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Amedisys Inc. (Nasdaq: AMED) has a new CEO. During the transition of power, we are likely to find out a lot about what the company’s future looks like.
As one of the largest, independent aging-in-place providers in the country, Amedisys’ next moves will send ripple effects throughout the home health and hospice space. And, by the day, it’s becoming clearer that the Amedisys of the last 10 years will not be the Amedisys of tomorrow.
That will be because of a few things, but namely its strategic focuses: Contessa Health and Medicare Advantage (MA).
On those initiatives, the incoming CEO – Richard Ashworth, who’s taking over for Paul Kusserow – is ready to hit the ground running.
“I know there’s short-term challenges right now,” Ashworth told me. “Some exogenous, cyclical things like labor and staffing. Sure. New models have to get set up with MA coming into the mix. Sure. But any business has those types of challenges in them. I think, overall, it’s a net opportunity.”
I had a long conversation with Ashworth and Kusserow on Tuesday, the day after the company officially announced the former’s hiring. What I gleaned from that is what the Amedisys of tomorrow may look like.
The future of Amedisys – and in some ways, the home health industry – is the topic of this week’s exclusive, members-only HHCN+ Update.
The future of Amedisys
When Amedisys purchased Contessa Health – an enabler of high-acuity care in the home – for $250 million in 2021, no one was sure how it would work out for the company long term.
Nearly two years later, though, it seems to become a larger part of the company’s strategy by the day, even if it’s dragging down financials in the near term.
“The future is moving aggressively into high-acuity care,” Kusserow said. “We have phenomenal relationships there and phenomenal partnerships. But we need to execute on that faster.”
Contessa has built up some major clients, including Mount Sinai Health System, CommonSpirit Health and Highmark Health, among others.
That is something Kusserow has spoken repeatedly about: that many hospitals would rather offload care-at-home efforts to others.
“What do we do for a hospital, we can take away that 15% to 20% of business that they generally don’t make money on,” Kusserow said. “We use their ancillary products at full price. We take that out, and then we split the profits with them as our partners. Then payers, they get a cut, because they get that we do that service for less, and then consumers get what they want.”
Contessa doesn’t just do hospital-level care in the home. It also does the equivalent of skilled nursing facility (SNF) care in the home, plus home-based palliative care. SNF-at-home care’s momentum has tapered off a bit since the height of COVID-19, but Kusserow still believes there’s a value proposition there.
What has really started to throw more wood into the Contessa fire is palliative care.
In February, Amedisys announced a new agreement with BlueCross BlueShield of Tennessee to deliver home-based palliative care to millions of beneficiaries.
“I think the opportunity, all in, is largely due to the fact that we’ve discovered palliative care and built that contract,” Kusserow said.
If Amedisys gets a few more of those contracts, which it’s banking on, Contessa will be in great shape, he said.
But even more important is what those palliative care contracts allow the company to do. It allows Amedisys to take on true risk with payers.
The company takes those patients and gets paid on a per member, per month basis, largely to keep them out of the hospital and other institutions.
“We’re in the vanguard,” Kusserow said. “There’s a couple other companies that are saying they’re doing it, but I haven’t really seen any proof of that.”
Contessa is moving into the forefront. Amedisys even offloaded the majority of its personal care assets to HouseWorks earlier this year, opting to partner there in lieu of owning.
In Ashworth’s eyes, Contessa is a gem, and one of the reasons he joined.
“We can take anything and everything that can be done in the home,” Ashworth said. “We can be the primary contact for that for providers, for physicians, for health systems and for payers, in a way that benefits everyone.”
In addition to the BlueCross BlueShield of Tennessee partnership, one of Amedisys’ biggest wins in payer innovation over the last year was its case-rate contract with CVS Health’s (NYSE: CVS) Aetna.
It got the contract that other companies are yearning for.
“We don’t have the details of the contract, but you can imagine that day, we’re calling out and saying, ‘Hey, can we come back to the table? Obviously you’ve figured out a case rate, so we’d like to sit and talk,’” Enhabit Inc. (NYSE: EHAB) CEO Barb Jacobsmeyer said shortly after that contract was brought up. “Certainly, if they’re able to go the route of episodic or case rate, we want to be at the table talking to them.”
Since that contract was signed, Amedisys has doubled its business with Aetna, according to Ashworth.
Not only is that a sign that the partnership is working, but it’s also a sign to other payers that, if they’re willing to sign on in such a way with Amedisys, they’ll be rewarded with more home health capacity.
“We’ve doubled our volume with that just in the last X number of months, because we came up with a good commercial agreement that both parties feel good about, and now we’re driving volume through it,” Ashworth said. “And that’s an example where you can do those kinds of contracts where then, at the local markets, it becomes very easy for provider sources to refer in, and it just starts to grow.”
Ashworth has significant experience dealing with MA plans from his time as CEO of Tivity Health.
Humana Inc. (NYSE: HUM) has a large share of the MA market, as does UnitedHealth Group (NYSE: UNH). Both of those companies now have home health companies under their belt, in Kindred at Home and LHC Group, respectively.
That should take some business off of the table for other home health providers theoretically.
But Ashworth believes that will become an advantage for Amedisys, which is still independent.
“You obviously have the rest of the market, but you also have a growing market,” he said. “We can do more strategic partnerships of our own, and Aetna is a great example of this.”
The first goal of Ashworth’s is a smooth transition from Kusserow to him. He has a lot of learning ahead of him.
After that, he’s looking for “quick wins.”
What those will look like is to be seen. But, in all likelihood, they will be tied to the above: MA contracts and Contessa Health, the two drivers of Amedisys’ overarching strategy moving forward.