Hospitals Have Changed Their Tune on Home Health Partnerships, LHC Chief Says

As hospitals begin to feel some impact from readmission penalties, partnerships with home health agencies are being embraced with unprecedented enthusiasm, said leaders of home health, hospice and comprehensive post-acute health care services provider LHC Group, Inc. (NASDAQ: LHCG), during a conference call Thursday.

Hospitals’ attention to partnerships with home health agencies is shifting in a “big way,” said Keith G. Myers, co-founder and CEO of LHC Group. He made his comments on a call with analysts after releasing fourth quarter 2014 earnings.

“I can’t remember the last time I’ve met with a hospital in the last year that didn’t say that home health was a core strategy going forward,” he said, noting that five years ago “it was hard to get an audience.”

To date, LHC Group has partnered with more than 60 hospitals and health systems nationwide, according to the company’s website.

“Over the years, we’ve had to really be aggressive in trying to get people to take meetings with us,” Myers said. Now, the activity has spiked.

In this last year, LHC has had to devote more personnel and planning to facilitate all the meetings that hospitals requested, Myers noted.

However, it can take health systems, especially nonprofit health systems, months or up to a year to agree to a joint venture.

“These conversations don’t happen overnight,” he said. “So the pipeline is greatly expanded, but it’s just hard to judge all the timing.”

The need for partnerships between hospitals and home health agencies is stronger than ever, said President and COO Donald D. Stelly. LHC has an even greater advantage because it can provide other services to prevent readmissions as well as home care, he explained.

“[The need] is one reason that we’re so bullish on the bilevel and trilevel of care strategy because hospitals have the need to eliminate that patient going back even if they’re not homebound,” he said. “And so our community-based service model kind of nuzzled up against traditional home health gives a solution to our partners.”

Overall, net service revenue for fiscal year 2014 was $733.6 million, the earnings report showed. In fiscal year 2015, net service revenue is expected to be in the range of $755 million to $775 million.

Written by Cassandra Dowell

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