VITAS Healthcare, a subsidiary of Chemed Corp. (NYSE: CHE), has built up and diversified its referral base during the pandemic. This effort has helped the company withstand COVID-19 headwinds and establish a foundation for recovery as the year progresses.
VITAS saw two sequential quarters of strong admissions growth during the latter half of last year, average daily census dropped 2.8% during Q4. This was largely due to pandemic-related disruption in the senior housing market, which historically has been a significant source of referrals. Woes in senior housing also impacted median length of stay, which dropped to 11 days in January from the pre-pandemic levels of 16 days.
Patients in facilities tend to receive hospice referrals earlier in the course of their illnesses and experience longer lengths of stay. However as vaccinations ramped up during the first quarter of the year, signs of recovery are on the horizon.
“[Median length of stay] has been stabilized and building back throughout the course of the first quarter and would be expected for the remainder of calendar year 2021 resulting in stabilization and beginning to return towards a normal [average daily census] growth trajectory,” VITAS CEO Nick Westfall said in a presentation at the Bank of America Healthcare Conference.
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%.
Aiding the company’s recovery is a more diversified referral mix. As senior housing referrals declined, VITAS built stronger relationships with other sources such as physician offices and hospitals, according to Westfall.
Among 160 hospice leaders surveyed for Hospice News’ 2021 Hospice Industry Outlook Report, 41% indicated that physician practices represent the largest opportunity for referral growth this year. This number is up from just 27% in 2020.
Outreach to physicians has paid off for VITAS thus far.
“We have established and grown more relationships than we had pre-pandemic. For physician offices, new providers that come in, as well as strength of hospital business, we have been pleased with the relationships that we’ve seen expand,” Westfall said. We’re also making sure we’re prioritizing time and continuing to be available to our senior housing partners.”
Communicating the value of hospice care to physicians will be an important key to developing and sustaining this largely untapped area of referring relationships. VITAS has stepped up its outreach to referral sources to communicate the value proposition of hospice care, with a focus on how the company can address its partners’ specific needs.
“We have always deployed it that way, and the pandemic has only highlighted and reinforced that need,” Westfall said. “This is something we focus on and target and talk about on a day-to-day basis, where we’re prioritizing our time, and ensuring our education and messaging is on point to meet their needs today, as well as their anticipated needs in the future.”