The homecare industry has generally been highly profitable for some owners. Providers welcome this profitability and the resulting viability that it has brought to the industry. Private equity groups have become frequent purchasers of homecare providers, a sure sign of profitability. At the same time, the environment for the provision of services of all types has become difficult and perhaps even dangerous for providers. The consequences for violations of regulatory requirements have never been higher!
Business/referral arrangements have been a key focus of recent enforcement actions. It is fair to say that providers dare not enter into business arrangements without knowledgeable advice concerning applicable requirements that must be met. Such advice should not just be an explanation of what providers cannot do. Rather, the goal should be to assist providers to meet their goals in business relationships without violating the law. In other words, there is almost always more than one way to skin the proverbial cat! In many, if not all, instances, the cost of appropriate advice will be less than the value of the relationships formed that generate more business for providers.
So, what’s the problem? Why do providers continue to enter into business/referral relationships without meeting applicable requirements, thereby violating the law and putting themselves and their businesses at risk? Is it greed, pride, carelessness or a lack of sophistication in business matters? Why aren’t providers willing to spend money on compliant arrangements that will clearly produce more profit than the amount of legal fees incurred?
One explanation may be that the money to ensure compliance in new business arrangements isn’t in the budget, but does it really make sense to forego an unforeseen profitable business relationship and risk violations? The answer is a resounding, “No!”
Here are some examples:
A large ALF comes to a home health agency, hospice or private duty agency and says that they would like the home care provider to be the exclusive provider of services to its residents unless, of course, residents choose other providers. Among other requests, manag