Addus Leaders Believe More Personal Care Will Help Payers With Medical Loss Ratio

Over the past 12 months, the leaders at Addus HomeCare Corp. (Nasdaq: ADUS) have been increasingly vocal about the company’s involvement in value-based care.

The company has established several value-based arrangements across the country, in places like New Mexico, Illinois and Arizona.

“There may be a little bit of difference between them, but I think fundamentally, we get paid for our services at the rate that we normally would,” Brad Bickham, executive vice president and chief operating officer at Addus, said Wednesday during a presentation at B of A Securities Healthcare Conference. “There can be a gain share component to it, so there is an upside component, depending on how we [perform on] certain metrics. Some of those may be related just to rehospitalizations, some may be a combination of hospitalizations and ED usage, and then also looking at quality metrics as well.”


Based in Frisco, Texas, Addus provides personal care, home health care and hospice care to over 49,000 consumers through 214 locations spanning 22 states.

The company has begun to heavily invest in its value-based care program.

One of the ways it’s doing so is through its rollout of a new case management software. The software was a key component in Addus’ effort to scale the program, according to Bickham.


“We’ve moved from having a team of individuals that have been getting changes in condition that our caregivers send to us to now [putting that] into the system,” he said. “The system is now doing risk scoring on clients, so that we can scale it to be able to target specific individuals who actually need to have some sort of intervention. We’re really positive about that development, and what that bodes for the future.”

The software also allows Addus to tweak the algorithm, and improve this risk scoring component, as the company receives more data. This will, in turn, help Addus better determine which interventions work best.

Bickham noted that the payers that Addus is currently partnering with are looking to expand these existing value-based arrangements. Plus, the company is seeing interest from other payers.

“There’s no lack of demand for that type of arrangement,” Bickham said. “It’s really getting with a payer that’s going to be a good partner with you to be able to make sure that, if we’ve got interventions that need to take place, we have an engaged case manager on the other side that can help us make those changes.”

Right now, value-based care is a smaller part of Addus’ overall business. However, the company is hoping to see substantial growth over the next five years.

“Does that mean it grows to three or four times the size it is today? As a billion dollar company, it’s going to be hard to become material for a while, but it is certainly something we’re very excited about,” Addus CEO Dirk Allison said during the discussion.

Looking ahead, Addus is excited about its latest contract.

Allison noted that if it works well, it will help the company form partnerships with more Medicare Advantage providers.

“It’s a small contract, and instead of gain-share we’re taking some risk,” he said. “Now, it’s very minimal. We’re only taking risk for our part, for our hours. We wanted to — I won’t say experiment — but we wanted to enter into a contract with a payer that we could partner together to determine if adding personal care hours can help reduce overall medical loss ratio for their patient base. We’re excited about that. We’ve only been in it less than a few months.”

Companies featured in this article: