Executives from LHC Group (Nasdaq: LHCG) and Addus HomeCare Corporation (Nasdaq: ADUS) highlighted the growth of their respective companies on Wednesday, while also providing updates on key acquisitions and prospective partnerships with payer sources.
Keith Myers, chairman and CEO of LHC Group, and Dirk Allison, president and CEO of Addus, provided insight into their companies’ inner workings during separate presentations at the Baird 2018 Global Healthcare Conference in New York City.
Myers kicked off his presentation by giving a brief update on the continued integration of Almost Family’s operations, which he referred to as “a match made in heaven.” Lafayette, Louisiana-based LHC Group, traditionally a home health provider, and Almost Family, mostly a personal care services provider, announced plans in November 2017 to merge in an all-stock transaction with an implied valued of $2.4 billion.
The deal was officially finalized in April.
“We had great cultural alignment between the two organizations,” Myers said.
In general, LHC Group has seen strong growth rates in the past, with Almost Family reporting less-than-consistent results. Improving the growth of Almost Family’s operation to more closely match LHC Group’s standards will be a point of focus moving toward 2020, according to Myers, who said the companies are finished with the initial phase of integration.
Next year will be largely dedicated to field integration, he said, with the goal of eliminating the difference between legacy LHC Group and Almost Family operations by 2020.
Addus has also made substantial progress toward the integration of its recent acquisitions of Arcadia and Ambercare. The Frisco, Texas-based company has taken a disciplined approach to integration of those two businesses and expects to wrap up the bulk those efforts by the end of this year or during the first quarter of 2019.
Addus acquired Arcadia Home Care & Staffing, a Southfield, Michigan-based in-home care services provider, for a purchase price of $18.5 million in April. Among its strategic benefits, the deal brought Addus into the new states of Florida and Wisconsin.
Addus finalized its $40 million deal for Ambercare, which provides personal care, hospice and home health services throughout New Mexico, in May.
Moving forward, Addus hope to leverage another $20 million to $50 million to acquire additional hospice businesses, in turn increasing the company’s overall offerings.
“Acquisitions [can] make me nervous, too,” Allison said. “The more work you do before you close, the better the work will be.”
SNFs and payer partnerships
In addition to touching on growth, Myers also highlighted some findings from a LHC Group pilot programs related to shifting skilled nursing facility (SNF) patients to home-based care settings. In certain cases, LHC Group has proven that it’s able to move up to 50% of a SNF’s patient population into a home setting for savings of up to $3,000 per patient, according to Myers.
One of LHC Group’s pilot programs of that nature was with Ochsner Health System, he said.
In addition to potential cost savings, the pilots also show that patient satisfaction scores go up when patients are transitioned from SNFs to home settings, according to Myers. Re-hospitalization rates have also been found to be lower, possibly due to a greater success in risk-stratifying patients and deploying resources where needed.
“It’s really rare you find somebody in an inpatient setting that doesn’t want to go home,” Myers said, noting that the ability to transition patients from SNFs to home settings may present opportunities to work with managed care partners in the future.
Similarly, Addus is also “visiting all the major Medicare Advantage players” about the value of personal care, Allison said.
Wary of PDGM behavioral adjustments
On a high level, conditions have never been more favorable for the home health industry, according to Myers. In part, that favorable landscape can be attributed to the industry’s strong lobbying efforts, he said.
“Our lobbying efforts in Washington are as strong as they’ve ever been,” Myers said. “We have a seat at the table.”
Despite its position, LHC Group and the industry overall does have some regulatory issues, he said, mainly with the implementation of the Patient-Driven Groupings Model (PDGM). Specifically, LHC Group is concerned with the behavioral adjustments created by the Centers for Medicare & Medicaid Services (CMS) in the proposed model.
Instead of assumed behavioral changes, LHC Group is pushing hard for observed behavioral changes that would be more gradually phased in, Myers said.
Written by Robert Holly