Amedisys Sees Opportunity in Competitors’ Mergers

Amedisys (Nasdaq: AMED) sees an opportunity among major consolidation in the home health care industry, CEO Paul Kusserow said at the J.P. Morgan Healthcare Conference in San Francisco on Wednesday. With competitors Almost Family (Nasaq: AFAM) and LHC Group (Nasdaq: LHCG) announcing their merger at the end of 2017, and Humana (NYSE: HUM) acquiring a 40% stake in the home health and hospice division of Kindred Healthcare (NYSE: KND), Baton Rouge-based Amedisys sees the mega-deals as positive, rather than serious competitive threats.

“We think this provides us with an opportunity for open field running while they’re focusing on integration, while they’re focused on making those combined companies work,” he said.

Amedisys, which has 432 care centers in 35 states and lines of business in home health, hospice and personal care, is also on the lookout for a significant acquisition of its own in 2018, preferably one in hospice, which echoes remarks Kusserow made in June 2017. At that time, he expressed hope for doing a deal by the end of the year, with hospice a priority.

Such a deal did not occur, but this hasn’t affected the company’s search, he indicated. Amedisys is “constantly looking for good things,” but the competitive market for deals has been a hindrance, Kusserow said.

“M&A has been hard in the sense that while we have an incredible war chest in terms of money, in terms of credit lines, in terms of what we can do, we haven’t been able to put together some of the larger deals,” he elaborated.  

Kusserow also touted Amedisys’ focus on quality, noting that 88% of its locations are now at four stars or higher. It also benefits the workforce, which he described as the company’s asset. Amedisys’ turnover for full-time employers—a hot-button issue in the home care field—is at about 18%, he said.

“If we focus on quality, we tend to attract great people, and if we do the right things for these people, it’s very important they become more and more productive,” Kusserow said.

Beyond Amedisys’ operations, Kusserow also touched on the Home Health Groupings Model (HHGM), a proposed payment system overhaul that was eventually cut from the final rule for the home health care prospective payment system (PPS) 2018 update by the Centers for Medicare & Medicaid Services (CMS) and had caused consternation in the industry. Amedisys is actively engaging with CMS in discussions on payment reform, Kusserow said.

“We’re much more comfortable going back to the table [with CMS],” he said. “We do think there will be a new rule at some point, but we now have a good understanding of what to think through with CMS. We’re much more optimistic.”

Written by Maggie Flynn

Maggie Flynn on Linkedin
Maggie Flynn
Business reporter at Aging Media Network
When she's not working, Maggie enjoys running, reading, writing and sports, in no particular order. Favorite things include murder mysteries, Lake Michigan and the Pittsburgh Penguins.

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