LifeCare Solutions leaves California

Bid rates are ‘unsustainable,’ says company’s CEO
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Friday, July 7, 2017

PHOENIX – LifeCare Solutions has begun transitioning patients as it prepares to exit the California market, says company exec Robert Fahlman.

“Our No. 1 priority is our patients and we want to make sure we take care of them,” said Fahlman, CEO of parent company Preferred Homecare, which acquired LifeCare Solutions, primarily a respiratory provider, in 2011. “When they are successfully transitioned, we will have finalized our exit from California.”

LifeCare Solutions, which serves 30,000 patients through 13 locations in California, has laid off its sales staff and some intake staff, and stopped taking referrals.

The provider was never able to build the scale it needed to service its competitive bidding contracts, says Fahlman. In 2011, when it was acquired, LifeCare Solutions received nearly $3 million from Medicare for oxygen concentrators (E1390); by 2015, that number had dwindled to $283,000, according to the HME Databank.

“When you get rate reductions up to 40%, there’s only so much you can take out of your system before it becomes unsustainable,” he said. “(Competitive bidding) is going to affect access to quality care and the outcomes related to that lack of access of care.”

Provider Chris Rice has been getting numerous calls from LifeCare Solution’s patients, referrals sources and even some of its managed care plans.

“We have managed to take a fair amount of patients,” said Rice, CEO of Riverside, Calif.-based Diamond Respiratory Care. “There are some plans we are not in network with, so we are helping to redirect those.”

Exiting the California market will allow Preferred Homecare, which operates DME companies, pharmacies and ambulatory infusion sites, to concentrate on its remaining locations across the Western U.S.

“We are very strong in our remaining states, and we remain committed to those states,” he said. “We continue to make investments in those markets and we anticipate a strong future.”