Despite recent hits on the overall markets, hospice company revenues may be protected by the growing demand for their services.
The U.S. stock markets took a major blow due to turmoil stemming from volatile oil prices and the continuing economic impact of the global COVID 19 outbreak. Monday’s drop — the worse since 2008 — caused a 15-minute halt to trading this morning. By day’s end the Dow slipped 7.8%; the S&P tumbled 7.6% and NASDAQ composite sank 7.3%, the Wall Street Journal reported.
Publicly traded hospice companies, however, may be better positioned than most to weather the storm.
“For hospice, there are two sides of this. There is a stock market impact where stocks are selling off just because of broader coronavirus fears. But operationally, if you think about the home health and hospice companies, I think the impact should be minimal to negligible because the need [for care] doesn’t go away with [COVID 19],” said Brian Tanquilut, senior vice president of health care services equity at Jeffries & Co. “While the issue is some people are scared to be exposed or to be out there in public places, the nurses will still do their work, and the demand for the service doesn’t go away. I think the stock issue is more of the market rather than fears of operational impact.”
An upward trend in hospice utilization during 2018 brought a record number of patients into hospice for longer periods of time, according to a 2019 report from Atlanta-based research firm Excel Health. Hospice utilization among Medicare beneficiaries climbed above 50% during 2018, the highest rate since the 1983 inception of the Medicare Hospice Benefit. Meanwhile the average length of stay rose to 75 days in Q2 2018 from 74 in full-year 2017, the report indicated.
Some hospice stocks did sink with the rest of the market. As of noon today Encompass Health’s (NYSE: ENC) stock price was down 7%. Home health and hospice provider LHC Group’s (NASDAQ: LHCG) share price had fallen 5.13%; Amedisys Inc. (NASDAQ: AMED) had dropped 3.67%, and Chemed Corp. (NYSE: CHE), parent company of VITAS Healthcare and Roto-Rooter, had fallen 6.47%. But by the time the markets closed for the day, each of these stocks had begun to inch back up.
“This is one of the few safe havens as people worry about the fundamental impact of [COVID 19], because people are not gonna say that they are not going to use hospice because there’s coronavirus,” Tanquilut said. “The concern more than anything else right now is on the clinician side: Do we risk exposing your clinicians by sending them to patients’ homes? But that’s the risk that most health care workers face, whether you’re working in a hospital or in a home setting, and so a lot of it just has to do with training on how to avoid it.”
Hospice providers are taking steps to protect employees as well as patients from the virus. LHC Group has begun pre-screening and protection protocols for its 32,000 employees and has committed to ensuring that staff have all necessary personal protective equipment and supplies.
“We are working proactively to continue providing the knowledge, education, and resources our workforce needs to help protect themselves and our patients from unnecessary risk,” said Keith Myers, LHC Group chairman and CEO.