Enhabit Goes All-In on Hospice Growth, Workforce Initiatives

Enhabit Home Health & Hospice (NYSE: EHAB) has honed its sights on hospice growth, with substantial investments into staffing and acquisitions.

Enhabit executives recently discussed what these investments mean for the future of its hospice business segment at the recent Wells Fargo Healthcare Conference in Boston.

“Hospice has been more of a growing side of our business,” said Enhabit President and CEO Barbara Jacobsmeyer at the conference. “We have a multifaceted growth strategy to scale our footprint across the country. For the first time ever, we have a formal de novo strategy.”

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Enhabit’s roughly 11,000 employees provide care across 34 states nationwide. More than 100 of its roughly 250 locations offer hospice in 22 of those states.

Enhabit’s de novo strategy will add 10 new home health and hospice locations each year, initially with a heavy focus on hospice, said Jacobsmeyer. Enhabit has opened three de novo hospices thus far this year.

Acquisitions form a second pillar to the company’s expansion, with plans to spend $50 million to $100 million annually, according to Jacobsmeyer.

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“We’re seeing a little bit of weight more towards hospice in our pipeline” said Enhabit CFO Crissy Carlisle at the conference. “We’re focused on maintaining financial flexibility. We feel very comfortable given our free cash flow and flexibility around our credit agreement to be in a position where we can take advantage of opportunities to grow the business.”

Roughly 60% to 70% of Enhabit’s acquisition pipeline is weighted towards hospice, Jacobsmeyer told Hospice News last month.

The newly independent home health and hospice provider spun off from Encompass Health (NYSE: EHC) in July, becoming its own separate, publicly traded company.

Enhabit’s overall revenue reached $268 million in the second quarter, a 6.3% dip compared to the same period last year — when the provider was still the home health and hospice segment at Encompass. Its hospice business brought in $47.8 million during Q2, an 11.2% drop from the prior year.

Like many providers, labor pressures pose some of the greatest risks to Enhabit’s hospice growth.

Recruiting and retaining clinicians will be pivotal to the company’s ability to scale and strengthen its operating models, according to Jacobsmeyer. The company has taken on additional costs to sustain competitive employee compensation and benefits packages across its business lines, she stated.

The company’s retention strategies have included updated mileage reimbursement, keeping paid contracting premiums low or at flat rates, and increased hiring salary incentives.

Incorporating more flexible work schedules for staff has been another tactic. Enhabit recently began implementing a new staffing model aimed at improving patient caseload management and workforce costs.

The focus on creating more work-life balance for employees is expected to boost hiring. Recently, the company was able to bring back five employees who had left the company for that very reason, according to Jacobmeyer.

“We want to be competitive in our markets, and these [changes] cover the basic need to get the recruitment side, but we feel like it needs to go layers deep as we look at long-term retention,” Jacobsmeyer said at the conference. “What we’ve heard from staff members that left us from hospice for less pay was that they had more work-life balance with backup coverage. So, it’s getting to a deeper level of investment to truly drive long-term retention and build and meet our employees where they need balance.”

The return on these investments and time it will take to shore up staffing resources is “hard to judge,” right now, but changes in the works are working towards long-term workforce retention and growth across the organization, said Jacobsmeyer.

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