VITAS on Path to Normalization Amid Pandemic Disruption

Restricted access to patients during COVID-19 made for choppy waves last year for VITAS Healthcare, a subsidiary company of Chemed Corp. (NYSE: CHE), but the company anticipates normalization on the horizon in a post-pandemic landscape. The pandemic’s turbulent tides have continued to disrupt the overall health care system, but signs of recovery are starting to emerge. 

Restricted access to patients in nursing homes, assisted living and senior housing facilities has plagued hospice providers during COVID-19, as these have historically been significant sources of referrals. Lengths of stay have also dropped, as patients in facilities often receive hospice referrals earlier.

“The most complex issue still facing VITAS is the disruptive impact the pandemic has had on traditional hospice referral sources and low occupancy in senior housing,” said Kevin MacNamara, president and CEO, Chemed Corp., in an earnings call earlier today. “This disruption continues to impact our admissions and traditional patient census patterns.”

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Despite VITAS seeing two sequential quarters of strong admissions growth during the latter half of 2020, average daily census dropped during Q4. The reduction was largely attributable to issues in the senior housing space, including nursing homes and assisted living facilities.

In the first quarter, VITAS reported that net patient revenue totaled $316 million, a drop of 6.5% compared to the prior year’s period. The company’s average daily census saw a decline of 6.1% since the prior year, with admissions declining by 2.5%.

“Comparisons to the pandemic year of 2020 are analytically difficult,” said MacNamara. “The pandemic clearly destroyed the hospice industry. The U.S. government stepped in to help with relaxation of sequestration and several other operational modifications. The net effect of the pandemic and the government’s actions was to allow VITAS to report an increase in adjusted net income of 25.7% in 2020, but VITAS had a patient base in which median length-of-stay fell to 11 days.”

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VITAS benefited from the moratorium on Medicare payment sequestration during the public health emergency. Congress recently extended the moratorium through Dec. 31. It temporarily halts the practice of skimming 2% off of provider payments by the U.S. Centers for Medicare & Medicaid Services.

Declines in daily census at VITAS were a direct result of the disruptions caused by restrictions at facilities where patients were housed, according to VITAS President and CEO Nick Westfall, who stated that VITAS has served more than 90,000 patients and their families since the pandemic’s onset.

“Our hospital-generated emissions have largely normalized to pre-pandemic levels. However, referrals from senior housing, specifically nursing homes and assisted living facilities, continue to be disrupted,” said Westfall. “There’s progression throughout the course of the quarter, but with volatility. It’s really market-specific. It’s a matter of timing and trajectory.”

Accessing patients in facilities is anticipated to remain a top concern for hospice leaders during 2020 and 2021. Referrals to VITAS from nursing homes were down 26.2%; and assisted living declined by 13.1% during the first quarter.

Long-term care facilities have been hardest hit by the deadly virus, with these residents among the most vulnerable to COVID-19. More than 647,750 nursing home residents have contracted the virus since its onset, causing nearly 132,000 related deaths, according to the U.S. Centers for Disease Control & Prevention (CDC).

VITAS has seen stabilization in some markets and pockets of improvement in senior housing admissions. Nevertheless, it remains too early to reasonably project a timeline for admissions to return to pre-pandemic levels, according to Westfall. Markets vary widely in terms of the loosening of those restrictions, often from state to state, or facility to facility.

Vaccinations have been among the beacons lighting the way for hospices to return to closed care settings. The CDC reported more than 4.5 million new vaccination doses have been administered through the Federal Pharmacy Partnership for Long-term Care (LTC) Program, with the most recent data reported in mid-March. The partnership is a collaboration among national pharmacy chains, health care organizations, CMS and industry groups to provide vaccinations to nursing homes and assisted living residents across 54 U.S. jurisdictions.

“Fortunately, [hospice] admissions in hospitals have largely normalized, and some of our senior housing referral sources are beginning to show improvement in occupancy and related referrals,” said MacNamara. “I firmly believe senior housing will recover. However, senior housing is in the early stages of recovery, and we do not have enough data points to accurately predict when senior housing referrals will return to pre-pandemic levels.”

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