Why HealthSouth is Taking the Encompass Name

After discovering that key audiences do not understand the link between HealthSouth (NYSE: HLS) and Encompass Home Health and Hospice since the two merged in 2014, the company has decided to take a single name.

HealthSouth, one of the nation’s largest providers of post-acute care services, will rebrand as Encompass Health Corporation on January 2, 2018. The home health division of the brand, Encompass Home Health and Hospice, will also fall under the new name, executives announced this week.

HealthSouth is the largest owner and operator of inpatient rehabilitation facilities, with 123 IRFs in place as of March 31, 2017. Its 193 home health locations give it the ranking of fourth largest provider of Medicare-certified skilled home health services nationally.

The move comes after research revealed there was little brand recognition and confusion over the link between the two names for the inpatient care side of the business and the home-based services division.

“Our research suggests that our outside constituencies have not consistently perceived the link between our inpatient and home-based segments,” HealthSouth President and CEO Mark Tarr said on a conference call to discuss the announcement Tuesday. “These considerations contributed to the conclusion that a single, strong brand would more effectively achieve our business goals.”

The lack of recognition came as no surprise, because the company had not prioritized marketing since HealthSouth acquired Encompass, Tarr noted.

Market Moves

The rebranding is also reflective of market changes in the post-acute care space, as health care steadily moves toward integrated delivery payment models, value-based purchasing and site neutrality, Tarr said.

Operating under one name represents the brand’s business strategy to coordinate care across the inpatient and home settings, Tarr noted.

HealthSouth conducted research across multiple audiences—acute care leaders, physicians, case managers, patients, caregivers, the investment community and HealthSouth/Encompass employees—to understand how the business is perceived and what these audiences are seeking from post-acute care providers.

Upon analyzing the research findings, HealthSouth executives found that maintaining two separate brands was limiting the awareness and understanding of the business with key clients.

Though the HealthSouth and Encompass Home Health and Hospice brands are being cemented as one, integrated corporation leadership will stay the same—Mark Tarr will serve as president and CEO of Encompass Health Corporation; Barb Jacobsmeyer will continue to lead operations for the inpatient rehabilitation hospital segment; and April Anthony will continue to lead the home health and hospice segment of the business.

The rebrand is expected to cost between $25 million and $30 million, said Doug Coltharp, HealthSouth executive vice president and CFO. These costs will come from managing and executing the conversion of branded assets, executing a plan to engage stakeholders and implementing a targeted marketing plan to expand awareness of the Encompass Health brand.

In addition to the name change, the brand’s ticker symbol will change from “HLS” to “EHC,” effective January 2, 2018. The full rollout of the Encompass Health Corporation brand across the franchise will be gradual, and is expected to be complete by the end of 2019.

HealthSouth shares were down 1.96% as the market closed on Tuesday.

Written by Elizabeth Jakaitis

Elizabeth Jakaitis