LHC Group CEO: Providers Starting to Realize How Fragile the Home Health Business Can Be

In the first quarter of 2020, LHC Group Inc. (Nasdaq: LHCG) boasted organic growth of 7.1% in home health admissions. That metric becomes more impressive when one considers the fact that the coronavirus drastically slowed home health admissions industry wide starting in mid-March. 

Before the virus took hold, LHC Group enjoyed even better organic home health admission growth. From Jan. 1 to March 14, organic growth for that arm of the business was up about 10%, compared to the same period a year earlier. 

Industry fallout from the implementation of the Patient-Driven Groupings Model (PDGM) was largely to credit. Leaders at the Lafayette, Louisiana-based home health and hospice provider expect PDGM to continue to accelerate organic home health growth in the year to come, with COVID-19 also adding fuel to the fire.


“It’s hard to unpack all the different layers between PDGM disruption and COVID disruption, but as evidenced by the pre-COVID ramp in admissions and now the … current COVID uptick in admissions, we feel like we’re very well-positioned,” CFO Josh Proffitt said.

Proffitt and other company leaders shared their insights Tuesday during a presentation at the Bank of America Securities 2020 Virtual Health Care Conference.

The call came just days after the company shared quarterly and COVID-19-related metrics with investors during its Q1 earnings call, on which President and CEO Keith Myers said the company was facing a “historic organic growth opportunity.”


In other words, LHC Group is uniquely positioned to absorb home health market share from agencies struggling to adapt to, first, PDGM and, now, to the coronavirus. At least, that’s what company leaders say. 

“One thing I think that everyone realized is how fragile the business can be,” Myers said during the Tuesday presentation. “Prior to COVID, the worst-case scenario might have been cash flow. … But [now] in addition to all the financial pressures, I think people are not taking their volume and their source of referrals for granted as much as they used to.”

Similarly, LHC Group isn’t taking the ability to outperform smaller agencies for granted. For example, as a large provider, it’s been easier for the company to obtain PPE than for some of its smaller counterparts, a benefit that’s paid off amid the COVID-19 emergency. 

“The ability to obtain PPE and to be able to equip your workforce with appropriate clinical masks and gloves and other forms of PPE was really a game-changer for us very early on,” Proffitt said. “That not only gave the patient population the confidence [to accept visits] … but it gives the referral sources the confidence to work with you.”

That, along with PDGM fallout, has helped the provider win new referral sources and increase patient volumes. So far in 2020 alone, LHC Group has gained more than 5,000 new referral sources.

While organic growth is a key part of LHC Group’s home health strategy going forward, it will also continue to examine acquisition opportunities, when appropriate.

“Generally speaking, if we’re established in a market, then in most cases, we’re going to first look to take share in that market where we’re already established, obviously,” Myers said. “If we’re looking at markets where we aren’t established yet, it’s a great opportunity to plant a flag.”

However, the majority — or about two-thirds — of LHC Group’s acquisition efforts are currently focused on its hospice service line, he said. Again, that’s largely due to the disruption PDGM and COVID-19 are causing in the home health industry. 

“It really causes us to focus more on growing home health organically and perfecting the PDGM model — and for 2020 and probably 2021 focus more intensely on hospice,” Myers said.

Companies featured in this article: