Enhabit Refocusing on Value-Based Programs, Seeking Hospice Deals

Enhabit, Inc. (NYSE-EHAB) is keeping a close eye on the regulatory and reimbursement landscape as it executes its value-based care growth strategy.

The home health and hospice provider last summer placed a focus on expanding its Medicare Advantage (MA) business, forming a payer innovation team focused on strengthening Enhabit’s value proposition to health plans.

“This team was focused on our value proposition with MA plans so that we could be successful in negotiating agreements that place a value on our quality outcomes,” Enhabit President and CEO Barbara Jacobsmeyer said at the recent annual New Ideas for the New Year Investor Conference. “We’ve faced challenges as a result of our previous lack of work with Medicare Advantage plans. Members were moving to MA and we just were not on very many plans, which restricted our sales team and restricted our growth.”


Enhabit has been focused on growth since spinning off from Encompass Health (NYSE: EHC) in July last year. Enhabit most recently expanded its presence in Florida, adding 22 locations with the acquisition of Southwest Florida Home Care’s home health agency in Fort Myers for an undisclosed sum in December.

The company’s more than 10,000 employees provide care across 105 hospice and 252 home health locations in 34 states.

Having a team dedicated to working with Medicare Advantage will be crucial to the company’s growth plans. Enhabit currently has payment agreements with nine MA plans and is seeking additional contracts this year, Jacobsmeyer said.


“When we look at 2023, it’s really with that lens of growth,” Jacobsmeyer said. “To be more of that full service provider to our referral sources, we have to be successful on our payer innovation team’s focus.”

Around 95 of Enhabit’s hospice locations are in states where the company also has home health operations. Increasing the degree of overlap between the two business lines is among the company’s key goals, according to Jacobsmeyer. Enhabit plans include opening 10 hospice de novos annually in its existing home health markets.

The co-location strategy allows for improved care transitions across different settings, which can be attractive to value-based payers, she added.

“We have the quality and efficiency to be well-positioned for value-based care, collaborating with various alternative payment models,” Jacobsmeyer said. “The outcomes from those types of arrangements give us data to present our value proposition to various non-Medicare plans too. It’s really about bringing our data and sitting down with these plans to say here’s the high-quality that we bring. We’re committing to timely access to care, but we need to be paid fairly.”

Acquisitions are also on the menu for Enhabit and will be key to achieving its growth targets

Enhabit plans to deploy $50 to $100 million annually towards transactions, with roughly 60% to 70% leaning towards hospice, Jacobsmeyer previously told Hospice News.

The company’s pipeline is skewed more towards hospice in part due to uncertainty around reimbursement in the home health sector, according to Enhabit CFO Crissy Carlisle. But that doesn’t mean that home health deals are off the table, Carlisle said during the conference.

Enhabit has experienced instances of lower reimbursement for its home health services due to the shift of more patients towards Medicare Advantage.

“We are leaning a little bit more towards hospice given the current reimbursement environment and also our ability to create overlap and build off synergies with our existing home health brand and referral sources in those markets,” Carlisle said. “The real question is whether we are going to be able to reach an agreement on, because we would need the seller to acknowledge that reimbursement uncertainty. It doesn’t mean we would not consider home health acquisitions.”

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