CEO Keith Myers: LHC Group is All-In on Hospice

Keith Myers co-founded LHC Group (NASDAQ: LHCG) in 1994 and has served as its chairman and CEO ever since. Today, the company’s platform, including all service lines, reaches 60% of the U.S. population aged 65 and older, LHC Group reported in an August earnings call.

One of the largest hospice and home health providers in the nation, the Lafayette, La.-based company operates 104 hospice locations, two hospice inpatient units and four palliative care programs in 35 states and the District of Columbia, caring for upwards of 21,000 patients and representing 11% of LHC Group’s business. The company’s hospice segment earned nearly $55.1 million in net service revenue during the second quarter of this year, up from close to $50.1 million in Q2 2018. 

Myers sat down with Hospice News at the Home Health Care News Summit conference in Chicago to discuss the industry’s direction and LHC Group’s hospice strategy.

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Health care is an evolving industry. What changes do you expect to see in the hospice space during the next few years?

I think the hospice benefit is going to grow substantially because more and more people are open to having those end-of-life conversations.

My wife and I, for example, I just turned 60 this year. We are doing things that our parents never did. We bought a plot, built our resting place, and that kind of acceptance is growing. People are more willing to have these conversations. The baby boom generation as they age are going to be much more accepting of hospice care.

Then on the policy side, people are much more aware of the savings that can be generated when hospice is elected. We know that about 25% of spending occurs in the last year of life, and we see many cases where people and their physicians don’t want to [end curative treatment.] But we are seeing that is changing. The policy will follow, and hospice will grow from that.

In 1998 when we opened our first hospice, it was big news in that community. It was almost like building a new church. It was so strange. It was the only hospice in that area. Today, you see several hospices serving a single community. So LHC Group is all-in on hospice.

We want hospice to be equal with home health. Home health is where we started, and hospice followed. Then came personal care, which is not less important, but it comes behind that and we are more selective with that. The reimbursement changes from state to state, and we are largely dependent on Medicaid so we may not have personal care in every market. But the vision is to have home health and hospice co-located in every market we serve.

Some companies in the space have indicated that they are going to slow down home health activity to focus on growing their hospice lines amid concerns over the patient-driven groupings model. Will LHC Group take a similar approach?

We are taking a longer term view, and we are not trying to time it. We have a dedicated team now that is focused on hospice. Their mission is to complete the build out. We want to have hospice co-located with home health in every market we serve.

We have one senior level executive now who is focused on hospice acquisitions in markets where we have a home health presence. We are not looking to necessarily make a large hospice acquisition or anything in the $50 to $100 million, because we don’t want to buy a lot of agencies in markets where we don’t have a home health presence. We prefer to go in and target a market and find a hospice that is a high quality, leading, reputable provider in their community and acquire that as part of a joint venture that is bolted on to our home health agencies to create a continuum of care.

In regards to creating a continuum of care, what ultimately would you like to see happen in terms of a payment model for palliative care?

The bar is set really low because you don’t have any model right now. I don’t think it should a per diem. I think it would be a fee-for-service, per-visit type rate. That is all we would need at the beginning. But we do need something to allow a patient to be on a palliative care program — that would be reimbursed — while they are on the home health benefit. Maybe they would have a limited number of visits, but it is part of the bridging process to bring patients from home health into hospice when the time comes.

We operate a unique model in that we have home health and hospice located in the same buildings with the same common areas, but the nurses who are home health nurses are focused on curative processes and are trying to help people get better and ultimately discharged.

In the same building a few yards away there is the hospice agency. And the home health agency may have 10% or 15% of the patients on their census that are on the decline towards having six months left to live, and they are not necessarily having the conversations about that.

We are starting to think of ourselves as a post-acute health system with home health, hospice and personal care services. We want to be able to look at a patient and have them in the right setting of care at any given time and not be limited by the constraints of fee-for-service or a six-month terminal prognosis. We understand that we are not going to change the six-month requirement for the [Medicare Hospice Benefit], but if we could intervene before the patient elects hospice it would be a huge help.

What is your take on the Primary Care First Models that have been announced and do you foresee LHC Group participating?

I can’t speak to whether we will participate in those models. We do have a nurse practitioner program that is still in its infancy for a company of our size. We are building that out and are going to have nurse practitioners making home visits in every market where we have home health and hospice. I think that home health and hospice have matured to a point where we can do that and not be viewed as being competitive with primary care physicians as an extension of their practice.

We want to make sure that we are not viewed as “stealing” patients from primary care, but more and more nurse practitioners will be providing care in the home, and when we participate in any type of risk-based model we are at risk in regards to rehospitalization rates for complex patients, and involving nurse practitioners is one of the best strategies for lowering rehospitalization rates.

In your company’s first quarter 2019 earnings conference call, you spoke of the health plan affiliated with your Geisinger acquisition, saying, “Being in the same room with the hospital and the payer creates alignment and provides an opportunity for us to work closely to develop value-based reimbursement models for managed Medicare and managed Medicaid populations.” How is that work progressing?

When you have a hospital system partner that is at full risk for a population, we come to the table as a post-acute operator, and when we show that 50% of the patients that they discharge to skilled nursing facilities can be cared for at home the conversation is very different than it would be if we were talking to a managed care plan.

A managed care plan would say that they would pay us ten more dollars per visit, for example, and take the patient out of the nursing home. A hospital system, especially like Geisinger that has a health plan, will say, “let’s pursue the savings,” and we’ll share the savings.

In the case of Geisinger, they are very willing to do that because they are a joint venture partner with the home health agency. When you have that dynamic, you skip that step of who is controlling the money and who wants to lay out that money for the value that’s being created.

I believe we need payment innovation in a big way in the managed care side. I visit the c-suites of [large insurance companies with managed care plans], and they absolutely see the value of providing care in the home.

But these organizations are very large and so very entrenched in the way that they do business. They have a department that contracts with home health, for example, that has no relationship with the department that contracts with skilled nursing facilities, and everyone is budgeted and incentivized to reduce their spending. So if the home health contractor reduces spending in home health they get paid an incentive even if it increases spending in skilled nursing facilities.

These companies realize that they have to think about this in a different way, but these big organizations are like cruise ships in that they don’t turn on a dime.

There is a sense of urgency for us. We want to move as fast as we can, and it is moving too slow for my liking, but I will take it as opposed to where we were in the past when we couldn’t have these kinds of conversations with those companies. Now they see the value of home health and hospice. But they have to change their organizations and the way they contract. They can’t treat or pay every provider the same regardless of their quality or their rehospitalization rate. You have to contract with providers based on their performance.

As the leader of one of the largest hospice providers in the nation, what concerns keep you up at night?

Probably the conversation about the MA carve in and how that is going to work.

It would be foolish at this point to think that managed care plans are going to get that right. They are more likely at first to do what they did with home health, basically not offer the benefit as it was developed but try to ration care in a per-visit model, and that would be very wrong for hospice.

In hospice you have to be there at a moment’s notice when the patient calls. We don’t know what [the carve-in] is going to look like, but pardon me if I don’t trust the managed care plans to do it right.

What are your most significant priorities as you prepare for a potentially massive influx of patients as the population ages?

It’s staffing. It’s the same issue with home health. If home health staffing is a challenge, meaning that nurses are not trained in school to be home health nurses, then hospice is two- to three-times more challenging.

[Hospice] is very special nursing. Only a small percentage of home health nurses can cross over and be a hospice nurse. It is as different as a physician who wants to be a family practice doctor or a general surgeon.

Dealing with death after death every day and not getting burned out takes a very special person. It’s a calling.

Do you have programs in place to help staff deal with the emotional fall out of providing end-of-life care and stave off burnout?

We have bereavement programs for family members of patients, and we also have a similar program for our staff. And it is equally as important. They do get burned out. I think they get overwhelmed with grief because they are in managing the symptoms of the patient who is dying, but at the same time they are consoling the family. So they play a dual role.

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