Encompass Health CEO Mark Tarr: It’s in Every Company’s Best Interest to Make Diversity a Priority

Across the U.S., ongoing protests against police violence toward Black Americans and other people of color have caused many companies to take a closer look at issues pertaining to workplace diversity and inclusion.

For some companies, this time has been a call to action, with many announcing plans to develop initiatives aimed at addressing inequality within organizations.

One example is Birmingham, Alabama-based health care giant Encompass Health Corp. (NYSE: EHC). The company’s president and CEO, Mark Tarr, recently joined CEO Action for Diversity & Inclusion, a coalition of more than 1,000 CEOs pledging to advance workplace diversity and inclusion.

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Encompass Health’s national footprint includes 245 home health locations, 83 hospice locations and 136 hospitals.

Home Health Care News recently caught up with Tarr to discuss Encompass Health’s larger diversity and inclusion efforts — and how the Black Lives Matter movement has impacted the company.

Below are highlights from HHCN’s conversation with Tarr, edited for length and clarity.

HHCN: Let’s start generally. Can you recap Encompass Health’s highlights and challenges since the start of the year? Specifically, the home health and hospice side of the business.

Tarr: First of all, we started off the year really well, whether it was on volumes or — on the home health side — implementing strategies for the Patient-Driven Groupings Model (PDGM). 

Then came the month of March — and the low point in April [in terms of] the impact from the pandemic and volume drop. The first three-fourths of the first quarter were good in terms of volume. We thought it was going to be a great year. Then this unknown, unplanned thing called COVID-19 hit, and we saw volumes drop. We subsequently saw the volumes start to pick back up at the end of April.

Now, we’ve seen our episodes start back up to pre-pandemic levels.

Both our management teams and the caregivers in the field have worked extremely hard to make sure they’re taking care of all patients in what has been a very challenging setting. 

We’re glad to see the volumes have recovered on the home health side. As far as hospice, we just didn’t see the variations and volatility. We hope we’re over the worst of it.

But certainly, the pandemic is still impacting business out there.

We have seen a shift in patients and their willingness to want to be treated. There was a time period where they were reluctant to let caregivers into their homes for fear of contracting the virus themselves. We’ve done a lot of education and communication with patients in terms of our preparations, in terms of what measures we’re taking with our own staff to prevent exposure and the spread of the virus. 

Encompass Health joined a coalition pledging to advance diversity and inclusion in the workplace. You’re one of more than 1,000 CEOs that have come together for CEO Action for Diversity & Inclusion. Why join that coalition?

I think it’s a good fit with the values and initiatives that we have within Encompass Health. One of our core values is setting the standard. I think it’s important for me as the CEO of our organization to set the standard — and that’s why I felt committed to signing on to this pledge.

It puts us in a nice company with other major corporate organizations. There is power in numbers. You have 1,000-plus companies, and I’m sure that number is growing every day now, as other CEOs evaluate this opportunity. 

This is all happening as we are seeing a larger shift toward greater racial equality, with the Black Lives Matter movement leading the charge. How is this impacting various parts of your company?

We treat a diverse patient population. We are in a wide swath of states. We certainly have a diverse staff across our 43,000 total employees, and that certainly covers home health and hospice as well. That diverse group has obviously been impacted.

I think that this is an opportunity for us.

We can all do better in terms of trying to understand differences and finding commonalities to better our organization.

It’s a good time to look inward. Clearly, the tragic death of George Floyd, which many of us saw on our TV screens, was somewhat of a call to action. I think that it was a prime opportunity for us to better understand what was going on out there in many of our communities. That’s what we’re doing as an organization.

The company is pledging to cultivate a workplace where diverse perspectives and experiences are welcomed and respected. What does this mean for Encompass Health, and what specific plans do you have in place to accomplish this?

Inclusion and diversity have been a priority for our organization for a long time.

We’ve had an inclusion-and-diversity council, which is made up of a number of our staff representing both of our operating segments, as well as our home office. We have a large geographic representation on that council, too.

We’ve used that council to provide feedback to the organization and identify steps we can take to better highlight and implement inclusive actions within our company. We’ll continue to use that diversity council as we go forward.

This has given us an opportunity to look at what we have done over those 10 or 12 years that the council has been in existence. What can we do better? What best practices can we take up as we further investigate and read about what other companies are doing?

Have there been any initiatives, best practices or policies that have sprung from the company’s diversity council that you would want to highlight?

The council has helped us develop an inclusion-and-diversity plan for this next year. The plan is really focused on four areas: workforce, patient experience, supplier diversity and community partnerships.

To give you just a little bit more detail, we have provided scholarships, for example. We have affiliations with five universities and have worked with them to support minority-endowed scholarships for deserving students entering health professions.

In 2019, we were recognized by the Women’s Forum of New York for raising the bar for female board representation. This award went to directors and boards that have at least 30% female representation.

We have an annual partnership with a local school here in Birmingham that has a diverse student population. We have created internship opportunities for these students. They have an opportunity to come and work within different departments in our home office here in Birmingham and get exposed to various aspects of what we do here, whether it’s finance and accounting, human resources, or any of the functions that we have here that help support our company.

Those are just a few of the things that we have done. It’s a comprehensive program, and it’s one that we continue to find opportunities to add to every year.

Encompass Health has long been recognized as a great place to work. What was the company already doing when it comes to diversity?

Well, one thing that happened recently, as part of the Black Lives Matter initiatives, is we have been developing a series of videos that we refer to as “Encompass Health Today.” Our employees will share situations that happened in their lives around racism and how they’ve handled it. We want to create these dialogues so that they can be used as tools out in the field. 

Some call them “uncomfortable conversations,” but they can be very constructive, particularly given the challenges in and around diversity. We released two of the videos now. We have others in the works, and these will be used to have positive dialogues around this sometimes difficult subject matter. 

In addition to promoting these important discussions, what other goals does Encompass Health have when it comes to addressing inclusivity?

Certainly, one of our biggest goals is to increase the strength of the diversity at the leadership levels. We have been aggressively doing that for the past several years. We think we have a lot of opportunities there, whether that is through just organic succession planning or making sure that there are opportunities for employees to participate in leadership development programs.

It’s both a short-term and a long-term goal because it can take a while, particularly if you’re doing it internally.

Our readers always want the “bottom line” connection to a given topic. How does diversity impact a provider’s financial well-being or overall business model? 

I think there are some well-publicized studies that show how companies that build and promote a diverse workforce also do well financially. 

We are no different. We see that as being very important to our overall success, whether that’s through financial growth or otherwise.

If we can build and continue to build upon the diversity that we have within our organization, I think it can help our recruitment and retention efforts, for instance. You can work better as a team because you’re more diverse and have different viewpoints to accomplish a collective goal. I think the patient benefits from that — and the organization benefits from that.

It’s in every company’s best interest to make diversity a priority. It certainly pays off in terms of shareholder value. I think it’s important for both the quantitative and qualitative goals that we set forth.

Shifting gears, I know you just talked about Encompass Health’s plans and goals for the remainder of the year during the Q2 earnings call, but can you close by summarizing how you see the home health and hospice segment performing in the final five or so months of 2020 and into 2021?

We withdrew our guidance, so I can’t say anything relative to future guidance.

Generally, we think that the demand for home health and hospice services is only going to grow in the future. 

We have grown aggressively in the past when you look at our ability to acquire new home health and hospice agencies. We certainly plan on doing that moving forward. One area of focus is what we call our “overlap markets,” where we have home health in addition to one of our rehabilitation hospitals. We’re very committed to that.

More and more patients are going to want to be treated in the home setting. It’s the low-cost setting. There will be an interest from the payers to see what all can be done in the home setting from a care standpoint.

We are in this for the long term. We think that PDGM will likely create opportunities where smaller, struggling agencies are looking for someone to acquire them, so they can be part of a larger-scale organization. That’ll be an opportunity for growth for Encompass Health going forward.

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