in the US. We know that there are 60 companies selling franchises with over 5,000 offices. We have data to show us that there are about 9,000 independent home care companies.
We also see that there are more Medicare Certified Home Health Agencies than ever before in the history of the Medicare program. According to the Centers for Medicare and Medicaid Services (CMS) at the end of 2011, there were 12,199 home health agencies. While we don’t know exactly how many of them also have private duty businesses, we do know that one of the biggest trends in our industry is for home health agencies to add private duty, or refocus on growing their existing private duty businesses.
3. Health Care Reform
The election of 2012 is over and President Obama will serve another term. That means that the implementation of health care reform will go forward. Here are the provisions that will go into effect in 2013:
- States must indicate HHS whether or not they will set up and operate insurance exchanges.
- Phasing in of federal subsidies for brand name prescription drugs for Medicare part D
- The threshold for the itemized deduction for unreimbursed medical expenses goes up from 7.5% of adjusted gross income to 10% of adjusted gross income;
- Limits the amount of contributions to a flexible spending account for medical expenses to $2,500 per year, increased annually by the cost of living adjustment.
- Imposes an excise tax of 2.3% on the sale of any taxable medical device.
- Creates the Consumer Operated and Oriented Plan (CO-OP) to foster the creation of non-profit, member-run health insurance companies.
- Extends authorization and funding for the Children’s Health Insurance Program (CHIP) through 2015 (current authorization is through 2013).
- Reduces Medicare Disproportionate Share Hospital (DSH) payments initially by 75% and subsequently increases payments based on the percent of the population uninsured and the amount of uncompensated care provided.
- Reduces states’ Medicaid Disproportionate Share Hospital (DSH) allotments and requires the Secretary to develop a methodology for distributing the DSH reductions.