Despite the fee-for-service rate environment, Addus Homecare Corporation (Nasdaq: ADUS) is bullish long term on home health care, which represents its smallest segment of business.
But that doesn’t tell the whole story. What Addus is really in on is home health care alongside personal care, which it can offer across Illinois, New Mexico and Tennessee.
Addus believes layering home health care on top of home- and community-based services (HCBS) will be key to its long-term overall growth, but also to its value-based care success. That’s a sentiment its leaders have repeated over the last few years.
But on Tuesday, at the Stephens Annual Investment Conference, they delved deeper into how that strategy is working.
“We really believe we’re at the beginning of being able to sit down and talk to some of the payers that are excited about value-based care, showing them what personal care along with home health can do,” Addus CEO Dirk Allison said. “We’re starting to get that data. That’s really what you’ll see in 2024, a focus on bringing in home health, a focus on our unit growth and a focus on some internal things on personal care.”
The Frisco, Texas-based Addus provides personal care, home health care and hospice care to over 49,000 consumers via 221 locations across 22 states.
It has had the personal care-home health thesis for a while. But now it’s more than just a thesis, given the data the company has collected over the last couple of years.
“We’ve now had up to two years of data that is showing we’re making significant reductions in this high-cost population group that we take care of, in both emergency room visits and readmissions to the hospital,” Allison said. “So, we’re pretty excited about that. And that’s why when we look at home health, we don’t want to get caught up in the fact that the next year or two may be a little tough. We think long term, and it’s a really good part of the business that we need to have at Addus.”
The value-based arrangements Addus does have in place are all different. But, for the most part, they are focused on inpatient utilization, rehospitalizations, emergency room visits and gap closures.
Addus now has evidence that it can reduce inpatient costs by about 15%, for instance.
Its leaders believe those value-based arrangements are best set up when personal care is the foundation. Personal care aides are in the home earlier and more often than home health aides are, for instance.
“Unlike a lot of people in the industry, we’re focused primarily first with the personal care component,” Addus COO Brad Bickham said. “Because, if you think about it, our personal care aides are in the home earlier than home health, earlier than hospice, they’re in the home longer than any of those providers. Our typical client may be seen three or four times a week with an aide in the home for two to eight hours a day. They’re able to see a lot of changes in condition with those clients.”
Addus has also invested in technology that will embed those caregiver observations into a system that will lead to risk scoring.
Once that risk scoring is there, it will be easier to intervene on those high-need clients that have a greater chance of being admitted to the hospital.
“We’ve had a lot of success with that,” Bickham said. “The plans, I think, are very bullish on what we’re doing, how they’re seeing the savings. We’ve had a lot of interest in expanding that. And I think what we’ve been really working on is kind of how we scale this. Along with the IT system, there’s also the clinical piece of it, which requires some education for the aides.”