When it comes to labor, hospice providers are walking a balance beam between the need to increase capacity and the long-term sustainability of offering bonuses, tech investments and larger benefits packages.
Publicly traded hospice providers have reported improvements on turnover and workforce shortages. But the strides have come at a cost. While the public companies do not represent the entire industry, their obligation to keep investors informed regarding their financial performance can provide insights into larger trends at a time when providers of all sizes are reporting astronomical labor expenses.
One consistent message these providers reported in their Q4 2022 earnings was that — while labor is improving —the upward swing comes with a hefty price tag.
For example, Chemed Corp. (NYSE: CHEM) subisidary VITAS Healthcare expanded its clinical staff by 103 employees during Q4 in 2022, and a total 275 during the last half of the year – with registered nurses representing the bulk. The company attributed much of this forward momentum to its recruitment and retention bonus program.
But VITAS, like other providers, also has to weigh the costs.
“VITAS has reversed the severe attrition of our licensed health care professionals that began during the pandemic,” David Williams, CFO and executive vice president at Chemed said in an earnings call. “This is evidenced by VITAS expanding our licensed health care staff by 275, coinciding with the launch of our hiring and retention program, beginning on July 1 of 2022. This higher staffing increased the average cost of sales in the quarter by an estimated $4.4 million.”
The bonus program includes a one-time retention payment ranging from $2,000 to $15,000 per employee for nurses, nurse managers, home health aides and social workers. The company expects the program to attract roughly 25 new health care workers each month during 2023 at an estimated cost of $40 million.
Beyond bonuses, some companies are implementing new technologies to help reduce turnover, also at a cost.
Addus HomeCare (NASDAQ: ADUS) has reported gains that the company ties back to investments made in 2022, including a new tracking system that accelerated onboarding, according to CEO Dirk Allison.
Addus added 80 clinical staff to its hospice segment last year. While some of its markets are still seeing labor challenges, these have become more “manageable,” than during the pandemic’s height.
“A part of our improved hiring results have been due to the recent investment we made in a candidate tracking system, which allows us to better engage with potential employees, as well as shortening the time between application and hire,” Allison said during an earnings call. “We are continuing to roll out this system to all of our sites, a process that should be completed in 2023.”
Enhabit Inc., (NYSE: EHAB) also reported seeing progress in clinical staffing rates following the instillation of a more sophisticated data analytics for its internal labor trends. The company also expanded its c-suite with Chief Human Resources Officer Tanya Marion.
During Q4 2022, Enhabit saw its pool of full-time nursing candidates rise 19%. The company hired 101 new nurses during that period, 41 of whom work in its hospice segment.
Enhabit had a 24% vacancy rate among its full-time staff at the end of last year and remains aggressive on recruitment, particularly for full-time nurses. Currently, about 39% of the providers’ nursing staff are pro re nata (PRN).
“Our ability to hire and retain clinical staff is also an important success factor,” Enhabit CFO Chrissy Carlisle said. “We’ve made meaningful net new hires in the back half of 2022. And with our continued focus on recruitment and retention, we believe we can grow volume and improve productivity. Given our ongoing efforts to hire and retain clinical staff to meet demand, we expect our financial performance to be higher in the back half of the year than the first half.”
Enhabit also implemented a new hospice case management system that contributed to the hiring increases, including the return of some nurses who “enjoyed [Enhabit’s] culture, but not [its] previous staffing model,” according to CEO Barb Jacobsmeyer.
Amedisys (NASDAQ: AMED) is also seeing its staffing investments bear fruit. The company increased its clinical workforce by 26% between August 2022 and January 2023, according to Chairman Paul Kusserow.
Through the combination technology investments, improved efficiency and beefed-up benefits, Amedisys anticipates decreased turnover and increased clinical capacity that will in turn “supercharge” the company’s growth potential, Kusserow added.
“On the people and labor side are two parts of the equation. It’s bringing talent in the door, and then it is keeping them here,” Kusserow said. “We are going further and creating an unrivaled people experience here at Amedisys by simplifying our administrative processes, enabling our caregivers with tools to make their jobs easier, improving our leadership development, streamlining our onboarding processes, investing in our employees and rolling out an enhanced benefit package specifically focused on aligning with what is important to our clinicians.”