Increasing Savings in Today's Economy

By Thomas Gruber, President

Dear Friends:

We welcome 2011 with a sense of optimism as we see signs of improvement in the national economy.  As the recovery proceeds we are paying close attention to the growing national consensus and goal of providing quality home and community-based services to defer or reduce the need of institutionalization of our most vulnerable citizens; the aged, chronically and developmentally disabled populations. CareStar will continue to provide quality products and services to fulfill our part in achieving this national goal.

The healthcare legislation signed into law by President Obama in March, 2010 recognizes the desirability and cost-effectiveness of home and community-based care. This legislation funds a number of programs specifically designed to move individuals from skilled nursing facilities back into the community where they can resume independence. CareStar has taken a leadership role in two such programs initiated by the state of Ohio: Home Choice and Community Living Assistance.

The ever expanding outlay of public monies for governmental services is rightly a subject of great interest and scrutiny in America today since the demand for governmental services has generally exceeded the resources available to provide these services in recent years. As a private company that generates the bulk of its revenues through governmental contracting, CareStar takes seriously its responsibility to manage the funds entrusted to us in a responsible manner.

As an example, CareStar contracts with the Ohio Department of Job and Family Services to manage the Ohio Home Care Program. Working with our partners at ODJFS, CareStar has affected significant savings for taxpayers while providing effective case management to more than 13,000 Ohio Home Care Program (OHCP) medically fragile or disabled consumers. The result is an enhanced quality of life that enables these consumers to remain in their homes rather than a nursing facility.

The average cost of services for consumers of the OHCP since 2006 is plotted on the chart below. The increase in the Consumer Price Index for Medical expenditures (CPI-M) is displayed for that same time period. The chart depicts the growing savings gap between the average cost of services provided to OHCP consumers and the expected cost if service expenditures grew at the rate of the CPI-M. The monthly savings per consumer is about $330 by 2010. The cumulative savings for 2006-2010 are about $95 million and growing exponentially as the ongoing impact of the case management work continues and builds. It is estimated that this cumulative amount will double in 2011 if current trends continue. We have achieved these savings by working hard to manage and control costs and to eliminate duplicative services while steadfastly guarding the quality of care provided to the consumer.

Another element of the contract between Ohio and CareStar requires the company to manage the service providers for the consumers of the OHCP. In this role CareStar performs annual provider billing reviews. For the years 2008-2010 nearly $5.6 million of potential overpayments have been identified by these billing reviews for recovery by the State of Ohio.

As we move forward into the challenging days ahead we at CareStar remain committed to our purpose of honoring God through our work by providing exceptional business solutions that improve the communities we serve by combining quality and innovation. These examples serve as an illustration of that commitment.

Sincerely,


Thomas J. Gruber

President

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