Stephen Phenneger has been named president and CFO of St. Croix Hospice, where he has served as acting CFO since March. Phenneger was acting CFO during the sale of St. Croix to the private equity firm H.I.G. Capital by previous owner the Vistria Group, a Chicago- based investment firm.
He previously served as executive vice president and CFO of Enclara Healthcare, a hospice pharmacy benefit management company and was an operating partner with Cressey & Company, a health care-focused private equity firm.
Phenneger recently spoke with hospice news about the company’s growth trajectory and plans for 2021, as well as the impact of the COVID-19 pandemic.
What are your top priorities as you come into this new role?
It’s integrating with the team first and foremost and helping the team execute on the growth strategy. St. Croix has a tremendous history in the past of both de novo and [mergers and acquisitions]. We intend to not only continue that, but accelerate it. So we are working with the team to make sure that we continue our growth, but also making sure that the quality of care that we deliver is not compromised.
You have a background in the private equity space. How does that inform your approach to financial leadership at St. Croix?
I think my background in working with growth-focused companies during the last 15 years fits very well into St. Croix. I’ve helped work with organizations as they grow and continue the next steps in their evolution, I think this helps inform the influence that I can have here at St. Croix.
Can you speak about the strategies that St. Croix is pursuing in terms of growth? You recently opened a de novo in Nebraska and opened several others in 2020. What are your growth objectives?
We will continue to expand in both de novo markets, continuing our outreach and expanding our existing footprint. We’ve got a history of opening branches. We opened seven last year in 2020, and we would expect that to continue going forward.
Additionally, we’ve done two transactions in the last 18 months. We continue to receive a fair amount of inbound interest with folks looking to partner with a larger player in the space, and we would continue to accelerate our acquisition strategy and our partnership strategy with smaller operators in our markets.
Can you talk about some of the factors that you consider when choosing a new market in which to expand?
We really want to understand where there’s a market that we know, that looks and feels like markets that we’re in. I think our first goal is understanding how we can increase the access to the benefit for that population. We want to understand where markets are underutilizing the hospice benefit, where we can bring that value.
Secondarily, and most importantly, we want to make sure that we can partner with good quality clinicians locally. Health care is a very local business, and that’s not lost on us. We want to work with people that we know are of high quality and integrity in that market that can help us develop it and deliver good care to the folks that need it.
Did your plans for expansion change with the transition to H.I.G. Capital?
We are continuing down the path that we were already on. We’ve got a great partner in H.I.G. that is supportive of our growth and impressed by our history of expansion. What was critical to us and selecting them as a partner is we want measured, quality growth.
Is St. Croix likely to pursue acquisitions during 2021 or are you focusing on opening new locations?
“Yes,” is the short answer. We have plans to open several locations this year. We’ve already opened one. We have a couple of others that we’re in active discussions with in key markets for us.
On the M&A front we are absolutely looking at and evaluating alternatives and opportunities. We’ve been fortunate enough to get a fair amount of inbound interest from local operators see us as a potential partner for them going forward.
How hard was the financial impact of COVID on St. Croix and what steps have you taken to mitigate those challenges?
COVID has impacted every component and aspect of our business, from how we engage with referral sources, how we engage with patients and their primary caregivers, and how we engage and interact in an office environment or virtually. Certainly, there’s been tremendous costs, financial and otherwise to the company and to employees.
Our team reacted quickly to be able to convert into a remote workforce, ensure that our workforce had appropriate [personal protective equipment (PPE)] to be able to engage safely with the patients and keep our workforce infection rate very low. We also had to make sure that we weren’t a contaminant to any of the patients or environments.
It’s hard to measure the impact of COVID. There are a tremendous amount of components to that, whether it’s employees that ended up in quarantine, determining how to safely engage with patients, determining how we ensure that loved ones can see their families in their dying days.