Enhabit (NYSE: EHAB) is piloting new technologies that will help the company's leaders navigate proposed home health payment cuts.
In preparation for a potential 6.4% interest rate cut, Enhabit is identifying potential increases if the final rule is similar to the proposed rule, according to company leaders at Jeffrey's Healthcare Services Conference on Tuesday.
Chief Financial Officer Ryan Solomon shared that there is no “silver bullet” to mitigate the potential impact of the rules, but the company focuses on visits per episode (VPE) pilots.
The pilot was launched in August in about 11 locations and includes strict compliance with Medalogix. This is the technology the company uses to provide recommendations for VPE, Solomon said. This technology assesses the impact on quality measured through patient transfers to facilities such as skilled nursing.
“Some of our peers tend to hover over the 12 VPE range,” Solomon said. “Looking at our latest performances, we're under 14, so I think there's a meaningful opportunity there.”
Enhabit has gathered teams to review the VPE recommendations and adapt the system to the number of recommended visits, CEO Barb Jacobsmeyer said. The only way to exceed the recommended number of visits is if the clinician works with the team to explain the variant.
Solomon emphasized the importance of focusing on cost areas and general administrative costs to ensure that the company is prepared for the final rules.
“If the final rules appear to be proposed, I think there are some potential disruptions that could create opportunities for growth beyond what we saw on our home health platform this year, and there are elements that have been tailored with side-specialist optimization and other aspects of the business,” Solomon said.
Enhabit's overall strategy has changed over the past three years.
Jacobsmeyer explained that when the company became independent from Encompass in July 2022, it has long focused on hiring, retention, payment strategy development, and M&A growth. She said on the phone that the second quarter of 2025 was “a great example of how they all come together.”
Jacobsmeyer shared that most of the year is spent winning contracts with most of the Medicare Advantage (MA) plans, as more beneficiaries are choosing MAs.
“To be considered a full-service provider of referral sources, we must be able to accept the majority of payers. This was a two-and-a-half year journey of negotiations to get a fair payment agreement for the services we provide,” she said. “From a growth perspective, we see results both when we look at improving revenue per visit, especially in terms of things other than Medicare.”
Enhabit currently operates 249 home sanitation sites and 114 hospice locations in 34 states. In August, Jacobsmeyer announced he would leave the company in July 2026 or when a successor was appointed.
Improved volume
Jacobsmeyer said that as hospital vision rates rise, so does demand for home care. The service fee model offers numerous options for patients transitioning from hospitals, including inpatient rehabilitation and skilled nursing facilities. However, MA plans may deny patients accessing those settings due to higher costs.
“There are a lot of patients on the hospital side of MA who need to move,” she said. “That's why the message is so important. You need to educate discharge planners in the hospital. This is not only upside down, but you want all patients. (Home care) The need for patients is long.
Jacobsmeyer said leaders need to move away from unfavourable payer contracts, as they did in 2024 from several MA payers. In doing so, the company experienced an immediate decline in the census, which also allowed the company to secure double-digit payments from one major payer.
As she prepares to step down from her role, she states that her successor is in a great position.
“We are in a position to distinguish ourselves from clinical experience,” she said. “If we can attract more clinicians, we'll be able to attract more market share. I think there will be more opportunities for our enemies as we look to the future.”
