Brookdale Sees ‘Recovery’ in Home Health, Looks to Grow

The nation’s largest senior living provider says its home health and hospice businesses have bounced back—and there are plans to grow both businesses in the near future.

In fact, the second quarter of 2016 saw “the beginnings of a recovery in [Brookdale Senior Living’s] ancillary business,” Brookdale Senior Living (NYSE: BKD) CEO Andy Smith said in a press release detailing the company’s most recent earnings.

Last year, Brookdale was the sixth largest home health provider in the country, with 1.22% of national market share. Growth of the company’s ancillary services segment has struggled for some time, due in part to licensure issues in the state of California.

But lately, Brookdale—which operates about 1,100 senior living communities nationwide—appears to be righting its home health and hospice ship.

“We continue to produce revenue growth in both hospice and home health episodes, with second-quarter 2016 revenue increasing by 6.2% year-over-year,” Brookdale CFO Cindy Baier said during the company’s second-quarter earnings call on Tuesday.

Specifically, Brookdale’s second-quarter 2016 ancillary services segment revenue totaled $123.3 million, which is $7.2 million higher than the segment’s revenue in the second quarter of 2015.

The revenue boost can be attributed primarily to an increase in home health and hospice average census, as well as the introduction of the company’s home health and hospice services to additional units, according to a Brookdale press release.

Additionally, Brookdale’s ancillary services operating income for the second quarter of 2016 totaled $19 million, which is 7.4% higher than the operating income recorded during the second quarter of 2015.

“We are pleased with the progress we have made in growing this business, and focus on labor productivity and labor management disciplines,” Baier said.

In the fourth quarter of 2015, Brookdale had issues controlling labor, which troubled the company’s ancillary services business, Baier explained. She credited Brookdale’s president of healthcare services for executing the turnaround.

“Anthony Mollica and his team have done a great job of really controlling labor,” Baier said.

Brookdale is also actively exiting markets in outpatient therapy as it tries to grow its home health and hospice businesses, Baier explained—particularly in California, where licensure laws have long prevented the provider from expanding its home health and hospice reach. 

“We have now obtained a good number of the required regulatory permits for California, and [we] will work to expand that business,” she said. “We project the expansion into our communities with these new licenses represents approximately $5 million of potential annual revenue over the next 12 months or so.”

Written by Mary Kate Nelson