COVID-19 headwinds slowed hospice growth during 2020 and 2021. This will likely trend into 2022, but signs of recovery are starting to show, according to Paul Kusserow, CEO of Amedisys (NASDAQ: AMED).
During the past two years hospices have contended with worsening staff shortages, rising supply costs, increased paid leave and employee quarantines due to the pandemic. Providers have seen drops in referrals and length of stay due to disruption in other health care settings and senior living. Many patients have also decided to delay or forego care to reduce risk of catching the virus in a facility.
“We think this is multi-year, but we think most of it is behind us. We rolled into this year expecting [the hospice market] to expand 2-to-3%. We think it declined as much as 6-to-10%,” Kusserow said at the Credit Suisse Annual Virtual Healthcare Conference. “We feel like there’ll be more normalization as we exit 2022 going into 2023.”
Kusserow attributed the anticipated improvement in large part to the prevalence of vaccination among seniors, both a key demographic for Amedisys and a high-priority group for vaccines. More than 98% of adults 65 or older in the United States have received at least one dose of COVID vaccine, with 85% fully vaccinated, according to the U.S. Centers for Disease Control & Prevention.
The workforce shortage and staff quarantine slowed growth at Amedisys and industry-wide this year. During the second quarter the company pinpointed 54 of its hospice locations that saw declines in average daily census (ADC). Chief Operating Officer Chris Gerard indicated at Credit Suisse that rising turnover was a leading cause.
Company-wide, the hospice segment’s ADC dipped in the third quarter to 13,272, down from 13,953 in Q3 2020. Discharge average length-of-stay fell to 94.5 days from 96.8 days in Q2. Median length-of-stay dropped to 24.3 days from 25.3 days.
Moving into the third quarter,the company saw some of this improve. Those 54 locations saw 3.5% ADC growth sequentially, a trend that is continuing so far in Q4.
“We had to really get in and measure ourselves against the management teams that we had in place and the people in the right seats invested in some positions there, which we think is paying off now,” Gerard said. “We’re seeing real significant movement so far in Q4 of those locations.”
Amedisys reported earlier this year that it would be doubling down on staff recruitment and retention efforts. This has included bolstering their business development team. The company has hired 39 new business development professionals, bringing their total of those staff to 536. They expect further, incremental expansion of this team. According to Gerard, these efforts are already paying off.
“The productivity has been incredibly consistent with history,” Gerard said. “In the first six months of our reps being on board, the hospice side has consistently performed right in line with our the past, same on the home health side. All that bodes pretty well for continued growth as we exit this quarter going into next year.”
Amedisys’ net service revenues rose to $553.5 million during the third quarter, up from $544.1 million from the prior year’s period. The company’s hospice segment took some punches from COVID-related headwinds as cases of the virus surged, particularly the delta variant. Q3 hospice segment revenues saw a decline to $195.5 million from $199.7 million in the prior year’s quarter.
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