Home Health & Hospice Week

 Gentiva's revenues are up while Amediss' are down for this quarter

Medicare cuts are taking their bites out of big and small providers alike, judging from recent earnings reports from two home health powerhouses.

Amedisys Inc. said Aug. 12 the so-called 15 percent reduction to home health agency rates last October cuts 5 percent from its payments, and the elimination of the 10 percent rural add-on in April shaves off another 3 percent.

Home health giant Gentiva Health Services Inc. mentioned in its Aug. 5 conference call that Medicare rates are skimpier than they used to be. "We're operating under comparatively lower Medicare reimbursement," Gentiva CEO Ron Malone pointed out.

Both companies saw lower profits in their most recent quarters, but Gentiva's had relatively little to do with Medicare rates, it says.

Melville, NY-based Gentiva recorded net income of $5.2 million on revenues of $208.4 million for the quarter ended June 29.

Last year it made a staggering $151.3 million profit on revenues of $195.6 million during the same time period, but most of that came from the company's sale of its specialty pharmaceutical business to Accredo. Disregarding the sales-related items, Gentiva actually recorded a $33.7 million loss for the year-ago quarter, it says.

Gentiva touted its revenue growth in all payor categories - commercial insurance, Medicare, Medicaid and other government. But commercial insurance revenues grew the most at 9 percent.

Gentiva seems to be making progress on matters with the HHS Office of Inspector Gen-eral's investigation of its cost reports, including sales and marketing costs (see pdf of Eli's HCW, Vol. XII, No. 20, p. 159). The OIG subpoenaed documents from Gentiva back in April.

"The government has preliminarily agreed to narrow the scope of documents to be produced regarding cost report issues to a time period between Jan. 1, 1998, and Sept. 30, 2000," Malone explained. Gentiva continues to cooperate with the government on the issue, it says.

While Gentiva saw its commercial insurance business grow, Amedisys' private insurance business declined in the quarter ended June 30, the Baton Rouge, LA-based company says. That's because Amedisys extricated itself from low-paying insurance contracts.

That move combined with the Medicare payment reductions led to Amedisys' slightly lower revenues for the quarter compared to last year: $32.2 million versus $32.9 million. The regional com-pany's profits also sagged, from $1.7 million a year ago to $1.5 million in the most recent quarter.

Still, the company easily beat analysts' expectations and the company's stock, which had been trading at well under $7 most of the summer, reached $8.10 at press time. Amedisys also increased Medicare admissions 8 percent in the quarter.

The company made two home care acquisitions recently. Amedisys purchased two HHAs trading under the name Metro Home Health for $6 million in cash, $1 million in a three-year note subject to performance requirements, and 163,000 shares of Amedisys common stock, subject to a one-year restriction on sales.

Amedisys also made a smaller acquisition July 1, purchasing a Fort Smith, AK HHA from Van Buren H.M.A. Inc. The acquisition is the company's first Arkansas location and complements its holdings in eastern Oklahoma, it says.