As Amedisys Inc. (NASDAQ: AMED) sees a changing of the guard in its C-suite, the company will not be slowing down on palliative care.
The Baton Rouge, Louisiana-based home health and hospice provider recently picked former Walgreens Co. President Richard Ashworth as its next CEO. He succeeds Chairman Paul Kusserow, who returned as the company’s top executive last year on a temporary basis.
Palliative care came to the forefront for Amedisys during Kusserow’s second term at the helm, with its Contessa subsidiary spearheading the emerging business line. Case in point, the company recently penned a contract with Blue Cross Blue Shield of Tennessee for its palliative services.
Despite the limited avenues for reimbursement, the opportunity to expand into palliative care represents a golden goose for Contessa, potentially exceeding Amedisys’ expectations when it acquired the business in 2021 for $250 million.
“I think the opportunity all-in [with Contessa] is larger, largely due to the fact that we’ve discovered palliative care and built that contract …,” Kusserow told Hospice News. “Palliative is interesting because I think we’re the first home health company to take true risk.”
The term “true risk” refers to the reimbursement models that are prevalent in Medicare Advantage (MA) — a per member, per month payment married with cost savings through reductions in institutional care.
With the leadership transition, it will be up to Ashworth to see this palliative care initiative through.
Most recently, Ashworth was president and CEO of the wellness solutions company Tivity Health (NASDAQ: TVTY), which contracts with MA plans.
Amedisys will be leveraging Ashworth’s experience working with MA in the coming years, as more of its home health, high-acuity and palliative payer mix shifts towards managed care.
“The other thing [in choosing Ashworth] is Tivity. One of the things that I think is really important is that they depend on payers, and their understanding of how payers work,” Kusserow said. “Understanding how to deal with payers is increasingly important, understanding how payers think about what they’re looking for. I think we have the solutions for them.”
With Amedisys’ national scale, Ashworth’s history in the C-suites of several companies also makes him a good fit, according to Kusserow. At Walgreens, for example, he oversaw nearly 275,000 employees at 9,500 locations nationwide, generating over $115 million in revenue, according to a press release by Amedisys.
Whereas currently, the home health and hospice provider operates 532 locations in 37 states and the District of Columbia, employing roughly 20,000 people.
Ashworth began his career as a pharmacist, and a desire to return to the clinical space was among the factors that drew him to Amedisys, he told Hospice News.
He also shares Kusserow’s perspective on Contessa as an engine for innovation and growth with its suite of high-acuity home care services, its blooming palliative care business and legions of joint ventures.
“I think from an Amedisys standpoint, we can kind of take anything and everything that can be done in the home, and we can be the primary contact for providers, for physicians and for health systems – and, ultimately, for payers – in a way that benefits everyone,” Ashworth said. “We have a tremendous opportunity for growth [with Contessa], and maybe all of that is underpinned by just an inherently fragmented market growing behind us, the tailwind of the aging population.”
Contessa’s growth trajectory is undeniable. The subsidiary brought in $5.9 million during the final three months of last year, up from $2 million in Q4 2021. Amedisys expects Contessa’s revenue to triple in 2023 with palliative care as the main accelerator, the company’s executives have said in earnings calls.
Despite this potential, Amedisys can’t put all its eggs into Contessa’s ever-expanding basket. Ashworth will be charged with spurring growth in the company’s bread-and-butter home health and hospice business.
This will require a strengthening of the company’s shields against surging headwinds, as well as navigation of a business environment fraught with inflation, labor and capacity shortages — and uncertainties around reimbursement — particularly on the home health side.
These factors contributed to a tumultuous 2022. For instance, net income attributable to Amedisys per diluted share dropped to $3.63 last year, compared to $6.34 in 2021.
For Q4, the company’s net service revenue rose by $2.7 million to $562.0 million, up from $559.3 million for the prior year’s period. But its hospice segment revenue fell to $197.6 million in Q4 from $204.9 million in 2021, which the provider has attributed to capacity constraints due to labor pressures.
For his part, Ashworth sounds optimistic.
“I know there are short-term challenges right now, some exogenous, cyclical things like labor and staffing. New models for commercials have to get set up with MA coming into the mix,” he told Hospice News. “But any business has those types of challenges in them. I think, overall, it’s a net opportunity.”