Enhabit Inc. (NYSE: EHAB) is seeing staffing-related capacity constraints start to ease despite a rocky quarter for its hospice segment.
The company hired 101 full-time nurses during the first quarter, including 91 in home health and 10 in hospice. Overall, its full-time vacancy rate dropped from 24.3% to 23.8%, about 50 basis points, according to CFO Crissy Carlisle.
“We are beginning to see the impact of our staff completing orientation and ramping up their patient caseload,” Carlisle said in an earnings call. “We ended the quarter with only four hospice locations at capacity constraints and 71 in home health.”
Dallas-based Enhabit’s footprint includes 252 home health locations and 105 hospice locations across 34 states. The company emerged from the 2021 spinoff of Encompass Health’s (NYSE: EHC) home health and hospice segment.
The company has been focused on growth since the outset, through de novos and acquisitions — with an emphasis on its hospice business. Enhabit opened two hospice de novos in Texas in March, and acquired an Indiana home health agency that same month.
The company’s spate of new hires are expected to improve its clinical productivity, according to CEO Barbara Jacobsmeyer. But these clinicians will first need some time to onboard and get up to speed.
“Similar to the third and fourth quarters of 2022. Our nurse recruitment success resulted in full time nurses who were not at full productivity throughout the first quarter, and increased use of contract labor to keep referral sources strong during that onboarding period,” Jacobsmeyer said in the earnings call. “We now believe we have full time nursing capacity that will allow us to reduce our use of contract labor and improve clinical productivity going forward.”
The company’s net service revenue totaled $265.1 million in Q1. Revenue for its hospice segment dipped slightly year-over-year to $49.3 million, down from $49.4 million.
Enhabit attributed the shortfall in part to increased labor costs associated with the implementation of a new case management model, the continued utilization of contract nurses and increases in group medical claims.
Also in Q1, the company hailed new contracts with one new payer and two conveners, organizations that build post-acute provider networks with the goal of reducing the total cost of care. Each of these companies have a national reach, according to Jacobsmeyer.
“The start of the year has been a busy and productive time for our payer innovation team,” she said. “The most significant update is our executed agreement with a national payer that became effective May one our branches are excited and ready to accept these patients that historically they had to decline.”