In his first public-facing appearance since returning to the role of CEO at Amedisys Inc. (Nasdaq: AMED), Paul Kusserow made the company’s focuses clear.
In that vein, he also retired any speculation as to why he came back.
“We haven’t hit and been predictable on earnings, so that’s the reason I’m back,” Kusserow said Tuesday at the BofA Securities Home Care Conference. “We need to stand by what we say and deliver on our numbers. And there’s no reason, with these initiatives, that we should not deliver on our numbers and beat our numbers.”
Besides earnings, Kusserow made Amedisys’ priorities in the near-term and long-term future clear: an effective Medicare Advantage (MA) strategy and success on staffing, both on recruiting and retention.
In mid-November, Amedisys announced that its then-CEO Chris Gerard would leave the company after just a short, 7-month stint in the role. Kusserow, who had handed the keys to Gerard in April, then returned.
“We believe that we actually have been quite prescient in preparing for the what the market is today,” Kusserow said. “[We] have been working on not so much changing the strategy, but we’re going to emphasize the strategy.”
The Baton Rouge, Louisiana-based Amedisys has about 21,000 employees spread across its 547 care centers, which are located in 36 states and the District of Columbia. The company offers home health, hospice and personal care services. It also offers high-acuity care in the home through Contessa Health, which it acquired last year.
That strategy includes the aforementioned commitment to better MA contracts and a staffing plan that satisfies future and current Amedisys workers. Kusserow wants Amedisys skating to where “the puck is going to go, and not where it is.”
“Due to the natural growth in home health and hospice, it’s not a question of if there is demand,” he said. “It’s a question of whether there is supply.”
A staffing strategy that works
While economists are not exactly in agreement on whether the U.S. economy is currently in a recession or on its way into one, the threat remains.
For home-based care providers, that is less of a cause of concern than for other industries, Kusserow said.
“What I’ve seen in my past lives – we haven’t really seen it here at Amedisys, because we haven’t been in [a recession] – but we see people returning to the workforce,” he said. “I anticipate that’s going to be the case. … And some people say it’s here, some people say it’s coming.”
Though pay seemed to become a more important part of the staffing solution for companies during this inflationary period, Kusserow still maintains that Amedisys’ internal findings suggest that it comes in around 4th in terms of importance to employees.
What those employees most want, he said, is good leaders, flexibility in scheduling and to feel a part of a team.
“When you look at what nurses want … they want flexibility in their scheduling and they want a very good leader,” Kusserow said.
Some of those aspects are hard to quantify and more have to do with an organization’s culture. That is what Amedisys will continue to invest in. For instance, the company – acknowledging that it is highly decentralized – wants to make sure it is molding better leaders at its care centers.
Those leaders are generally nurses who were eventually elevated into that role. While Kusserow said they often prove to be “great” managers and leaders, they need guidance to get there. That guidance is well worth the investment when considering the effect it can have on turnover.
Amedisys leaders have also come to the conclusion that pay isn’t as important as previously thought due to the turnover rate among employees that received significant bonuses recently.
“We saw a big increase in the amount of sign-on bonuses and retention bonuses that we put out there in the market,” Scott Ginn, Amedisys’ acting COO, EVP and CFO, said during the conference. “What we saw there was still a heavy amount of turnover in that group.”
Ultimately, somewhat of a turnover rate is always necessary, Kusserow said, as that weeds out the workers that are not doing a good job. However, keeping that rate down makes an immediate and positive impact on the bottom line.
One reflection of that is the amount of money Amedisys spends on contract workers, which is about $40 million per year.
“That’ll never go to zero,” Ginn said. “But that’s something that if we get the hiring stages right, that’ll be a great way to offset that. As you’re having to turn over and replace staffing, there’s a cost to that and the productivity is not there. So a lot of that is in our control. But some of the other market pressures, I don’t think will alleviate for a little bit now.”
Ginn and Kusserow do not see a staffing fix as a pie-in-the-sky proposition. In fact, they are “very optimistic” they’ll get to a much better place soon.
What they’re cognizant about, however, is the fact that in a constrained market, employers need to meet workers where they want to be.
“The employees are going to now start to dictate more of what they want and what they’re willing to do. And we have to be aligned with that and be willing to satisfy those needs. If we do, we will have lots of nurses. … If you look at under other industries, they really understand how to bring people in and deploy them. We need to expand our thinking. And the good thing is, the bar is so low that I think we can elevate it pretty quickly.”
Momentum on MA
Outside of just getting Amedisys back to meeting and surpassing earnings expectations, Kusserow said he is going to be laser-focused on MA contracts.
“One of the positives that occurred when I came back was that I got calls from all the payers, being an ex-payer [myself], saying they want to sit and talk about how to work together and how we can reimagine working with them on a home health basis,” he said. “So, I think there will be opportunities. That’s where I frankly plan on spending most of my time. I’m going to be spending my time on this new MA book and trying to make sure we move towards that.”
Kusserow mentioned that MA sign-ups are outpacing traditional fee-for-service sign-ups by about seven to one.
But payers continued and verbalized commitment to keeping members safe and healthy at home gives home health providers a degree of leverage – at least the larger ones.
“You’re going to need home health services,” Kusserow said. “How many payers have said, ‘Oh, this is where the world’s going.’ Yes, the world is going there, [to the home]. But you won’t have the people to take care of your members unless you start to strike deals with us. And those deals are fundamentally allowing us to manage that care, at risk.”
Part of what Amedisys and other home health providers also want is to either cut conveners out of the conversation or work with them on a different basis. Most of the large providers have the capabilities on their own to handle utilization management, so long as they are working directly with the payers, and not through a middleman.
With case-rate contracts, Amedisys believes that it can drive down visits, keep quality high and drive more clinical capacity for itself and the payers on the way.
“We need a good case rate” Kusserow said. “We aren’t going do things on a per-visit basis, we’ll do it on a case-rate basis. And then we can redeploy, 25% or 30% of what we can drive down – maybe it’s not that high – but with what we can drive down, we can redeploy that capacity.”
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