VITAS Healthcare, a subsidiary of Chemed (NYSE: CHE), is seeing the benefits of ongoing community access initiatives as it continues to battle headwinds that started with the COVID-19 pandemic.
Since 2020, the company has been beleaguered by the staffing shortage, reduced lengths of stay, and disruption in skilled nursing, senior housing, and to some extent acute-care referrals. These factors, along with the return of Medicare sequestration, have contributed to declining revenues. But some indicators in Q3 point to an upturn in some areas as 2023 approaches.
VITAS’ Community Access Initiative is one of the interventions that appear to be bearing fruit, according to CEO Nick Westfall. The program focuses on educating health care providers throughout the continuum to identify patients who are eligible for hospice earlier in their disease process.
Thanks in part to this effort, length of stay rose during the third quarter, Westfall indicated in an earnings call.
“This sequential performance illustrates the consistency with which our Community-Based Access Initiative is performing as we continue to be focused on incrementally admitting more appropriate patients each day across all pre-admits settings,” Westfall said. “Growth in our median length of stay is attributed to the successful execution of our Community Access Initiative.”
The company’s average length of stay rose to 106.2 days during Q3, up from 103.7 during the second quarter and 96 days during the prior year’s period. This suggests some normalization is occurring as COVID infection rates drop, as length of stay has been a pain point for many providers during the pandemic.
Admission rates in Q3 were mixed depending on the referal source. The company saw nursing home admissions jump 6.2%, but sustained a 23.4% drop among those referred from hospitals. They also saw a 7% decline in assisted-living facility admissions.
Despite the declines, some improvement started to take shape in the latter half of the quarter, according to Westfall.
“Our admissions strengthened and outpaced our discharges throughout the second half of the third quarter. This entire-quarter admission improvement generated weekly average daily census growth, which we haven’t experienced since the start of the pandemic,” Westfall said. “Directionally, this is encouraging as we proactively expand our clinical staffing and increase our clinical capacity. This is the most encouraging set of emerging green-shoot growth metrics we’ve seen since the start of the pandemic.”
Clinical capacity has been a major factor in the company’s declining admissions. The staffing shortage has been the biggest barrier to growth for VITAS since at least the start of the pandemic.
The recent increase reflects investments the hospice provider has made in recruitment and retention during the past two years.
The company has instituted a hiring and retention bonus strategy focused primarily on nurses, nurse managers, home health care aides, and social workers, which includes payments to employees ranging from $2,000 to $15,000. The company has financed the program largely through Provider Relief Fund dollars, some of which also went towards bolstering their supply of personal protective equipment.
Additionally, VITAS has increased employees’ allotments of vacation time.
The bonuses have drawn new hires and had a positive impact on turnover, Chemed CEO Kevin McNamara indicated in the earnings call.
“During the quarter VITAS has expanded our licensed health care professional staff by 172 employees, the majority consisting of licensed nurses,” McNamara said. “This is the first significant expansion of our clinical workforce and related patient capacity since the pandemic began in early 2020.”
Nevertheless, revenues were down in Q3 from the prior year’s quarter, as the hospice provider absorbed the reinstatement of 2% Medicare sequestration and geographically-adjusted reimbursement reductions in some markets. Those numbers fell to $297 million during Q3, down 6.6% from the prior year.