Home Health & Hospice Week

Staff quarantine siphons millions from companies’ bottom lines.

While multiple factors have boosted home health and hospice presence over the past year, many other issues have hampered providers’ ability to grow and thrive as expected, leading to mixed results from publicly traded companies.

LHC Group Inc. reported net income of $137.9 million on revenues of $2.06 billion for 2020. The company’s profit increased over 2019’s $113.9 million figure, but revenues were down slightly from $2.08 billion for the year. And although 2020 figures also include Encompass Health Corp.’s rehab facility business, the Birmingham, Alabama-based company reported $368.8 million in net income on revenues of $4.64 billion for 2020, while in 2019 it profited a higher $445.8 million on lower revenues of $4.60 billion.

Brookdale Senior Living reported that revenues for both its home health and hospice business lines were down — a whopping 24 percent for home health to $249.2 million, and a more minor 0.8 percent to $95.5 million for hospice. Brookdale is selling the majority of its home health and hospice business, it also announced (see related story, p. 68).

One of home health and hospice providers’ biggest challenges in 2020 was staffing. As COVID ebbs and flows, the nursing shortage continues to worsen. Home health and hospice agencies have to compete with hospitals and other settings for scarce personnel.

“We’ve seen a lot of our older nurses, [who] tend to gravitate toward home care for a variety of reasons, leave the market early because of COVID,” explained Encompass Home Health and Hospice CEO April Anthony in the company’s Jan. 27 earnings call. “And then we’ve seen a lot of our younger nurses, who are raising young families, leave the market because of some of the childcare challenges that have existed during the COVID period.”

Meanwhile, “hospitals are driving the cost up and … even though we are providing a different type of service, we are having to chase some of those acute care hospitals and what they are having to do to recruit nurses,” Anthony continued. Hospitals are “our competitors in the workforce,” she concluded.

Changes to therapist compensation made in May 2020 are helping mitigate the nurse compensation cost increase, noted Encompass Health CFO Doug Coltharp in the call.

LHC’s voluntary turnover returned to 17 percent in the fourth quarter of 2020, according to LHC Group President Josh Proffitt. Amedisys put its voluntary turnover at 18.3 percent for the year, Amedisys CFO Scott Ginn revealed in the Lafayette, Louisiana-based chain’s Feb. 25 earnings call.

“We’re just people. We have no real assets,” Amedisys CEO Paul Kusserow pointed out in the call. “And therefore, the assets are our people, and we have to have incredible understanding, particularly when there is more burnout and there are shortages of clinicians.”

Other factors that home health and hospice companies say negatively impacted their earnings in 2020 include:

• Referral volume. Home health companies that depended heavily on hospital referrals, particularly for elective procedures, saw a big hit. And hospice companies that received referrals from and served a large portion of patients in skilled nursing, assisted living, and other facilities endured a double whammy. “Not only were occupancy levels down, VITAS employees weren’t allowed on sites for weeks time in Florida,” pointed out VITAS Healthcare Corp. CFO David Williams in the company’s earnings call.
• Staff quarantines. Exacerbating the staffing shortage is required quarantine time for workers, several companies noted. As COVID surges, so does quarantining for employees. Amedisys peaked in December with about 6 percent of its staff out on quarantine, noted COO Chris Gerard in the call. LHC saw a high of about 4 percent, CFO Dale Gerard Mackel related in the company’s Feb. 27 earnings call.
• COVID costs. Increased expenses due to COVID, for personal protective equipment, supplies, and more, add up, the publicly traded companies acknowledged. For example, Amedisys spent $14.4 million on PPE in 2020, Ginn noted in the call. Quarantine pay cost Amedisys another $4.1 million in 2020, he said.
• LUPAs. Low utilization payment adjustments, which were already an increased threat under the Patient-Driven Groupings Model that took effect in January 2020, became even more troubling in the pandemic. Companies reported reaching LUPA peaks in the low to mid-teens for certain time periods at the beginning of COVID-19. Those figures have come down but are still subject to COVID-sparked fluctuation. For example, LHC reported an average LUPA rate of 9.5 percent in the second quarter of 2020. That dipped to 8.7 percent in the third quarter, but went back up to 8.9 percent in the fourth quarter, according to supplemental financial information LHC released with its earnings report.