VITAS Sees Growth Despite COVID-19 Costs

A rise in patient census pulled up revenues for hospice provider VITAS Healthcare, a subsidiary of Chemed Corp. (NASDAQ: CHE) in the second quarter, despite declining admissions and rising expenses stemming from the COVID-19 pandemic. 

In addition to VITAS, Chemed owns the plumbing company Roto-Rooter.  

The company’s average daily census reached 19,195 patients during the second quarter, up 2.8% from the prior year period. VITAS saw a 3.8% drop in admissions from Q2 2019, starting in April.

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“April 2020, was probably the most challenging month we will have ever seen, said Chemed CEO Kevin MacNamara in an earnings conference call. “Significant operating issues emerge daily triggered primarily from incredibly fast moving and sometimes contradictory. federal, state and local government regulations.”

Net service revenue for VITAS was up 4% from the prior year’s quarter, coming in at $327 million. The company got a boost from a 2.8% jump in the days-of-care provided, as well as a geographically weighted average Medicare reimbursement rate increase. VITAS also benefited from the suspension of sequestration during the pandemic by the U.S. Centers for Medicare & Medicaid Services (CMS). 

Under the auspices of the Budget Control Act, the CMS in 2014 began reducing payments to hospice providers by 2 percent across the board, a practice called sequestration.

VITAS took a blow from ballooning supply and PPE costs as well as the expense of increasing paid time off for many employees to provide additional relief from the strain of working in a pandemic.

Restrictions on services in other health care settings contributed to the company’s drop in admissions. Declining placement in nursing homes and assisted living facilities also impacted VITAS admissions, including a 22.8% drop in the number of patients in nursing homes entering the hospice and a 10.2% decline from assisted living.

“Admission performance in the quarter was primarily impacted by the level of disruption which occurred in each of our referring partners across the health care continuum. For example, admissions from hospitals were pressured due to the reduction in available bed capacity and elective procedures, resulting in fewer patients accessing and subsequently being discharged from hospitals,” said VITAS CEO Nick Westfall. “Admissions from physician offices who were disrupted, or were able to remain operational through telehealth interactions saw an increase due to the number of patients choosing to access the disrupted health care system through their primary or specialty physician practice, along with medical offices.”

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