Workforce improvement is at the crux of Enhabit, Inc.’s (NYSE: EHAB) hospice growth plans. Seeing recent clinical staffing gains, the company’s recruitment priorities include reinforcing its sales team to draw more referrals.
Labor has been a big “swing factor” in Enhabit’s ability to sustain and grow its services, particularly on the hospice side, CEO Barbara Jacobsmeyer recently indicated. In addition to clinical staffing capacity, beefing up its sales team will also be crucial to its hospice expansion, Jacobsmeyer stated during the Oppenheimer 33rd Annual Healthcare Conference.
“The most important thing for hospice now that we are improving on the staffing front is really getting the staff back in place from the sales perspective,” Jacobsmeyer said.
Enhabit operates roughly 100 hospice locations and around 252 home health locations in 34 states.
Similar to many hospice providers, higher clinical turnover has strained its capacity.
The close of Q3 in 2022 marked Enhabit’s first quarter as an independent company following its spinoff from Encompass Health (NYSE: EHC) in July. Since then, Enhabit has been teeter-tottering on labor metrics with apparent differentials among markets.
During Q3 last year, for example, the company saw diminished clinical capacity at 11 hospice locations as it battled workforce pressures. However, this number was down from 17 in Q2.
As of now, seven hospice locations are experiencing similar constraints, Jacobsmeyer stated.
“I don’t think that number will ever be zero, because we’re always updating our listings,” she said. “It’s kind of a moving target, because they’re not always the same locations. As a branch starts to grow, we have to do the adjustments and hire more so that they can have future growth.”
Some of Enhabit’s markets were hit harder than others by labor headwinds, according to Jacobsmeyer. The associated reductions in volumes had an impact on sales teams as well as clinical.
“As we had sales team members leave in 2022, if it was a market that we did not have [clinical] staff or that we were staffing constrained, then we made the decision not to replace those sales team members because a salesperson doesn’t want to have to keep saying no,” Jacobsmeyer said.
The company saw steady improvement last year on a quarterly basis, but volume continued to fall short of 2021 numbers.
For instance, Enhabit’s average daily hospice census reached 3,588 in Q4 2022, representing a 2.9% increase sequentially, but a 1.2% decrease year-over-year. This fit a pattern that extended throughout 2022.
Meanwhile, the company saw its direct sales workforce depleted by 83 employees between December 2021 and the end of 2022. Enhabit has since seen improvement, reporting 60 new hires as of January this year.
The company also made some clinical staffing gains in Q4 — 101 full-time nursing hires, 41 on the hospice side and 60 in home health. This represented a 19% year-over-year staffing growth.
Despite the upward swings, the company in Q4 relied more heavily on contract nurses as its new hires were onboarded. Contract nurses represented about 5.2% of hospice patient visits during the fourth quarter, Jacobsmeyer said during the Oppenheimer conference.
“We are now at the stage where we’ve had markets with improved [clinical] staffing and don’t have those capacity constraints,” she said. “It’s why we’ve used contract labor in some of them so that we can get sales teams back in the markets, back in front of referral sources so that we can get those referrals back that we saw fall over the last few years. We’ll use them where we know we have the hiring and can use that as a bridge to get those referrals increasing.”