As Home Health Lags, Hospice a Bright Spot for Brookdale

The growth of its hospice segment during the third quarter of 2018 was a bright spot for Brookdale Senior Living (NYSE: BKD), the largest owner and operator of senior living communities throughout the United States. The same can’t be said for the Brentwood, Tennessee-based company’s home health business, which continues to lag behind expectations.

Brookdale leadership discussed the up-and-down nature of its hospice and home health segments during a Tuesday conference call with investors.

“Our hospice business continues to grow strongly,” Executive Vice President and CFO Steven Swain said during the call.


Operating in nearly every U.S. state, Brookdale is a provider of independent living, assisted living, dementia-care communities and continuing care retirement communities (CCRCs). Through its ancillary services program, the company also is one of the largest U.S. providers of home health, hospice and outpatient therapy services.

Brookdale’s total revenue for the third quarter of 2018 was $1.12 billion, down roughly 5% compared to the $1.18 billion it took in during the prior year’s quarter. The decrease reflects the disposal of communities through sales and lease terminations, as well as lower occupancy, which was experienced industry wide, Swain said.

Revenue for Brookdale’s ancillary services segment was $108.3 million for the third quarter of 2018, about a 2% drop compared to the third quarter of 2017.


At about $81.7 million, Brookdale’s home health business contributed the most to its total Q3 2018 ancillary services segment resident fee revenue. Home health operations brought in about $87.3 million during the third quarter of last year, however.

In general, lower Medicare reimbursement rates have affected Brookdale’s home health business, according to company leadership. CMS recently finalized a 2.2% rate increase to Medicare home health payments in 2019 estimated at $420 million.

Home health payment reform will also likely make an impact, particular in regard to therapy services.

“With a potential 2020 CMS Patient-Driven Grouping Model changes in mind, we are shifting our therapy case mix towards normalized industry trends, gradually to address proposed changes over the next several years,” Swain said. “From an expense perspective, we mitigated the impact of lower revenue by consolidating several agencies and reducing [general and administrative expenses].”

While resident fee revenue for Brookdale’s home health operations has dropped in each of the past four quarters, hospice revenue has steadily trended upward. Hospice resident fee revenue for the third quarter of 2018 checked in at about $20.6 million, a more than 15% jump compared to the same period a year ago.

Since taking the reins as CEO of Brookdale last February, Cindy Baier has touted the value of hospice to the overall organization, which is in the midst of a turnaround effort focused on its huge senior housing portfolio. Baier has been leading an effort to shrink the company to a more manageable size, monetize some of its valuable owned real estate and re-structure its portfolio of leased properties.

Brookdale’s stock was up 0.65% nearing close of market Tuesday, trading at $9.26.

Written by Robert Holly

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