The caregivers at Aveanna Healthcare Holdings Inc. (Nasdaq: AVAH) and the drivers at Uber (NYSE: UBER) have something in common.
Specifically, Aveanna has set up its app to give its private-duty caregivers more autonomy over their work schedule.
“While they’re all employees of Aveanna, they sometimes look and feel more like an independent contractor,” Tony Strange, CEO of Aveanna, said Tuesday during a presentation at Barclays Global Healthcare Conference. “If you think of an Uber driver, … when they want to go to work, they turn on their app and start taking rides. When they want to stop working, they turn off their app. Our [private-duty] caregivers are very similar.”
For Aveanna, this has been a key strategy in managing turnover.
“When you ask about turnover or churn — that Uber driver doesn’t send in a letter of resignation and leave they just stopped taking trips,” Strange continued. “That’s kind of how our private-duty [business] is.”
Strange noted that 70% of the caregivers Aveanna pays on a weekly basis are the same every week. The other 30% are caregivers who rotate in and out based on their availability and how much they want to work.
Based in Atlanta, Aveanna delivers home health, private-duty care, hospice and other services to a broad range of patients through locations in 31 states.
Aside from Aveanna’s caregiver strategy, Strange also touched on the company’s increasing reliance on Medicaid in order to keep its payer mix diverse. The company has a significant penetration into the Medicaid space.
“In our private-duty segment, we’re predominantly paid through Medicaid. … People tend to think that Medicaid is a single-payer, but the reality is that Medicaid is a unique payer in 31 different states that we operate in,” he said. “We love the de-risking nature. It would take the stroke of 31 pens to actually hurt us. Conversely, we have 31 opportunities to have a positive rate impact as well.”
On the flip side, Medicare represents about 12% of Aveanna’s overall revenues.
The rate drought is over
During the presentation, Strange also touched on the current rate environment.
“If you go back to our Q3 earnings call, one of the things we talked about was, in the 31 states we’re in, we had experienced rate increases and/or expansion of benefits in 24 of the 31 states,” he said. “That trend has continued. In our career, I don’t think we’ve ever seen a more positive rate environment.”
Rod Windley, chairman of Aveanna, also noted that in states like Florida and California, the company hadn’t seen a rate increase in a decade.
“It’s been a long drought in the rate world,” he said. “We got some pretty meaningful rate increases in 2021, and we’re back this year asking for more — deservedly so.”
The company attributed the positive rate environment to state Medicaid systems viewing home care as a value-add.
“They’re leaning forward into home care as a part of the solution, and that’s a great place to be,” Strange said. “Our rate environment continues to be positive going forward, and we don’t see that changing anytime in the near future.”
Looking ahead, Aveanna is excited that for the “first time in decades” state Medicaid systems are approaching the company and considering new ways to deliver home care services.
“We have some of our payer partners coming to us saying, ‘We know that this is not sustainable. Long term, what can we do together to change the delivery model?’” Strange said. “We’re investing in pilot projects where we might reinvent the way that private-duty services are delivered.”
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