Elara Caring CEO: We’re Beginning To ‘Draw The Line’ In Medicare Advantage Relationships

Before Scott Powers was at the helm of Elara Caring, he worked in the payer space, specifically with Medicare Advantage (MA) plans.

Now, the home health industry is at an inflection point when it comes to working with those plans, which are becoming a larger part of providers’ business by the day.

In order to better set itself up for these changes, Elara Caring is adjusting operationally.

All the while, it is considering whether to build out its own ER diversion and hospital at home programs, and also entering its next stage of growth.

The Dallas-based Elara Caring is a provider of home health, hospice, palliative, behavioral health and personal care services. It serves more than 60,000 patients across 200 locations.

Powers sat down with HHCN for the most recent edition of HHCN+ TALKS to chat about MA, hospital at home, automating workflows and much more. The transcript of the conversation is below.

[00:00:06] HHCN: Hello, everyone. Welcome to another edition of HHCN+ Talks. Thank you for joining us, whether live or after the fact. We do appreciate it. We have a great guest today, Elara Caring CEO Scott Powers. Scott, it’s great to talk to you again. Before we go on, I just want to get a background on yourself for the audience.

[00:00:27] Powers: Thank you, Andrew. Thank you for spending some time. A little background on me. I’ve been the CEO and chairman of Elara Caring a little over three years. We’re a combination of three like-sized organizations that came together in 2018. Prior to Elara, I was in the payer world, primarily around Medicare Advantage, and then before that, technology. Glad to be here.

[00:00:54] HHCN: Okay, great. We’re going to get more into that today in today’s discussion. Can you give more background on Elara – just your network and the services that you offer?

[00:01:07] Powers: We consider ourselves a value-based platform company in the home. We’ve got six service lines. We’re in the skilled home health business, the personal care business, behavioral health, hospice, palliative care, and a business we call ElaraConnect, which is really the risk-bearing entity that ties all the pieces together. We’re in 17 states. We have 25,000 caregivers, 60,000 patients, we do about 10 million visits per year. The company has been in existence now for five years and is back to growing again. That’s a little nutshell about who we are.

[00:01:47] HHCN: You said you had that payer background, that Medicare Advantage background, in specific. Obviously, we’re at a crucial point in the whole health care landscape right now where providers are having to decide what to do as their payer mix diversifies and Medicare Advantage becomes a bigger part of their business. Since you have that background, do you feel like you have a better perspective as to how Elara should handle that situation? If so, how has that played out so far?

[00:02:21] Powers: I do think it’s an advantage. Having been a payer for 10 years and really understanding Medicare Advantage from two different companies, I think I understand how payers think and what motivates them. I’ll just elaborate a little bit more.

Essentially, governments and payers finance and take risks for the health care industry. They’re also vertically integrating in non-facility-based care. They’re getting more powerful by the day.

I think you see that in the news, but at the end of the day, payers really want value for their membership and they want to grow their membership, and they need high-performing networks and they want partners who can perform and can take risk along with them.

Really, if you think about the growth in Medicare Advantage, the ability to take our industry and our company, for example, and tie the pieces together and take risks for outcomes, produce great outcomes, and be accountable to those outcomes, is really I think where the industry is going – and clearly where we’re going.

I think there are some real advantages to our industry if we capture this moment of being able to produce those outcomes because the home health episode, whether it’s skilled hospice, personal care, is one of the most highly satisfying consumer experiences on this planet. Customers trust us. It’s a high-touch environment. There’s plenty of room to add value.

As we add that value, whether it’s saving money for the payer, keeping that patient or that member out of the hospital, improving their star ratings, whatever it might be, those are the moments I think that are going to be really important for us to capture. And to add value to that experience, and then share in that value as we create it.

[00:04:15] HHCN: Are there any things that you have done operationally, Scott, to change in order to better set yourself up for taking on Medicare Advantage business?

[00:04:26] Powers: It’s a great question. I would say the following, clinical capacity is pretty scarce, and high-quality, high-outcome-based organizations who produce great results are scarce.

We’ve taken the approach that says, “Look, in a world of limited supply, we are going to make sure that we’re taking our best economical patients as a starting point.”

That includes Medicare typically upfront, and then it second goes to who are the payers that want to go on this ride from a value-based perspective and share in that value. What we’ve done is really paired down who we will work with and who wants to be a partner in that journey with us. We’ve been very deliberate about making sure our mix is appropriate. We have a very advantageous mix.

As we grow along with the Medicare Advantage business, it’s really growing in a value-based way. What we mean by that is someone who wants to share in those outcomes when we produce great outcomes. Things like case-rate models with upside capabilities, those are all very specific things that we’re driving, and we’re making sure that we have payers who want to have direct relationships with us rather than push us through a convener or utilization management-type process. Those are two or three specific actions we’ve taken.

[00:06:04] HHCN: Have you seen more success with getting those direct relationships and not having to go through convener, or is that still something that you’re working on?

[00:06:12] Powers: Well, we are having more success. We have started to draw the line on some of those convener conversations like you’ve heard others do in the industry. Yes, we’ve had some success there. I think payers are starting to understand that there’s more and more care going to the home, that the outcomes are getting better and better, and the cost is clearly better.

It’s not just the cost of the home health episode, it’s the cost that’s being impacted on SNF stays and hospitalization stays and other things that drive value for those payers like star ratings. I think they’re starting to see the potential of what the home health community can do for them, and I think they’re worried about access to care in the home.

I think they understand that we all need to make money to serve our own shareholders and pay our own employees. I think they understand that they need to work with us in order to have access to those clinical and nonclinical resources in the home. I think it’s been more of a listening year than there ever has been. I expect that will continue as scarcity continues.

[00:07:23] HHCN: Do you think because of your scale, there’s an inherent advantage to working with Medicare Advantage plans right now in that some of these smaller providers might not be able to form those direct relationships, might not have the ability to come to a payer and say, “Hey, this is what we want when it comes to us providing services through beneficiaries”?

[00:07:42] Powers: Yes, I would agree with that. I think in order to take risk and really understand the value you’re producing, you have to have a certain level of sophistication in order to do that. What I mean by that is you’ve got to be able to measure outcomes and you’ve got to be able to measure them by patient type, by disease state, by location. You have to mix in technology and virtual care into this. You have to think about care beyond just the local delivery of care, but how do you do it more holistically, and even in some cases, centralized case management.

Being able to really measure what you’re producing and make that credible requires a certain degree of sophistication in order to play in this game. To me, that requires some level of scale, and it does require more than one service line to be able to do that, or at a minimum, a very deep set of external relationships where you can provide that total care experience in the home.

[00:08:44] HHCN: Let’s shift a little bit to some of your clinical strategies, which is that you obviously have more service lines than just home health and hospice. Can you explain why you are invested in the service lines that you are and whether that actually helps out with payer relationships?

[00:09:06] Powers: Like I said, to be a value-based leader, I do think you need a diverse set of capabilities in the home in order to take that value experience and deliver that continuum of care while being accountable to the outcomes. In terms of why we’re in some of the businesses we are, that’s the first reason.

The second I would say, I’ll give you a couple of examples.

We’re a big personal care player. It’s a super stable business. The patients stay with us for years. The states view it as essential services. The challenge has been labor and supply, that’s been a persistent, nagging problem. We’ve developed a secret sauce around hiring and retaining caregivers that we think is truly differentiated, which allows us to solve that problem. That we think is an advantage to us.

Behavioral health is another example. We know that it’s well-publicized that seniors with behavioral health conditions consume three to four times as more health care dollars than people without behavioral health conditions. That ability to do behavioral health at scale and port that into our Medicare business, it’s been a huge differentiator and one that the payers have really grabbed onto because they know that it’s a high-cost, high-need area for them.

Then we also have a platform called ElaraConnect, it’s a data, insights and centralized care remote patient monitoring platform. We use that data to provide better care to the people on service, but also to cross-serve and cross-sell to other lines of business. We refer our own business and our own patients amongst our different business lines, which really allows us to grow faster than the market.

You asked if that diversification is helping with our relationships, I would say yes. I think that the other thing that the audience will benefit from is, payers want partners who can take risk and simplify their administration. They don’t like dealing with multiple vendors. They don’t like having big networks. They have their own administration problems and their own complexity problems. Anybody who can step up to the plate with a full suite of offerings that helps them simplify that and takes on risk for those outcomes is clearly going to be beneficial in the long run.

[00:11:48] HHCN: In terms of the platform, I’m curious to know whether there’s certain insights that you have gleaned since you launched that that were really surprising, or things that you were able to turn into actionable results down the line.

[00:12:09] Powers: Yes. One such example is, we have a follow program in our ElaraConnect where we follow patients after they’ve been discharged from home health. We do that through a combination of live touches with those patients. We also do outreach with a robocall-type environment. Then we also reach out to physicians. What we found through some of our data and insights is many of our patients after they’ve been discharged, their condition persists.

As a result of that outreach, we’ve really been able to curb readmission rates back into the hospital through that outreach and getting that kind of level of skilled service back — get that patient back on skilled services through partnership with that physician. As a result, we’ve really been able to get our hospital admission rates for those patients down below 10%, somewhere around 10% to 9% on many of those patients. That’s an example of where that platform is really followed.

Those patients, plus the payers, benefit by not having an ER visit or an inpatient admission. That’s one great example of how we’ve been able to do that. The second is really around hospice, making sure if a person’s condition continues to deteriorate in hospice, and if that’s a conversation that should be had with that patient. Our data allows us to see that as, say, the skilled episode progresses and allows us to intervene to what might be a great conversation for that patient who’s in need of end-of-life services. Those are two examples of how we look at that.

[00:14:15] HHCN: Are there any other service lines that you’ve considered getting into?

[00:14:30] Powers: The short answer is yes. But to be more specific, we believe that this consumer experience – we measure net promoter score with our patients at the end of each care episode. Our net promoter score hovers around 90 to 92 as an organization. Anybody who follows net promoter score understands that that is a world-class consumer experience.

Our belief is that many of the people we care for, their needs don’t end at the end of an episode. The things we’re looking at is stitching together networks, and that’s why we got into the palliative business. We saw the need to continue to care for those patients beyond the episode of care and create more of a longitudinal relationship for their needs. Palliative is one example. Population health management is another example, and we’ve got some pilots, if you will, to make that happen.

Then I would say on the front end, we’re getting increasingly asked by our hospital partners to consider programs like hospital at home and ER diversion. It requires a different skill set, but we have the scale in our markets to make it happen.

Those are things we’re looking at either as a preferred vendor to some of the bigger partners in those markets or creating those capabilities for our hospital partners, which gets to some of the strains that you’re seeing in the hospital balance sheets, for example, as your finding hospitals really have to decide what they’re going to be good at. One of those things is determining how to use their partners as they best need to care for their patients, and those are examples of where we’ve been asked to look at different capabilities and are investigating if we want to go into those at scale.

[00:16:39] HHCN: As you’re investigating, what does the calculation look like? What are the pros, what are the cons, what would you need to put into it in order to make that a reality?

[00:16:51] Powers: Really, the financial aspect of this is how much you want to invest because you have to be integrated into the hospital, say, at a hospital at home program more directly than we do today, so there’s an investment required there, or a partnership required, one of the two. The other is just the skill mix in the field. Like I said earlier, knowing how to best utilize your scarce resources. Hospital at home is a slightly different clinical mix than a post-acute episode, as an example, so making sure that we can hire those right people and keep them busy at scale is important.

I would say if you start to summarize, it’s really down to labor availability, investment required to be good, and then understanding your partner’s needs, and is this an ongoing need or is this a short-term need? Our objective is to solve long-term problems for our hospital partners, so those are the types of things we’ve been looking at.

[00:18:02] HHCN: Okay, great. It was interesting because I did see in a recent survey from Home Health Care News, actually, that 50% of home health agencies are at least considering getting into hospital at home in the new year. They’re going through that same thought process. Shifting gears a little bit here, the final rule last year obviously was disappointing. It wasn’t as bad as the proposed rule, but we all know that it was, for all intents and purposes, a cut, and there are looming cuts in the coming years. Have you adjusted anything operationally at the company because of that, and if so, what?

[00:18:46] Powers: I think it’s a great question. I think we’re all a little nervous about what the future holds, but I think we always have been, anybody who’s been in this industry for a long time. Look, I’ll start my answer this way: I spent the first half of my career in an environment where prices drop every year. We’re forced to innovate and bring more with less to not only thrive but to survive. I think the same is going to happen here. The Medicare system is stressed financially. I just think there’s going to continue to be the need to get more efficient and figure out how to thrive in this environment.

In Elara, we’re really learning to innovate faster, I guess, is the best way to think about it, and I’ll get more specific. We have a view that cost must decline faster than rate declines, in spite of labor cost challenges, fuel prices, more regulation, those are just realities of life. We see a variety of low-value activity and money wasters that really impact job satisfaction as well for our workforce that together will drive a variety of innovations that will lower the cost faster than the rates decline.

We have what we call the big four initiatives inside the company. One of those is around automating manual workflows. We’ve partnered with a company called ServiceNow to really go through all our workflows and determine how do we bring the digital world into our workplace in a way that most other industries already have done so.

The second is around automating the referral inflow, the acceptance of those referrals, and the revenue cycle management process, and really streamline that to make sure that not only are we fast, but we’re efficient and we get paid for everything we do. The third is really around reducing clinical documentation time. We’ve got a variety of lean initiatives around how we optimize. It’s one of the biggest pain points in our business. It only got worse with PDGM. We’re really looking hard and taking an outside-in view of how to take technology to that particular problem.

Then last is optimizing scheduling and routing. There’s a lot of inefficiency and a lot of dissatisfaction with windshield time in our industry. Getting smart about how we route people and how we optimize their time. Those are the four big initiatives that we are working on to drive more efficiency and cost reduction and remove waste, not only to save money but to make Elara a more attractive place for clinicians and caregivers to want to work.

[00:21:43] HHCN: Fantastic. How far along are you in those initiatives? When were those four initiatives laid out? When would you like to see significant progress in those initiatives?

[00:21:56] Powers: We started automating our referral flow over a year ago. I’d say we’re now just in the final phases of making that scale in every branch that we do business. Our referral partners have responded well, which has resulted in more growth than we expected.

The manual workflow, we started in our PCS business six months ago with our ServiceNow partner to really try to, as we call it, Uber-ize the caregiver workflow in terms of how they schedule their hours, how they get paid, how we schedule their time, really taking a technology lens to making that easy, and how fast we can train and onboard someone.

That process is probably six months away from being production-ized, but we’re well on our way there. Then on the documentation workflow and scheduling and routing, these are relatively new initiatives. What I can tell you is we’re finding all kinds of different innovative companies that have come forward with thoughts and ideas. We put some real change agents on top of these. We expect by the end of this year, we’ll have some real improvements in these areas that everyone will be experiencing.

[00:23:25] HHCN: Scott, I think this is in line with the rest of the conversation we’ve had, but a little bit different path here. In terms of Elara Caring’s next stage of growth, what does that look like in your mind?

[00:23:51] Powers: I’d say we have four key areas of growth that we’re heavily focused on. The first is our organic expansion, so getting deeper in the communities we serve with our key accounts. Back to what I said before, we want to be the easiest and fastest to admit patients. We want to be fully staffed and be the company that has caregivers to give, to meet our referring partners’ needs. Then making sure we have the deepest product suite, and behavioral health being one of those to fulfill those needs, it’s really going deep in the places we do business today with all the things I just described.

The second is really around new counties in de novos, so extending our current licensing footprint. Think of these as expansions close to home where we have great operators and great referral relationships to expand our horizons into new zip codes, as an example. There are a lot of needs out there because of the staffing shortages, and as a result, we’ve been able to grow and think we can continue to expand our boundaries.

Third is mergers and acquisitions. We’ve been fortunate enough to get $200 million of new capital. Elara is back in the acquisition game. We’ve got a handful of companies under LOI that we’re driving towards and that’s a relatively new development in the last six months. Then last, these value-based agreements. As we’ve talked very early on, we’re being very selective in growing our payer business with partners who see the end game, and are willing to share in that value creation. We’re being very deliberate and we have a very rich mix of business today. We’re going forward with partners who really want to play the game and see the value in what we bring to the table.

[00:26:04] HHCN: Anyways, is there an under-the-radar trend, Scott, that you’re following that I might not be writing about, that people may not be talking about, but that you think is going to influence the industry in the next year or so?

[00:26:25] Powers: Yes, I think there’s really, Andrew, three things worth noting here. We talked a little bit about this earlier. Hospital balance sheets are stressed. What we’re seeing is they’re cutting back off of staff. They’re focusing on where they can make money. I think you’re seeing more and more patients, particularly low-paying patients, coming out of the hospital sooner and looking for home care sooner. I think our acuity in the home is going to continue to grow. I just think keeping an eye on that is going to be important. That’s an opportunity and it’s a threat for the industry.

Second, I would say, would be the credit markets. I think performance fundamentals matter more than ever in our industry. I think it’s going to impact M&A valuations over time. I think everybody has to have a plan to extend their cash and make money in the business. Really important.

Then I would say Medicare Advantage plans. CMS is putting more and more focus on the consumer experience, the CAPs, and their star ratings. That presents an opportunity for us. Network adequacy is a bigger deal. Behavioral health, they just rolled out more requirements for network adequacy around behavioral health. I suspect that will go into home health over time.

I just watch the MA business. Everybody knows it’s growing, but I would just suggest watching the fundamentals underneath it. What of all that from my perspective is the more sophistication in our industry, quality, outcomes, scale, taking risks for performance are going to be required for some of these underlying trends that are happening in the business. I just think that’s going to be a requirement to be in this business long term and to thrive is to be able to kind of keep up with the MA players.

[00:28:31] HHCN: Okay. Great. Scott, a couple of good questions from the audience here. Number one, for hospital at home, how do you look at building out those capabilities in-house versus leveraging partners?

[00:28:51] Powers: I think the first step is really just being a preferred partner to many of these organizations who you just described. They’ve got leverage. They’ve got some scale, but they’re entering markets rapidly where they don’t necessarily have all the infrastructure in place to make it work. First and foremost I’d say is just find those organizations and see if you can be a partner if that’s of interest to you.

Beyond that, being able to be a hospital at home provider full scale requires a significant amount of data and technology infrastructure in the hospital, in that partnership in the hospital, connected to those physicians, and that requires a different sales approach. It requires a different relationship with those hospitals than maybe you do have today. That’s where the investment really ratchets up.

I’d say the advantage most everybody will have in their market is they are a trusted partner to many of the hospital systems and they have scale, so they have caregivers. That’s at the end of the day what’s going to matter is can you produce enough caregivers to produce outcomes and keep those people healthy at home. That would be my suggestion.

[00:30:20] HHCN: As you focus on longitudinal care, do your at-risk models provide an ROI for more effectively engaging the family and informal caregivers in the process? Or is the market not ready for this yet? How are you approaching this?

[00:30:38] Powers: Look, the family and the caregiver support is clearly an important part of producing the outcome. I always go back to how you produce an acceptable outcome for that patient population. Obviously, having the right skilled and unskilled resources in the home, having the right amount of technology in the home, if that’s warranted. Dealing with the social determinants, whether it’s food insecurity, transportation needs, pharmacy needs, those are all key elements.

Family and caregiver support is also a key part of it. In terms of how the economics work for those family members, the caregivers, those are, I think, to be determined. But I do think there’s going to be – primarily with highly comorbid patients that have multiple chronic conditions – those are going to be probably the first populations that really make financial sense for the payer to provide fees for longitudinal care. I think you’ve seen it in other models that exist in the market today that provide those types of services.

It’s not new. Specifically around families and caregivers in terms of how that works, I think they’re part of the equation, but I don’t know that they’re a specific carve-out from an economic standpoint. I hope I answered the question, but that’s the way I see it.

[00:32:14] HHCN: Is there one biggest goal for Elara Caring in the next year?

[00:32:44] Powers: For us, it’s really growing faster than the market in all our markets. We’ve made so many investments in our hiring and our retention. We’ve talked about the speed in which we operate with our referral partners, the quality, the product offerings, all those are significant investments for us.

As we did in 2022, it’s extending our streak into 2023 and just growing faster than the market as a result of those investments. I believe as one of a handful of platform players left in the industry, being able to bring all those resources to bear and grow faster than the market based upon that great consumer experience is really the focus for us.

[00:33:37] HHCN: Fantastic. All right, Scott, I think that’s all I have for you. Thank you again for taking the time. It’s great to talk to you as always. Thank you to our audience for listening in live and contributing, and also to anyone that’s going to watch after the fact. We appreciate it.