Efficiency will be the name of the game at the Pennant Group (NYSE: PNTG) as the company works to offset labor pressures and a challenging reimbursement environment.
Pennant is leveraging technology to combat persistent workforce shortages and elevated turnover spurred during the pandemic. Providers have increasingly sought methods for streamlining clinical teams’ administrative tasks, for instance, including time spent on documentation.
“We are working to improve cost management and optimize care delivery. Our local teams are reporting out regularly on efforts to reduce direct and administrative costs while driving revenue to meet their commitments,” Pennant CEO Brent Guerisoli said in an earnings conference call. “As part of this effort, we are working hard to optimize the [electronic medical record] experience for our clinical teams, as we more effectively utilize technology and data to improve episode management, utilization and productivity while also enhancing the employee experience.”
The lean toward efficiency reflects larger trends in the industry as the labor pool dwindles. Without more boots to put on the ground, providers are seeking ways to get more mileage out of the ones they already have in place.
About 40% of 330 hospice professionals who responded to the 2023 Hospice News Outlook Survey and Report said that staff satisfaction and engagement would be the biggest driver of their technology investments this year.
But — while no one is out of the woods on labor — some, including Pennant, are seeing glimmers of improvement.
“While the pandemic has created a role in staffing difficulties and turnover across many industries, we are ultimately responsible for creating a life-changing employee experience, and our turnover results have not measured up to the highest standards we have set for ourselves,” John Gochnour, Pennant’s president, said in the earnings call. “In the fourth quarter and into the month of January, we have seen signs of improvement in our labor trends. Wage inflation slowed sequentially, clinical headcount increased and home health and hospice turnover has declined as we continue to improve these trends will allow us to admit and serve more patients and residents.”
Pennant also hopes that investing in efficiency will lighten the headwinds brought on by the unfavorable trends in home health reimbursement. For 2023, the U.S. Centers for Medicare & Medicaid Services (CMS) increased home health base rate payments by only 0.7% after initially proposing a 4.2% aggregate cut.
Amid these concerns, the company’s hospice segment has emerged as a bright spot in Q4, with increases in admissions (up 2.4% year over year), length of stay (up nearly 10%), and average daily census (up 5.2%). The company expects further census growth to “ramp up” in the remainder of the year, according to Gochnour.
Pennant’s home health and hospice services segment brought in $90.7 million in revenue during Q4, up 16.4% from the prior year’s period. The segment’s full-year revenue reached $342.2 million, up 10.6% from 2022.
The company expects acquisitions and de novos to open a second front in terms of growth during 2023.
Late last year, Pennant purchased the Wisconsin-based home health agency Kenosha Visiting Nurse Association for an undisclosed sum. This followed a transaction for Ardent Hospice in California last August.
“We see a robust pipeline of acquisition opportunities in home health, hospice and senior living across our platform and in new markets,” Gochnour said. “As we find opportunities through the efforts of our local teams, and our strong relationships with the broker community. We will continue to be disciplined and diligent in executing our growth strategy, looking for opportunistic acquisitions in areas where we have healthy clusters and talented candidates in our leadership development program.”