After the tumultuous years of the pandemic, VITAS Healthcare expects a stable growth trajectory heading into 2024.
Florida-based VITAS is a subsidiary of Chemed Corp. (NYSE: CHE). Though the company has not yet released financial guidance for 2024, VITAS anticipates a “predictable” year in terms of earnings and growth, executives said at Monday’s Bank of America Healthcare Conference.
Chemed’s 2024 outlook represents a “retreat to normalcy,” compared to the worst days of the COVID-19 outbreak, CEO Kevin McNamara said at the conference.
For VITAS in particular, increases in clinical capacity has fostered steady growth during 2023. This, in tandem with a 3.1% base rate increase from the U.S. Centers of Medicare & Medicaid Services (CMS), is contributing to the company’s optimism.
“When we start thinking about the impressive mid to high single-digit volume growth, combined with the rate increase, and then potentially some stabilization regarding high acuity, which has tended to eat into that top-line growth over time, we feel we feel good about the predictability of the business and the predictability of operating profit generation,” VITAS CEO Nick Westfall said at the conference.
VITAS is the nation’s largest provider of hospice care by market share, according to 2020 data from LexisNexis. The company in Q3 saw a 12.5% year-over-year increase in net service revenue, reaching $334 million.
Fueling the growth is an influx of new clinician hires, spurred by a bonus program the company offered between July 2022 and mid-2023. The program included a one-time retention payment that ranged from $2,000 to $15,000 per employee for nurses, nurse managers, home health aides and social workers who completed at least 12 months of employment.
Over the initiative’s 12-month period, VITAS brought on a total of 784 licensed clinicians, the majority of which were nurses. During Q3 alone, the company has hired 157 licensed professionals, VITAS executives reported during a Q3 earnings call.
The hiring has resulted in capacity gains. The company’s average daily census, for example, rose 9.4% to 18,859 in the third quarter, and admissions increased 7.5% to 15,774.
Beyond census, reaching patients earlier in the course of their illnesses represents a second front for hospice growth, according to Westfall.
“The real question is less about the number of lives and the demographics coming in, that’s an important component of it, but also, for the industry to continue to move in the direction of [helping patients] feel more comfortable accessing the benefit earlier in their disease trajectory,” Westfall said at the conference. “The combination of both of those things very much impact five-year forecasts. It’s not just about lives; it’s as much about lives accessing the benefit earlier.”