The home healthcare industry got rocked earlier this month by news that three of its larger, publicly traded members could face criminal prosecutions on allegations of “gaming” Medicare.
They might want to take a lesson from the for-profit education sector, which has also faced some heat.
That’s some advice from Vince Martin, a contributor to the Seeking Alpha investor website.
“First, when the government has you in its sights, it is very difficult to wriggle free,” Martin recently wrote.
For-profit colleges, Martin said, have faced subpoenas, hearings, potential subsidy cuts and investigations from all three branches of the government in recent years. A number of state attorneys general from both parties have looked into the for-profit college industry, and a multistate class action lawsuit could be coming.
Like home healthcare providers who get reimbursement from Medicare and other programs, for-profit colleges receive roughly 90% of their revenue through the federal government, often in the form of Pell grants and subsidized loans, Martin noted.
“Does anyone doubt that home healthcare companies—or any Medicare provider for that matter—will not face the same pressures from the same variety of sources?” Martin asked.
Martin was referring to the hit that stocks of Amedisys Inc. of Baton Rouge, La., Atlanta-based Gentiva Health Services Inc. and LHC Group Inc. of Lafayette, La.—all home healthcare providers—took earlier this month. Their share prices tumbled after U.S. Senate investigators accused them of deliberately increasing their visits to patients in order to get higher payments from Medicare, the federal insurance program for elderly Americans, in a report released by the Senate Finance Committee.
Lake Forest-based Apria Healthcare Group Inc., one of the largest home health providers, is now privately traded but reports some financial results for the benefit of bondholders.
Sens. Max Baucus, D-Mont., and Charles Grassley, R-Iowa, said in separate statements that the situation needed to change.
Grassley said that the government had to fix policies that let “Medicare money flow down the drain.”
Baucus said that elderly Medicare patients “should not be used as pawns to increase a company’s profits. Especially in these tough economic times, taxpayers simply cannot afford for their dollars to be wasted on unnecessary care.”
Amedisys said it was “disappointed in the committee’s conclusion.”
The allegations against the home healthcare companies come as a 3.35% cut in their reimbursements is under consideration by the Centers for Medicare & Medicaid Services.
Botox Cosmetic
As it draws closer to Botox Cosmetic’s 10-year anniversary, Irvine-based Allergan Inc. released data from a study on how women’s perceptions about the drug have changed over the years.
The study showed that the number of women who considered talking to their doctors about injections of the wrinkle-smoother have grown from 1.3 million in 2002, the first year Botox Cosmetic was on the market, to 5.8 million in 2010. It also showed that the number of women who believed the drug was effective for treating frown lines increased from 21% in 2002 to 79% in 2010.
Some 11 million Botox Cosmetic treatments have been administered, according to Allergan.
The survey featured 43-year-old actress Courtney Thorne-Smith, the latest in a line of celebrity spokeswomen for Botox Cosmetic. Other Botox Cosmetic spokespeople have included Courteney Cox of Friends fame and former Miss America Vanessa L. Williams.
Allergan said its work with Thorne-Smith and HealthyWomen—a Red Bank, N.J.-based nonprofit that provides health information to women—is intended “to address pressing questions women have about medical aesthetic injectable treatments like Botox Cosmetic.”
Grubb & Ellis Buy
Santa Ana-based Grubb & Ellis Co.’s healthcare unit has made a big deal in the Southeast.
Grubb & Ellis Healthcare REIT II Inc. said it is spending $166.5 million to buy 10 nursing homes in Alabama, Georgia, Louisiana and Tennessee. The unit bought the buildings from 20 unidentified entities affiliated with Wellington Healthcare Services LP of Roswell, Ga., which has leases on the properties through 2026.
The nursing homes have nearly 460,000 square feet of space among them. Individually, they range in size from 20,000 to 82,000 square feet, with an average of 46,000.
Of the nursing homes, six are in Georgia, including two in Atlanta. The others are in Mobile, Ala.; Shreveport, La.; and Memphis and Millington, Tenn.
Grubb & Ellis Healthcare REIT said in a federal filing that it would use debt financing and borrowing from its credit lines to finance the buy.
Grubb’s healthcare unit buys hospitals, medical office buildings that house doctors, assisted-living facilities and nursing homes, and buildings that have medical-related tenants.
