Enhabit (NYSE: EHAB) aims to become a home health provider to improve negotiations with plans and build relationships with referrals, but the path to this goal took longer than the company leaders originally envisaged.
To achieve more referral partners and increase the amount of patients, Barb Jacobsmeyer, president and CEO of Enhabit, is about to become a “full-service” provider. Payer innovation was the “most important part” of Enhabit's strategy, which is recognized as a full-service provider, but it was a longer process than Jacobsmeyer had anticipated.
“This January 1st was our first time truly doing full service,” Jacobsmeyer said at Goldman Sachs' 46th Global Healthcare Conference on Tuesday. “Up to that point we had negotiated, renegotiated, or given different payers notices. So, on January 1st this year, it was the first time we had all the large national payers and many local payers.”
Dallas-based Enhabit Home Health & Hospice operates 364 locations in 34 states, including 251 home sanitation locations and 113 hospice locations.
In addition to expanding the payer mix, Enhabit has recently returned to renegotiate some of its contracts, and managed to secure some rate increases, according to Jacobsmeyer. During negotiations, the company is constantly trying to build episode contracts, and now has around 70% of the census of home health patients.
“This allows us to manage patient visits and compare them to payers who manage the visits,” Jacobsmeyer said. “We're going to all of these discussions looking for episodes.”
Now that Enhabit has reached a critical chunk of payer relationships and has managed to achieve higher rates, the company is focusing on messaging to inform referral sources of payer expansion sources.
The company's payer mix has continued growth with traditional Medicare and its payer innovation agreements, Jacobsmeier said.
Looking at industry-wide reimbursement trends, Jacobsmeyer advocated that MEDPAC analyzes margins for all payers rather than focusing solely on Medicare.
“They continue to write reports for home health care with only Medicare margins,” she said. “Obviously, that was 10 years ago when the majority of home hygiene was the cost of services. If there's more than 50% of Medicare benefits, then that's not OK anymore.”
According to the company's chief financial officer, Ryan Solomon, the company reported that its Medicare fees have declined and is currently in line with its colleagues.
The company expects its share of revenue from Medicare to continue to normalize, Solomon said.
As for continuous expansion, according to Solomon, we are growing strategically through both de novo and acquisitions, from a continuous expansion standpoint, in terms of continuous expansion, with a bit of focus on the growth of our hospice business.
