The Federal Reserve has decided to allow one of their emergency lending facilities to expire and to trim two others. These decisions are a clear sign that the Fed believes improving financial markets will allow them to begin winding down their unprecedented intervention in the market. The Fed also decided to refrain from pumping more money into the economy, providing further indication of their confidence in the recent signs of economic recovery.

President Obama’s 2010 budget proposal for home health agencies (HHA) calls for a reduction in Medicare payments of $13.16 billion spanning 5 years.  There will almost certainly be increased government regulation of Medicare home health care, resulting in decreasing margins, but the final cuts to Medicare reimbursement will not be as drastic as the ones proposed by the White House. The malaise currently affecting mergers and acquisitions as a whole has spread to the home health care M&A market. 2009 Q1 M&A activity in the home health industry is 30% lower than Q1 2008 and 22% lower than Q4 2008. As the economy picks up speed and and financial markets continue to stabilize M&A activity will follow suit.