Amedisys Foresees Strong 2020-21 Hospice Growth

Despite seeing a drop in referrals and admissions between mid-March and early April, Amedisys (NYSE: AMED) expects its hospice business to stay on a strong growth trajectory during 2020 and into 2021, despite corporate leaders voicing some skepticism about the forthcoming Medicare Advantage hospice carve-in. 

Acquisitions activity is a pillar of the company’s hospice strategy, though Amedisys has also doubled down on the de novo front, opening eight within the past year. The company recently agreed to the $235 million purchase of AseraCare Hospice. This was the second 2020 acquisition for Amedisys; it followed the January purchase of Asana Hospice for an undisclosed amount.

“We’re finding the hospice business to be very resilient, a good business for us. We believe it’s more protected from a regulatory perspective and also from a consumer perspective. We also think it’s very good complement with home health and personal care,” Amedisys CEO Paul Kusserow said in a presentation at the Bank of America Securities 2020 Virtual Health Care Conference. “We’ve done four deals in the last year and a half, and we’ve done [de novos], so we’re pushing aggressively on hospice. If I have $1, I’ll put it in hospice at this point.” 

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The company is well-positioned to recover fast from the pandemic-related slowdown, according to Kusserow. Amedisys’ average daily census for hospice patients has returned to pre-COVID levels. Even as the economy at large seems to be leaning toward a possible recession, Kusserow said he expects demographic tailwinds, rising demand and reduced turnover to shield the company from major deleterious effects. 

As uncertainties continue to abound related to the coronavirus outbreak, the company is focused on working toward strong fourth quarter results and preparing for changes in the hospice landscape forthcoming in 2021.

Effective Jan. 1, the U.S. Centers for Medicare & Medicaid Services (CMS) will test coverage of hospice in the value-based insurance design model, commonly called the Medicare Advantage hospice carve-in. The carve-in, according to CMS, is intended to increase access to hospice services and facilitate better coordination between patients’ hospice providers and their other clinicians.

The Medicare Advantage program has been growing in recent years. The number of participating beneficiaries tripled between 2019 and 2020, totaling nearly 1.2 million enrollees in 30 states, according to CMS.

While Kusserow didn’t show concern that the carve-in would negatively impact Amedisys’ hospice business, he wasn’t optimistic about the program.

“We don’t agree with it. We don’t think it should happen,” Kusserow said in the presentation. “I think it’s a contradiction, I think if Medicare Advantage gets involved and starts to push people into hospice it’s problematic for them. I think the whole ‘death panels’ issue could come up again, and I think that would be really problematic for managed care.” 

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