Hospital, Home-Based Admissions Rise for Vitas Healthcare

Hospital and home-based admissions for Vitas Healthcare — the hospice business of Chemed Corporation (NYSE: CHE) — increased during the third quarter of 2018, while nursing home and assisted-living facility admissions declined.

Gains in hospital and home-based admissions largely overshadowed losses from the two other care settings, however, leading to sturdy Q3 financial results for Cincinnati-based Chemed and its hospice segment. Vitas is widely viewed as either the largest or second-largest hospice company in the United States.

“Vitas had a good third quarter, both financially and operationally,” CEO Nicholas Westfall said during a Tuesday conference call with investors.

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Vitas posted net patient revenue of $302 million for the quarter, an increase of 4.4% compared to same period a year ago.

Overall, Chemed generated Q3 revenue of $444 million, an increase of 8.2% over the third quarter of 2017. Roto-Rooter — a commercial and residential plumbing and drain cleaning services provider — represents Chemed’s other major business line.

A geographically weighted Medicare reimbursement rate increase of approximately 0.8%, along with a 7.8% increase to Vitas’ average daily census, factored into the hospice provider’s revenue gains, according to Chemed’s leadership. Growth was partially offset by an “acuity mix shift.”

Vitas’ admissions during the third quarter of 2018 totaled 16,403, up 2.5% from the Q3 of 2017.

Admissions generated from hospitals, which typically represent about half of Vitas’ admissions, increased nearly 2%. Home-based admissions, meanwhile, increased by more than 5%, reflective of older adults’ desires to age in place.

Vitas’ nursing home admissions declined 6.4% in the third quarter of 2018, with assisted-living facility admissions also dropping by 1.1%.

While overall admissions were up, average revenue per patient per day was down slightly, according to the company, coming in at $187.19 — down 0.8% from the prior year’s quarter.

Reimbursement for routine home care and high-acuity care averaged $163.58 and $744.16, respectively, during the most recent quarter. High-acuity days of care accounted for 4.1% of the total, 54 basis points less than the prior year’s quarter.

Vitas’ average length of stay in the third quarter of 2018 was 90 days. Median length of stay was 18 days.

Hospice duration metrics are important to monitor, Westfall said, because of their significance to the Centers for Medicare & Medicaid Services (CMS), the Medicare Payment Advisory Commission (MedPAC) and other government agencies.

“As we think about length of stay internally and forecasting, it’s, well, it’s been moderately increasing by a few days, to put it in perspective,” he said. “It’s still very much in line with the overall industry and the overall length of stay increase the industry’s experiencing, which I believe CMS, MedPAC and others encourage and like because it helps to indicate earlier access and earlier identification of hospice-appropriate patients into the benefit.”

MedPAC, in particular, is concerned about people staying in hospice for multiple years, Westfall said.

About one out of every 30,000 of Vitas’ admissions results in a three-year or longer length of stay, he said. Of those 30,000 admissions, about 15,000 or so typically pass away “in weeks or less.”

Written by Robert Holly

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