After seeing a 4% decline in traditional Medicare beneficiaries in the markets the company serves, Enhabit Inc. (NYSE: EHAB) is working to build back up its home health fee-for-service business.
That will start by working with referral sources and offering them a wide range of care services, according to Barb Jacobsmeyer, the president and CEO of Enhabit.
“[Referral sources] don’t want someone that just wants their fee-for-service [business] — they want to see a list,” she said. “They want to know that you really can be a more full-service provider.”
Jacobsmeyer made these comments Wednesday during Citi’s 2023 Healthcare Services, Medtech, Tools and HCIT conference.
Recently, Enhabit has been forthcoming about its struggles as a whole. During its fourth-quarter earnings call, the company revealed that net service revenue, net income and home health admissions all saw a downturn on a year-over-year basis.
Overall, the Dallas-based Enhabit has 252 home health locations and 105 hospice locations across 24 states. Enhabit spun off from Encompass Health Corporation (NYSE: EHC) in July of 2022.
Despite the slump on the fee-for-service side, Enhabit has seen strong growth when it comes to Medicare Advantage (MA). The company has recently signed 18 new MA contracts. At this point in time, nine of these contracts are effective.
“What we’ve done is gone out to our business development teams in the field and said, ‘Reach out to all your large referral sources, whether it’s a hospital, surgery center, or physician, and find out from them what would be the top three to four contracts that would be meaningful for us to come in and say we could serve,’” Jacobsmeyer said. “And then we get that to our payer innovation team, so that they can start further developing that pipeline.”
Currently, Enhabit has about 35 contracts in its development pipeline.
Enhabit CFO Crissy Carlisle believes that MA and labor are going to be the company’s “swing factors” in 2023.
“The success of our ability to recruit and retain professionals, and then the success of the payer innovation team, and what they’re able to achieve with more contracts, as well as getting improved rates on those contracts — it really comes down to those two things,” she said during the discussion.
Carlisle also gave an update on where the company stands when it comes to M&A plans.
“We plan to invest $2 to $4 million in ten de novos in 2023,” she said. “That’s an important piece. We’ll prioritize adding hospice where we already have an existing home health location, because we can take advantage of having some infrastructure already in place in that area. We can co-locate and then build off the existing brand, and have existing referral sources in that market.”