The Patient-Driven Groupings Model (PDGM) will largely come and go, leaving ample growth opportunities in its wake for the market’s biggest home health providers. With that in mind, LHC Group Inc. (Nasdaq: LHCG), has its long-term sights set on landing more value-based payment agreements.
That’s according to CFO Joshua L. Proffitt, who discussed PDGM, LHC Group’s financial standing and other topics while presenting at the Stephens Nashville Investment Conference on Friday.
Like so many other companies, LHC Group is gearing up for the major transition that will take place once PDGM officially begins on Jan. 1. Many companies have begun implementing refined staffing strategies as a response to the payment overhaul’s changes to therapy utilization, while others have worked to beef up their coding capabilities.
One thing that may set LHC Group apart is that the company has decided to forgo implementing a staffing strategy.
Indeed, LHC Group has made no changes, Proffitt said, pointing out that the company has always worked to have employees operating at the tops of their licenses when delivering home health services. That means, for example, utilizing licensed practical nurses (LPNs) instead of registered nurses (RNs) when appropriate to deliver the same patient outcomes — or utilizing physical therapy assistants (PTAs) instead of physical therapists (PTs).
In a post-PDGM world, maximizing staff efficiencies and utilizing the right discipline mix will set the stage for value-based arrangements.
“Play this forward five or 10 years from now, PDGM will come and go, but we are looking at where LHC Group is going to be positioned five years from now and the value-based arena,” Proffitt said. “We are really learning from what we are modeling here and are going to be able to pull that through on value-based arrangements.”
Looking ahead, the Lafayette, Louisiana-based home health, hospice and personal care giant believes the next couple of years after PDGM will be a time for growth opportunity as well as disruption.
“For those of us who have been in the industry for a long time, we can look back at when other significant reimbursement changes have happened,” Proffitt said. “The three to five years following, there is not only market consolidation, but explosive growth. We’ve experienced that over our 25-plus-year history at [LHC Group]. PDGM will be a significant market disruptor.”
Throughout 2019, LHC Group completed or announced acquired annualized-revenue of at least $86.7 million, taking into account deals for 17 home health, eight hospice and two home- and community-based services locations.
In general, Proffitt’s comments fall in line with what previous M&A experts have told Home Health Care News.
So far, the M&A market has slowed due to PDGM but could pick up again once the industry has settled into the new reimbursement landscape.
“There are people that are a little more conservative waiting to see what happens,” Mike Dordick, president of McBee Associates, told HHCN. “The trend you may see, once it’s 2020, is that some of the bigger players may reengage and that the valuations may change. Right now, it’s very ‘wait and see,’ and people are being strategic about what they buy instead of just going after everything.”