Disruption in the larger health care and aging services space adversely impacted VITAS Healthcare, a subsidiary of Chemed Corp. (NYSE: CHE), during 2020. This is particularly due to difficulty accessing patients in nursing homes, assisted living and senior housing operations, as occupancy drops due to the pandemic. The company expects some of that disruption to normalize during the second half of 2021 as vaccines roll out to those facilities.
While VITAS saw two sequential quarters of strong admissions growth during the latter half of last year, average daily census dropped 2.8% during Q4. The company attributes much of this reduction to issues in the senior housing sector, including nursing homes and assisted living, which historically has been a significant source of referrals. Compounding this concern is length of stay. Patients in facilities tend to receive hospice referrals earlier in the course of their illnesses and experience longer lengths of stay.
However, the future holds promise that the senior housing market will stabilize.
“We anticipate improvement in senior housing admissions in the second half of 2021 as senior housing patient mix and aggregate occupancy returns to pre-pandemic levels,” said Chemed CEO Kevin McNamara in an earnings conference call.
Driving much of this optimism is the availability of vaccines. Senior housing residents have been prioritized in many states for vaccine distribution. Long term care facilities have been among the hardest hit by the killer virus. To date, more than 600,000 of long term care residents have contracted the novel coronavirus, leading to more than 125,000 deaths, according to the U.S. Centers for Disease Control & Prevention. Facility staff have also suffered, with infections exceeding 525,000 infections nationwide and more than 1,500 fatalities.
Accessing patients in facilities has been a top concern for hospice leaders during 2020 and 2021, as nursing homes have imposed strict limitations as to who may enter due to fears of spreading the virus.
Recent data from the U.S. Centers for Medicare & Medicaid Services (CMS) show that numbers are starting to come down as more residents become vaccinated. During the week of Jan. 17, about 17,500 new infections occurred in nursing homes. Just one month earlier around Dec. 20, weekly cases exceeded 32,000.
“We’ll declare the nursing homes returning to normal, beyond making sure all the nursing home employees are vaccinated as well as the residents, when visitation returns to pre-pandemic rules — when the entire family can visit their grandmother in the nursing home,” said VITAS CEO Nick Westfall. “When those visitations are allowed, we think that’ll be the last obstacle to returning to normal occupancy.”
VITAS in Q4 2020 brought in $332 million in net revenue down 2.3% from the prior year’s quarter. Associated with the decline was a 2.8% reduction in days-of-care. The median length of stay for VITAS was 14 days during the fourth quarter, compared to 16 days in Q4 2019. This is directly impacted by difficulties accessing patients in senior housing facilities, who tend to receive hospice care for longer periods of time than those in private residences or inpatient centers.
Admissions of nursing home patients dropped 19.3% in Q4, accompanied by a 14.7% reduction in assisted living admissions, compared to the prior year’s quarter. This numbers could start trending back upward as access to facilities improves.
“There’s always going to be a continued need and role for the senior housing industry, specifically nursing homes,” Westfall said. “There just flat out aren’t enough caregivers to go out and deliver care at individuals’ residential homes. That’s an important thing to know, and we feel confident that occupancy levels will continue to come back as the pandemic subsides.”