Home Health & Hospice Week

Odyssey CEO resigns as earnings falter.

Is a Department of Justice investigation of Odyssey Health Care Inc. an isolated incident or the start of an industry-wide crackdown?
 
The DOJ's False Claims Act investigation of Dallas-based Odyssey covers claims submitted since Jan. 1, 2000. It focuses on patient admissions, patient retention and billing, Odyssey says in a release.
 
Odyssey has a record of serving fewer high-cost cancer patients than competitors, analysts told The New York Times.
 
The chain with 72 locations in 30 states also is facing a number of shareholder lawsuits, which were sparked by the company exceeding its per patient aggregate cap in a previous quarter. The suits charge Odyssey with admitting patients ineligible for the hospice benefit, providing below-standard care due to heavy workloads and other financial misdeeds (see Eli's HCW, Vol. XIII, No. 18, p. 143).
 
Odyssey says it is cooperating with the DOJ investigation, but maintains "it has a longstanding and ongoing employee training and regulatory compliance program, including a mechanism for employees to alert management anonymously of issues."
 
Heads roll: CEO and President David C. Gasmire has resigned after nine months in the post, and former CEO Richard R. Burnham will reassume the duties, the company says. Burnham is currently the chairman.
 
Odyssey expects to report lower-than-expected earnings of $0.24 per share for the quarter ended Sept. 30 due to "weak admissions and patient census in selected markets," it adds. Stock prices for the company plunged nearly 50 percent after this announcement. "Resignations and investigations tend to be warning signs," observes investment advisor The Motley Fool of the development.
 
The announcement also dragged down the stock prices of fellow hospice chains VITAS Healthcare Corp. (whose parent is Chemed Corp.) and VistaCare Inc. That sparked VITAS to announce it will be disclosing positive earnings developments on Oct. 25. "We did not anticipate" making an advance announcement, a VITAS spokesperson told Reuters. "We needed to calm the market."