Amedisys Implements Aggressive Plan for Retention, Hospice Growth
Amedisys, Inc. (Nasdaq: AMED) is riding into the end of 2017 with a mission to grow its clinical and business development staff, as well as strengthen its stake in the hospice sector.
While the third quarter saw several challenges—both on a personal front, as well as with industrywide woes concerning the Centers for Medicaid and Medicare Services’ (CMS) home health groupings model (HHGM)—the Baton Rouge, Louisiana-based provider posted positive earnings results.
In a year-over-year analysis, net service revenue for the company increased $18.6 million to $380.2 million in the third quarter of 2017, compared to $361.6 million in the same quarter 2016. Meanwhile, earnings per diluted share for the quarter was 42 cents, compared to 34 cents in the same quarter last year.
‘An Aggressive Plan’
For its home health segment, same-store episodic admissions saw a growth of 3% for the quarter, according to Amedisys President and CEO Paul Kusserow.
While modest, the growth rate is an improvement compared to its standings in the beginning of the year, when the company saw a “significant deficit” in its home health business development staff. This handicap impacted the company’s ability to grow organically, according to Kusserow.
“We responded by launching an aggressive plan to increase hiring and reduce turnover,” Kusserow explained during the company’s third quarter earnings call.
This plan has certainly been put into motion, as the company rapidly grew its business development roster to a total of 770 full-time employees, up 29 full-time employees from the second quarter, and 59 full-time employees from the first quarter, according to Kusserow.
“Our home health business development vacancy rate has dropped from almost 9% in April of this year, to 1% in September,” he added.
This move was crucial in order for the company to see full productivity according to Brian Tanquilut, analyst with investment banking firm Jeffries.
“Without sales force fully staffed over the course of 2017, they haven’t been able to drive the growth they wanted to,” Tanquilut told Home Health Care News. “Now that they’re fully staffed with their business development team, the expectation is that they will be productive and they will drive growth for Amedisys next year.”
The company plans to use this same tactic in addressing two areas it will focus on heavily in 2018: Readmissions and clinician turnover, according to Kusserow.
In regards to clinician turnover, Amedisys filled more than 1,300 clinical roles across its segments in the third quarter, a “new quarterly high” for the company, Kusserow explained.
“We have also seen a 5% increase in visits per week, compared to January,” he said. “The productivity gains from our existing employees, combined with the new hires in the field have given us the clinical capacity needed to support our volume growth.”
Echoing industrywide sentiment, Kusserow was appreciative of CMS’ decision to not implement HHGM in its home health final rule for 2018.
“I’m especially proud of our 1,300 employees who took the time to send e-mail messages to their members of Congress about HHGM,” he said.
On the mergers and acquisitions (M&A) front, Amedisys is turning its attention to larger hospice assets and personal care tuck-ins, along with home health deals in select geographies, according to Kusserow.
This play into hospice is a logical move for Tanquilut.
“Hospice has been good growth area for a lot of providers and I think that it is a logical extension for home nursing providers to get into hospice, even though they’re very different businesses,” Tanquilut said. ” I think that Amedisys is rightfully looking at some segments of their sector where they can find growth.”
Amedisys’ hospice segment has experienced significant growth over the last few years, and is quantified by its current average daily census (ADC).
“To put this growth in perspective, our average daily census (ADC) for the quarter was just over 7,000 patients. Since the third quarter of 2014, our ADC has grown over 50%,” Kusserow said.
While HHGM may be out of the picture for now, the company still expects to take a hit under CMS’ final ruling.
“We anticipate the impact on our episodes in progress … will result in a reduction in revenue of approximately $1 million for the fourth quarter,” Amedysis CFO Scott Ginn said on the call. “The good news is that will be offset, to some extent, by the hospice rate increase, which will add a $1 million to Q4, and $1 million each quarter next year.”
Kusserow also addressed recent troubles the company faced earlier in the third quarter, namely its ZPIC audit concerning a Medicare contractor in Florida.
Currently, the company is still working through the appeals process, according to Kusserow.
“We want to emphasize that we disagree with the ZPIC auditor’s conclusions, particularly with the alleged error rate and their extrapolation methodology,” he said.
In conjunction with the audit, the company also announced the closure of four Florida home health care centers, the consolidation of another three home health centers and a restructuring plan in its home health segment.
Specifically, Amedisys will be closing its care centers in Clearwater, Fort Lauderdale, Broward and Delray Beach, Florida. Its Winter Haven care center will consolidate with its Lakeland location, and its Tampa and Brandenton care centers will consolidate with its Brandon/Riverview locations, according to Kendra Kimmons, vice president of marketing and communications for Amedisys.
This move was a focus towards improving efficiency, according to Ginn.
“We saw an opportunity to close some underperforming care centers and consolidate a few others in order to … ultimately better serve our patient’s needs,” he said.
He expects these actions to contribute a $4 million to $5 million of the overall anticipated EBITDA improvement in 2018
At the close of market Wednesday, the company’s stock was up 5.9%, hovering near $58.49 per share.
Written by Carlo Calma