Enhabit Set To Go Big On De Novos, Medicare Advantage In 2023

The last year or so at Enhabit Inc. (NYSE: EHAB) has been about finding its footing – as a stand-alone company, and one that’s publicly traded.

But moving forward, growth will be a priority, according to President and CEO Barb Jacobsmeyer.

“We’ve kind of spent the last two years blocking and tackling all the various challenges that arose from the pandemic,” Jacobsmeyer said at the 23rd annual “New Ideas for the New Year” Investor Conference on Wednesday. “We also faced challenges as a result of our previous lack of work with Medicare Advantage plans. Members were — and are — moving to MA and we were not on very many plans, which restricted our sales team and our growth. When we look at 2023, it’s really with a lens of growth.”


The Dallas-based Enhabit is a home health and hospice provider that operates across 34 states with over 10,000 employees. Today, home health makes up about 80% of Enhabit’s revenue.

After acquiring the Fort Myers, Florida, location of Southwest Florida Home Care, Enhabit is a top five home health provider in the majority of the states it operates in, according to Jacobsmeyer.

Despite some early struggles after going public last year, the company believes it is in a sound position at the beginning of 2023.


“There are 11 states in which we hold the No. 1 or No. 2 position for home health market share,” Jacobsmeyer said. “We continue to focus on driving organic growth in the existing operations and we’ll continue to execute on our de novo strategy. Historically, the company opens two to three de novos a year, but our future projections increase this to a target of 10 new de novo locations annually.”

Enhabit’s size is one of its largest assets, she explained.

“For companies like Enhabit, the scale and density really provides companies our size the ability to focus on efficiencies and pilot technologies, things that are difficult for the smaller owners and operators,” Jacobsmeyer said. “Then when you look at the increase of the Medicare Advantage penetration, I do think the size and density is starting to carry a little bit more leverage as we negotiate, especially with those payers that are being a little challenged with access – and timely access – for their members.”

Because of some of the uncertainty around reimbursement rates in home health, Enhabit CFO Crissy Carlisle said most of the M&A focus will be in hospice. But small- and medium-sized home health opportunities will still be on the table. .

“I think it’s fair to say that our pipeline is full and that the current pipeline is skewed a little bit more towards hospice,” Carlisle said. “The reimbursement uncertainty in home health is putting some pressure on that. However, I do think we’ll continue to see home health players come to market.”

Today, about 75% of Enhabit’s home health revenue is fee-for-service Medicare.

It’s likely, however, that its payer mix will change with its strategy.

“We have the quality efficiency to be well positioned for value-based care,” Jacobsmeyer said. “We’ve collaborated with various alternative payment models and the outcomes from those types of arrangements give us the data to present our value proposition to the various non-Medicare plans. We all know Medicare Advantage is a growing portion of the home health revenue mix and we’re working to ensure that the agreements we enter into have an emphasis on quality outcomes.”

Enhabit’s sales teams have been turned away from payers who want more than just fee-for-service business. Because of that, Enhabit will be putting an emphasis on making strides with its payer innovation team.

Clinician flexibility will also be a focus for the company, Jacobsmeyer said.

“Historically, the majority of our clinicians have been full-time staff,” she said. “We’ve realized that we’re going to have to increase the headcount of clinicians because so many more of them — while they’re retained and are still with us — want part-time or PRN roles, which is still really an important role, but it means you just need more of them.”

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