Home health care firms capture big share of market as insurers cut coverage options.

U.S. home health care providers took in $6 billion in 1991, up 22 percent from 1990, and look for 20 percent annual growth rates in the coming years because hospitals are sending patients home earlier as Medicare, Medi-Cal and private insurers cut their coverage.

Insurers and the insured can save more than $1,000 per day in health care costs if chronically or terminally ill patients get their intravenous nutrition and medication at home, according to data received from various health care organizations and consultants. Some hospitals are providing home care so they can get some, rather than no, income from patients who get treated at home and avoid high hospital bills. Others have not changed.

The aging U.S. population and new advances in home health-care technology point to continued expansion in the field. These trends will keep thousands of Los Angeles hospital beds empty but hospital representatives say they lose less money on vacant beds than they do treating patients whose insurance coverage won't pay the bill for the room, medication and tests.

Graver forces also are at work.

"The growing number of AIDS cases in Los Angeles alone has caused a major rise in the number of dollars spent on home health care," said Bob Penner, vice president of Alternative Health Care Inc., Los Angeles. Alternative is one of the growing companies that delivers intravenous medication and nutrition to the chronically and terminally ill. Alternative and other home health care companies help patients and insurance companies keep health care costs down. Since they deliver the medication and nourishment at home, the patient or insurance company doesn't have to pay for the hospital room.

Patients with AIDS and cancer require frequent if not constant medication. Patients who have had most or all of their intestines removed because of cancer of other illnesses have to take intravenous nourishment. Twenty years ago, they had to be cared for in hospitals. But today, the improvements in delivery systems, small infusion pumps and power sources, let those who once had to stay in hospitals, move freely about their homes.

The trend is a boon to companies like Chatsworth-based Total Pharmaceutical Care Inc., founded in 1984. It sells intravenous medication and nourishment prescriptions and has nurses who deliver and administer the medication or nourishment in patients' homes.

Its sales increased by more than 50 percent to $31 million last year from $20 million in 1990, and analysts believe the company could ring up $55 million to $57 million in sales by the end of 1992.

"We think we can provide better care in intravenous medication and nutrition at home because patients don't run the risk of catching diseases from other patients," said Chief Financial Officer Michael Piraino.

Total Pharmaceutical Care has 27 locations nationwide (four in Los Angeles County) and plans to open another three in 1992. The home health care and intravenous nourishment and medication business is growing so fast that Piraino said there is room in Los Angeles market for other home health care providers.

Also vying in the Southland home-care market is Rancho Cucamonga-based Curaflex Infusion Services Inc., which has offices in Sherman Oaks, Rancho Cucamonga, Fountain Valley and San Francisco. Like Total Pharmaceutical Care and Alternative Health Care, Curaflex sells drugs and drug delivery systems and has a staff of nurses that administer the medications at the patient's home.

One of the nation's largest home health care providers, Lincolnshire, Ill.-based Caremark has Los Angeles County operations in Lancaster and Glendale. The subsidiary of Deerfield, Ill.-based Baxter International Inc., provides out-of-hospital care in the home and in clinical settings, mainly for intravenous medication and nutrition. In some cases, when someone with cancer or AIDS chooses to die at home, the home care provider will send a nurse to care for the patient at home.

Caremark captured $2.2 billion of the 1991 $8.9 billion alternate site health care products and services market, including home infusion therapy and dialysis treatment for patients with failing kidneys. Because of its national scope and the price advantages it gets through huge bulk purchases, Caremark is a major competitor in Los Angeles, say health care experts.

At this point, according to Bob Hold, president of the Los Angeles Medical Association, hospitals haven't fought the trend toward home health care. In some cases they even contract with the homecare providers for extended care after they have billed out the limits for hospital care on patients' policies.

"The medical association has never taken a stand for or against home care. We are concerned that the patients receive the appropriate level of care, whether in a convalescent home or in their own home," Hold said.

Tom Kelly, a KPMG Peat Marwick partner who analyzes the health care industry, paints a gloomy picture of the future for hospitals. "Fifty percent of Los Angeles' (hospital) beds are empty," Kelly said.

Several Los Angeles hospitals defy the trend. Kelly said Kaiser Permanente, a health maintenance organization, keeps its beds full. Cedars Sinai in Beverly Hills, Huntington Memorial Hospital in Pasadena, Torrance Memorial Medical Center and Little Company of Hospital in Torrance have better-than-average occupancies, Kelly said.

Still, for the industry in general, "the hospitals' (profit) margins have been eroded by the changes in health insurance coverage (to the point that they) have lost money on their operations for one or more of the past three years," he said. "The 15 percent of the patients that aren't price sensitive generate all of the profits for the hospitals."

Cedars-Sinai Medical Center has started a home health care division which provides home nursing care, primarily intravenous medication and nourishment. It sends nurses and technicians to the home to care for the chronically ill like their home care competitors who aren't in the hospital business.

Peggy Mueller, director of Cedar's home care division, said more of the terminally ill AIDS and cancer patients are choosing to die at home in a more comfortable environment. Along with AIDS and cancer patients, Cedars-Sinai like most other hospitals, treat chronically ill, from cancer patients, to AIDS patients.

"They still have the expenses for medication and for the nurses' visits but they don't have to pay for the room or worry about being put on a respirator (against their wishes) when their hearts and lungs can no longer function," Mueller said.