EHC - Earnings call transcript Q1 2022 | Encompass Health Corporation

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Mark Miller

Thank you, operator, and good morning, everyone. Thank you for joining Encompass Health’s First Quarter 2022 Earnings Call. With me on the call today are Mark Tarr, President and Chief Executive Officer; Doug Coltharp, Chief Financial Officer; Barb Jacobsmeyer, Chief Executive Officer-Home Health and Hospice; and Patrick Darby, General Counsel and Corporate Secretary.

Before we begin, if you do not already have a copy, the first quarter earnings release, supplemental information, and related Form 8-K filed with the SEC are available on our website at encompasshealth.com. On Page 2 of the supplemental information, you will find the Safe Harbor statements, which are also set forth in greater detail on the last page of the earnings release.

will uncertainties, statements, beyond many we to are our call, and risks of the make which forward-looking subject control. During which are ongoing that impact the our and and review Form as company’s the for stockholder estimates when materially the risks and uncertainties from March impact those projections, related actual well filings, to the XX, Form Certain of earnings discussed XX, results X-K, and Form the December COVID-XX differ expectations, ended like value as and SEC cause release our on our the XX-Q its magnitude business could and relating strategic XX-K including year in XXXX and quarter are XXXX, filed. for to ended them. We to encourage read you

not estimates, these to of estimates today. as to on information We reliance undertake forward-looking other do cautioned only projections, duty and events which undue are update on the presented, not of forward-looking and statements. speak place are based guidance future current You a

supplemental Our on include will measures. call non-GAAP this financial certain and information discussion

question. X-K as For follow-up of the which of comparable available is the one measure of the question of that like to most rule we release, our information, the such allow end are earnings and to GAAP remind all SEC, and website. at to the the to everyone one Form end the will on available with I directly a submit question would the supplemental reconciliation filed measures, adhere yesterday at part everyone to

that, over put queue. please additional back have to I’ll to in the With questions, you turn If call yourself Mark Tarr. free the feel

Mark Tarr

everyone. morning, good and you, thank Mark,

operational rehabilitation the of an segment We and agency the utilization bonuses, staffing EBITDA utilization adjusted agency increase as negotiated lower in are renewed rates. are replace agency continue we the continued remain those the health the sign-on providers, of Our rate generated strategies. prospects team and these offset each On discharge and shift for and daily of all were skilled significant provide dedication the the higher half us This discharge clinicians growth These metrics segment, ahead. a QX increased to X.X% growth. addition staffing increase the X.X% and X.X%. IRF balance Omicron between revenue the strong and the we The and in and combined growth members de census costs growth. our strategic XX.X% the new drive future home for Average validate high positioning of allowed QX, by peaked, declining X.X%. to net contracts the further We in basis X.X% quarter new as our challenges. the increased first our demand results services growth staffing that of quarter, and healthcare IRF in spite and our resulting a businesses per and a a was store challenges. expect with on necessitated surge, discharges to in capitalize in revenue labor continued Like resulting tight a in provide in opportunities we bed gradual admissions confident grew X,XXX. to the growing growth improvement we strong FTEs services revenue believe X.X% to decline by and progress evidence continue to has demand of novo make the by same-store second of market particularly The at EBITDA. enhance adjusted impacted quarter, for new of for the consolidated staffing in In of staffing in hires inpatient revenue in

the improvement of second this half accelerate expect year. We to in the

X.X% on solid business health a sequentially. QX, X.X% X.X% grew admissions including Total grew admissions generated in Same-store growth. admissions home same-store Our basis.

quarter. total point the point admissions in exceeded hospice in in high to health admissions prior XXXX. a our the in X.X% of adjusted by Hospice decline As QX some daily declined was home of driven high comparison, achieved staffing primarily The historically quarter average historical branches capacity segment led a costs High decline census. in larger constraints EBITDA. of admissions at our with

Home top XXX the front, of and the XXX the new Health On accelerated in the net FTEs quarter net increase with is in We staffing but started and slowly ended XX the nurses. surge, Hospice This in quarter of hiring progressed. to the a Omicron on as QX QX. due full-time quarter

and recruiting including a strategies salary we expect We home Demand the result strong. retention, as updating implemented the market our on mileage to have from nursing hires our impact in structure, stemming over and changes methodology. in adjustments reimbursement for past of and our see recruiting compensation remains care favorable year trends positive the

quarantines, home unless timely We them deliver care on staff admit will a not are XXXX. and accept we they we X,XXX that patient predominantly in QX health estimate level we of can lost required we confident Based require. the admissions of

in openings and opened the Given de the of we opened XXXX We rule. issued adding XXXX. our We an continued the additional anticipate novo and to hospice hospitals. two anticipate IRF via XXXX an additional IRFs existing opening de in IRFs Health strategy. added hospitals the capacity and quarter, recently CMS Home de addition novo these to three for locations proposed in an quarter the four We acquisition, novo have proposed eight six additional XXXX. existing demand in Hospice beds rule and and strong services, XX our XX beds

estimate a October beginning would For IRFs, segment for increase which market CMS IRF our XXXX. basket a in X, proposed net X.X%, X.X% update of result we

final not of July expected late the reminder, rule is released expected be include in impact does to sequestration. increase early a The or August. As this IRF

impact in rule net or hospice, is sequestration. expected Again, rate also proposed The hospice August. the July For X.X%. final of the update this prior is late to early is

not adequately positive, for compensate elevated do rate the staffing rules they While updates are in the and costs. proposed hospice IRF the directionally

relief. hopeful are provide We final will that the greater rules

XXXX July. be June to the in or rule released expect Home proposed We Health

Moving name & brand Enhabit under now of publicly Hospice spinoff Health Health an to and traded independent, the business Home our new Home the into company Hospice.

are and targeting on believe a that than incentives, from included our the the including spinoff ruling significant to XXXX, alignment independent not the slides by of IRS The the Page supplemental customary the enhanced better revised have of resources, financial other changed assumptions of company benefits, downward. Health related of will on approval and subject Form conditions, number the disclosures consummation structures equity XX previous key favorable of focus, the the of currencies. separate X Hospice establishment are SEC. as We July of including We and our and & have of receipt expenses of spinoff from to management Home Enhabit management provide a rebranding been creation an allocation capital independent X,

Moving now to guidance.

The guidance EPS Our guidance not underlying and on EBITDA, changed. be revenue, key for considerations the this adjusted has Page XXXX found XX of can consolidated adjusted supplemental slides.

current that, We the business providing a With to As throughout this Health anticipate for June. Encompass over guidance half separated basis turn structure XXXX. of the guidance a during XXXX reminder, of the I’ll and Doug. it first continues assumes Enhabit on

Doug Coltharp

our morning, $XXX million. company QX EBITDA We revenues quarter approximately QX billion everyone. was solid Thank $X.XXX of you, a good generated challenges. Mark, of for industry-wide the in consolidated persistent and and spite of very adjusted

with with was the X.X% we free businesses. strong. very Our health cash and saw the million, rehabilitation flow in discharges both same-store in experienced trends of X.X%. quarter continued of of X.X% Inpatient $XXX our approximately adjusted increased X.X% QX volume growth key first XXXX. The increased that growth. in fourth quarter Home We was XXXX good of same-store admissions growth

$XXX was Also XXXX, segment, Health business. our case Home by costs, and challenges business, was the costs million. shift consistent absorbed IRF challenges with substantially QX In XX.X%, did Hospice As increased and staffing XXXX, But increase $XXX largely impacted growth but volume costs our an labor volume costs. in revenue IRF million bonuses. including lead agency to sign-on limit did the and approximately higher to staffing led that QX and staffing higher in not for or in

$XX in IRF XX.X% segment our cost shift at locations our much clinical totaled million QX the the revenue and basis and offset and incremental in annual and bonuses wage million of to $XX internal sign-on with The increases staffing, XXX new $XX staff to Salaries million quarter. year-over-year combined agency benefits revenue as $XX of XXXX the XXXX. million our XXXX staff compared for increased compared hired quarter XXXX QX existing from of percent QX in points First in a increase as to XX.X%.

back As we towards are expected costs staffing earnings, continue skewed indicated with quarter fourth constraints half XXXX and when of the year. improvement to elevated the in reported we

market. negotiate to of agency are The some substantially contracts the circumstances seeing hospitals are ability agency lower in improvement early We using FTEs rates the vary by reduction renew. and our as in

Our and ensuring patients remains once our treatment services in high-quality of access rehabilitation providing care first admitted. priority to for inpatient need

Although and a remain demand/supply the the will the our dissipate to of trajectory we uncertain, believe as improvement staffing result in continue to and begin imbalance. initiatives challenges general timing both

X.X% quarter much Home approximately in admissions day. to Health the estimate a segment lost clinical home costs increase staffing, cost impacted per per million home staffing our staffing due increase does in we While cost it $X health and hospice that X,XXX first Hospice agency of also by utilize staffing in health constraints, lost Higher translates not a X.X% We and to led XXXX was to challenges. and revenue. in visit

significant health on generated our a contracts. and was A came non-episodic As of XXXX, the these fee-for-service. the a contracts to percentage Managed basis predominantly Medicare growth pay for in we Medicare and discount admissions of that Advantage QX case substantial much under Care home

our payment clinical patients Advantage services of for not part not The and home. in-home of differential patient high-quality understand in regardless the their of preference providing per rate cost adequate source. light plans is is Managed quality cost vary does this access plans at members to are to the of are central Medicare to Many compensation payment visit received payer these the difficult relative on Care of Medicare effectiveness A our continuation CMS, and increases mission care, source. care, from receive increasing the of based have providing receiving. care Our

be devoting arrangements. substantial will will to further We we to plans, anticipate resources value-based which discussions lead more with time and these

EPS we mentioned, operating the XXXX adjusted adjusted revenue, reaffirming Mark EBITDA, As net and guidance. are

have also Page The we cost our staffing be Given the I can increased slides guidance, XXXX like for earnings by XXX XXXX the our our point out IRF reaffirmed within guidance found our to expected would year on points for increases overpayments release. tax of experience expect our from of the to prior basis XX to range million full considerations year-to-date business. our $XXX cash guidance, income an of now, increase application open $XXX $XX that of line XXXX XXXX the now of income due we’ll for million we That’s the flow adjusted and million questions. to primarily million. to free that is XXXX And taxes. $XX accompanying

Operator

Instructions] Thank you. [Operator you. Thank

come Bank will from with question first America. of Fischbeck Our Kevin

Kevin Fischbeck

to labor you be quarter Hello. put do into a talking quarter. hire get nurses growth how and has number quantities wanted shortages, to about for in staffing of you kind bit. I Thanks. – I in little not that’s mean, can each Helpful dig to that order of it but I you historically? that back hiring volume into XX to the mean, many in the to that need context? temporary to in staffing where the back get business been holding

Doug Coltharp

XX you’re and the to on Health Home Kevin, the specifically side? Hospice speaking

Kevin Fischbeck

kind then But well. of Yes. side I particular. guess, in I rounded also out IRF guess, as to yes, it’s the that

Doug Coltharp

with Okay. don’t on Health I’ll and Home you side. start Well, blanks in then IRF the Barb, fill why the

Barb Jacobsmeyer

Sure.

X,XXX That combination quarter Home But a to first certainly Health, we mean, one the a that very was highest in the one the for pandemic. point, quarter At relates by hit employees. open one of of constraints was throughout over peak entire much I it impacted quarantines positions. saw as the was half. we staffing also So, quarantine

we are news So, this to XX the good down morning. there is as of

So, much progress there.

new need like the full is, adding feeling time. the in we we quarter. going we’re we and to Quarter here whole strong with with April, front, one, XXX-plus plus. fourth some first the at end quarters news quarter we’re higher in net net were had in that to hires good month the new third On than had The XX confident we do have hiring

So repeat, again, the as net quarter and hires, good four, as far if place. a of be new number three quarter we’ll could in we really

Doug Coltharp

nursing open of it’s… terms now, In But positions right

Barb Jacobsmeyer

for positions. Open nursing even we we growth, above historically. increased positions, nursing open up Yeah. kind consistently we’re always looking even about only run probably That’s to have where staff of XXX because XXX to XXX

Doug Coltharp

hit we side, the IRF month the to labor FTEs peak over a switching of Kevin, then, And March. contract in of XXX

will about XXX In any So, always in a not labor a we forward. of there’s the that normalized degree go some going filling to basis FTEs. have looking pre-pandemic, zero. to year, efficiency we moving It some say, to reason expect have more in to And given for XXXX, decline of contract fluctuations back, contract is to would volume XXX with point at monthly on terms in that expect to and openings labor. you’re time

So, we’ve ideal say FTEs run with into need get back to I’d about that, to that got XXX cut rate. an we to

Mark Tarr

where terms – here think teams, have in have they as in of relative an to we Birmingham very it’s now applicant quick themselves to added be FTEs. recruitment And may recruiting. I the a substantial have So, hired expect. noting resources particularly here from confident converting we acquisition Kevin, form, you flow, it’s quite XX worth all shown our Mark. over they staff well in as centralized applicant to functions It’s do, That’s talent as to is

First on available to nurses market wins every these time.

we positions. are capturing efficiently we opportunities resource are and applicants standpoint doing nursing can So, a generating to and that from the sure for make we working everything

Kevin Fischbeck

And the it looks it IRF the Great. just combined the maybe then but you raise second for as for health company the didn’t on raised you wages you question, right. side All mentioned, home for overall. or side, like outlook

So, overall. just why it showing it’s is than the on up more elsewhere wondering Thanks. IRF

Doug Coltharp

elevated, remained $XXX,XXX of per cost annualized for increased that use versus $XX,XXX. FTE contract have an It’s contract internal The labor north labor. rates really of of

that it caused assumption. saw that first level we to us when in So, higher the quarter, change

Operator

Thank you.

Our from next Rice question A.J. will Credit come with Suisse.

Doug Coltharp

Good morning, A.J.

Mark Tarr

A.J. Hey,

A.J. Rice

you? are How

Mark Tarr

Good.

A.J. Rice

I in up differential make your pushback? constraints. the gap you more – give turn Can pick you’re said in to to labor Care leverage, of between patients? that I vis-à-vis fee-for-service it on about arena. health Managed substantial you not Do the that having is naturally away be and that some the there’s hey, fee-for-service to or to for put recently you payments Medicare widened get we’re first an would home that – wouldn’t kind because you Or say, paying you narrowed? And Managed where going in over differential. admissions know you take available – comments you what Care of what something that has a environment Just Has some just have mean, of to is to

Doug Coltharp

Yes.

then first I’ll our So, regards will with second A.J., we address allocate resources. how the part regarding the hit clinical to and Barb differential, part the

our just National XXXX. portion these to in to non-episodic at which and of of a the more initiation attributable though, that that substantial February and we quarters. roughly are has XX%, regard impact United growth the Health for payments is in stable on anniversary Barb? seeing of the with Contract, about end So at last been and several because it the discount, P&L, increased, is It’s the we has it’s

Barb Jacobsmeyer

Yes.

little quarter XXXX you of we when to a our when So, where increased market going the touch data, Medicare to give of agencies, of X.X%, MA on first to XXXX have decreased bit markets four markets enrollees the the based a look on XX.X%. our backdrop fee-for-service within in quarter enrollees look we we but at two I’m

need know on we we have focus this. to a So,

do at and handling we though we we each that things location in how how individual are the of one though, that. labor mentioned, you As is assign look our

remained levels versus for non-episodic. conversion at Our rates have episodic historical

XX% to we’re and from but referrals That seeing about historically non-episodic. for about episodic to non-episodic. increasing XX% XX% remained has those just XX% We’re the conversion a on a stable,

to value that our have proven MA the relationship. with team we we’ve So is our what a a strategic lot restructured done more her spent really DCEs, on ACOs, And leader certain has aspects we’ve focus of recently of proposition. time selling

the what really that have bring value with we entire plans. We sell our can we’re innovation our her so to she these MA we on with team, improve about of that so reengage providers over these rates payer can side moved talking and

A.J. Rice

rehab growth area, follow-up, to in of reflect about X% that doesn’t IRF before, my increased to assuming you was to X%, component assumption business X%. the your a big think, which still, is the mentioned just Maybe labor labor in I’m therapist hospital I Okay. your X% there. as increased, pressure from

the nurses So does the the that is you as suggest see that for higher to started in pressure increase maybe or have therapist arena some well?

Mark Tarr

sure more this Yes. side, but significant much I A.J., well. in on competitive skewed Mark. I that for paying it’s of as nursing mean, our has rates, pressure has the make markets therapists. consideration competition we towards aspect on it’s you’re there’s nursing than been – been the all there’s where of heavily now. our we’ve right it try always to the mean, But therapists

Doug Coltharp

it’s nursing within nursing It’s labor. contract and

Operator

you. Thank

from will question next James come Our with Sarah Barclays.

Mark Tarr

Sarah. Good morning,

Doug Coltharp

morning, Sarah. Good

Sarah James

morning. even Good for and a changes, sound like structural. you’re the XXXX what Is some was we those and you hourly the assuming they could helpful there gas guide, rates. to prices temporary in way maybe reimbursement, more is trends out really structural versus there the change in what the understand of mileage is versus XXXX? more can to upticks It Just of break what placed you enduring like out be so guys them different buckets

Doug Coltharp

XXXX. reimbursement is about to The million worth for mileage $X $X in million EBITDA

things needed the at in look market, our it And but tight so most mileage when be much vehicle compensation impetus the a looking although initially wasn’t labor structure mileage reimbursement. that a When piece. into higher actually, to and And the reimbursement depreciation go so, competitive. things are at the us it gas overall that. is more of There to of at so significant gas like the It’s composition, it’s determined for there, determining in we policy we look attributable context was in prices, forth. that lot not and that maintenance you

And so, adjustment. we made that

Sarah James

question, about talked needing XX XXX FTEs and to be this quarter. staffed clarify to And adding just about on you Kevin’s fully

how bridge currently adding XX So about XXX to which should a are in can timeframe reasonable think that you if you a quarter? we

Doug Coltharp

I our no One already that the for Omicron rate was there reasons. due surge. difficult XX everybody the largely There to in is And use run hiring quarter, for as that extremely we’re would put and not – was supply of have a comments of first you just we available quarter that seeing expect the increased Mark improve some recruitment accelerate. hires and new for resources retention, about substantially with would that the if And number doing improve. things together the of to we made the we’re rate to two

the contract so we And range. to labor XXX that year, time exit somewhere going down kind we’re that to we’re of by this hoping in be FTE

Mark Tarr

not first the new for terms in applicants the to lowest It’s quarter unusual hiring. be new quarter of and

You’re people aren’t where coming the off jobs. looking period holiday for typically

into you lot puts of of that But a just almost And that is February the started activity, seeing saw in of hiring. you typical before later a quarter. the activity. so we seasonality And of start it lot but

Operator

you. Thank

Our William with Larew Blair. Matt next from question will come

Doug Coltharp

Good Hey. Matt. morning,

Matt Larew

everyone. Thanks taking for morning, the Good Hey. question.

to a First of as, that is a maybe for just on gap. a I that that has moving while. them thought bridge fee-for-service follow-up know to to episodic persisted would MA versus be gap way I the A.J.’s obviously,

So, here. a of couple questions

guess, rates then, more referenced have you First, the on piece taking second, that’s than like of getting. past? like, you negotiating, feel confidence more some a that’d payers standpoint, been confident gives a risks. what you are it from the And Do leverage feel perhaps negotiating because sounds piece perhaps I the one? be you you in

would in being So, you that of envision structured upside/downside? or terms how upside

Doug Coltharp

Yes.

have over also extremely first and to feel short proven is is and I’m we definitely Barb. it. that like it that supply, in been care because leverage is the take efficient. I’ll we increased home going have then We it’s labor to clinical So, and part, pass cost And health

care have ratios and for to compete high. resources. predominantly keep again, resources, those plans low that get have tight trying we these market if their of quality on going as to medical And, So we’re the for consistently and in as those producing loss are to is they’re is members possible, a patients driven limited

Barb Jacobsmeyer

Yes.

So, if obviously to our historically MA to low then received on want a rehospitalization has rates. add payment, job as to plans. certainly we as innovation it but We DCEs. at had focus value-based selling would as episodic that, where I we And these more good moved is components, not, That’s into leader those relates our the industry-leading because critical to have the that are she components. payer as mentioned, done like contracts that ACO, value-based well we’d we those

to use that going we’re same to go so information MA And the to players.

to going us important so, going their going is, really other being forward. that she’s deprioritized And to I think, role we to pay fair not we with point as need members, mentioned, Doug we our paid But force the we’re if have don’t a that and to to clinicians. the talking to but have they’re around want rates turn

Matt Larew

a other sense. some then today. It just retention. know Doug, makes the increases. you you reimbursement gave And about And mileage. lot of a around alluded lot obviously, I this is increased to just, you’ve of of Okay. And obviously, piece the recruiting spoken

to might that in guess it nature executive that piece be a and curious is turnover involved something becomes today in improve the that compensation, it bigger else doing Just strategic you’re the is retention. or workforce of something future? more broadly, And stability of then what I given workforce

Doug Coltharp

point talking you are specific at the Home about Matt, Health or… this segment

Matt Larew

more more nursing thinking Well, segments sort no, about of just both broadly.

Barb Jacobsmeyer

Yes.

as health as nursing the adding as hospice we’re But, it leadership adjustment addition, therapists. in some development. mileage what seen same the that things And well wanting our home a it and coming piece. I A to for to leadership think focusing it to relates of that made as as that not opportunities this been around we will like lot on the development going retention So, relates that growth big we retention and progress in, nurses. health, retention. our We’ve lot they the a home certainly see on side on We market did, say on that’s has know good we have piece progress have so the individuals side. to for nurses relates to our of

We well. in are staffing going improved and these model changes so, And make are some we are some as our it hospice a drive of early if our how staffing piloting be relates think, to we’ll that, retention our to in will few new models markets, signs received to I look

Doug Coltharp

Many of strategies same Yes. hospitals the the nurses. in work are

course, paid want as marketable the they want in be or certifications Of the patient want our sure focused rate, and additional a ability very get knowledge orthopedics. we specific whether get make also programmings can to for we where that They such nurses. a or interested neuro it’s to on to stroke education. into CRRN compensate learn about accordingly. They’re they’re But clinical patient more to additional they

a So, these clinical lot means education for clinicians.

we have that that so, gain a sure education. and And we make robust opportunities them to agenda for

are there a it, play other non-compensation but big of role retention. categories that So, big a is certainly, part in the compensation

Operator

Thank you.

Mok come will from with question UBS. next Our Andrew

Andrew Mok

Good morning. Hi.

wanted guide. Just to like pretty to and follow-up hold basis per FTE the in point that XXX costs a guidance. increase change That in seems big assumption assumption IRF on

any So can impact assumptions offsetting that increase of through take here? Thanks. consider to the you us and

Doug Coltharp

Yes.

has – than growing been So, with of function was assumption of issued a at recall, greater we you in the have. QX some the ranges And the But wider somewhat that first also may was the this we of because labor increase the and our regarding uncertainty was – historically call in a it company guidance primary there all, our around of assumptions. year fact the we that larger. was outset costs. cited And

you guidance tradeoffs capacity price P&L favorable we know, and It’s into volume was also forward. increases. around that up results there there the built clearly QX. in are from predominantly So – that there as some saw And

that have the were you increases. So and there. out guidance the we cost ranges labor IRF reaffirming in do the comfortable this into assumption mix those change And we that accommodate regarding of all put

Andrew Mok

converting growth the MA number helps contract Thanks. a is there us follow-up and is percentage fee-per-service And on of we per helpful. of share isolate now been you episodic health so? visit home admissions That’s to trending just year it. If discussion past revenue or Got national the a reimbursement, can that episodic United try what versus that has the core then, over And impact your mix. how to the around per understand visit? its

Doug Coltharp

I’ve So, think I’ll first that at MA is our about because Care The to second Managed I’ll the have it first episodic my fee-for-service got disposal. business business one the about a and does of non-episodic. answer non-episodic. to one. is the XX%, those non-Medicare is X% episodic and come at than much more discount an of The at narrow discount that percentage the

sequential I the In in of is trends saw we growth you what admissions QX terms our on the tell episodic, can that episodic growth from to QX.

So, the positive. trend there is line

Barb Jacobsmeyer

When anniversarying to move, now quarter. XXXX. we which look admission episodic since of that that been you is the converted what historically do first this non-episodic in admissions quarter, month quarter actually episodic under this of at March had XXX March, strongest have And would in our one, contract, UHC

Operator

you. Thank

will Tanquilut from next Our Brian question with Jefferies. come

Doug Coltharp

Brian. Hello,

Mark Tarr

Brian. morning, Good

Jack Slevin

on Slevin Apologies Brian. – Hey, the for disappoint. Jack to good It’s everyone. for morning,

Mark Tarr

No, an upgrade. it’s

Jack Slevin

thank No, you.

touch conversation So, of around on point. a I wanted labor. little and to side, a more I lot to volume I mean the belabor don’t – want the

you think gave great data I points. us

of IRF we give IRF I’m in a that rest on, How in look little mix like and we had the you of bit all. mix I when maybe look is discharges looking specifically, thinking we And XXXX same-store for for business business orthopedics. the gone So, elective down us now? get what how specifically, at trends procedures reading be should mix about, that of as know year? a the to can at sense sort you the right

Mark Tarr

and that recall, I a best saw big we think if think come emphasis our to on nicely. stroke about it, program, the back we way you placed

start of XX.X% over comorbidities there were more a did our go had high fairly neuro. patients, of we a start it. we to still procedures, had discharges those see But back we particularly it’s see quarter, degree a have stroke. orthopedic – part first The we to of few The placements our were XX% come that did with small that that mix. some in, and to recall elective joint Relative overall

we resumed patients. on normalized start the cases the hospital of So, clearly care both Board pattern surgeries, of planned of saw normal some ongoing course across pleased the we a to are COVID into as saw of acuity demand. more dropped what higher they in and as as the the terms number well systems acute run a We

Doug Coltharp

of we’re And last declined that Medicare Advantage most nice in is seeing and neuro we so, what that would But, year-over-year we quarter our suggested what against positive there fee-for-service XXXX in basis. increase and that occurred strong thing. we business. mix of in that up our through book that’s That to that. was had actually was in that be growth remember, mentioned. MA payer a recognized actually a overall from for in acuity quarter in previously ran XXXX, is on of of the a perspective, we was the that Mark again, of saw XXXX, stroke volume a I XX% year. relatively the up terms X.X% in constant really which From stickiness growth QX X.X%. is a And, by evidence QX it think accelerated this had

and Advantage differential to right More of led of XX% value is level at plans are on the side had revenues narrowing episodic Advantage. there. that success than in proposition of we’re a So, on the payment the our the with the payer demonstrating an more normalization to a continued Medicare side an IRF paid on the And but IRF mix, seeing the our X%. Medicare discount we’ve elevated MA basis, has

Barb Jacobsmeyer

And actually recovered far electives. referral then, underwent are for quarter-over-quarter, elective that those home to while admission, year a the quarter year, as increase saw one have our and one now – patients health, recovered But actually have of on procedures electives. there’s in quarter shift the above level. sources of a as they been our XX% from pandemic those of We last XXXX this the

to moving ambulatory we us You more as centers. probably surgery spending those centers in remember about electives talking saw time

seen it’s coming XX-XX electives feel, So, of shift sources. we’ve that, Medicare. that But And electives a the lot good have to mix referrals where is because of coming coming because a what referral versus are we those back. that are from, of come MA see the is, of at in

As their far XX% facilities ALS pretty one quarter our is normal That Access of at patients, facilities. this XXXX, in resided to XX% patients of increase. these ILS our these and back to in back Medicare as to census year. percentage are beginning has and in declined

markets. us program back the pandemic prior and we’re trends those positive community in to initial so that So, for some the strong piloting seeing was pilot care

So, further each we’ll expanding be that into these in quarters. of – subsequent

Jack Slevin

for this Two towards as Got And for of the early helpful it’s visits per – the then Thanks. the we metrics quarter? this track off above second rolling quick Really the going throughout or on the I challenging Should episode how that in opportunity how hospice then, one continues things it. One, and labor business, of business. year about a it Enhabit is end forgiveness? my in And length sequestration to that follow-up, environments peers. looking forward QX? color. Barb. to an Okay. patient given is the be stay And wanted touch did thinking the in being track for like

Barb Jacobsmeyer

Sure.

it’s Medalogix. and they’re facilities, the with come IRF when our particularly we to on area nursing continually I on our What of an put So that visits use look you that focus very us is therapy say per at patients will focused. episode, from

nursing time more episode. visits a And have have strong need, combination therapy so and going to any per you’re need that you of

visits be, that seen to we’ve therapy and little increases again, intensity. because tends combo on of episode it grow, a per nursing also that electives As that bit our

question, focus to with we’ve managing And continue I’m So of Medalogix. we continue is. But patients. we we’re and seen below to mix using with sorry... to recommendation manage it then does well, a do the have lot the And your second the of what Medalogix what that is

Jack Slevin

of length stay. Hospice

Barb Jacobsmeyer

stay, been one, you of four, I say that Hospice was length compare of is would when it’s us. consistent was area that’s our stay an XXX; length for XXX. it pretty quarter What quarter

referrals received the referral look ILS/ALS, We’ve lot continue our sources. and home from diversify to a We from to SNFs health. historically of

of some the the time more in of have to you spending tend length more care patients hospitals. That’s We’re stay. get acute where shorter that that of

diversifying to continuing we that source. referral so focus on And are

Operator

you. Thank

Ransom question next with Our Raymond from comes John James.

Mark Tarr

Hello, John.

Doug Coltharp

Good John. morning,

John Ransom

a this there morning. while good was A people. one guess I she Barb. ago, for April, and Hey, your of is fight with big public poaching was some

in you home poaching has to of how you down lawsuit? your maybe health, six the those and replace the If you have key were the many since settled say, or had rate of at, top to look filed executives seven

Barb Jacobsmeyer

I’ve the there key that operations not time. folks replace the a are a Well, long added We Resource but Human my had to Chief key sales executives. been for executives have executive and at over Officer, any level, of

So, well committed and a they doing great are job.

were and field. also for executives commitment sales get level in senior of the manage able to ops next We the that

both So, and I a we’re level place executive relates as in to management. senior think it good

Mark Tarr

in adding of And, to team Barb, you been anticipation have your the spin-off.

So, Officer. Chief hiring for recently Information a instance,

Barb Jacobsmeyer

Correct.

John Ransom

deals when Great. deals, know of of can one. some kicker. let’s What of these are And is kickers we jump are other big a with managed you with of for? would over these couple two-way and kind I if And home outside is with deals are say, that you think things upside/downside these kind a get or re-hospitalization rewarded a fee-for-service fee-for-visit about care my it’s and a health obviously But, follow-up hurdles? the

Barb Jacobsmeyer

came in a for value-based from us hospitalization patients say both. that be rates so, of any physician. would to addition it you I positive for we’re to obviously, that looking Yeah, always mean, impact. have I sort would is rates hospitalization

the been even never in they’ve hospital. So,

we overall So, satisfaction know because as you’re timely readmission rates, visits, of patient the quality connected looking that’s as ER care really at rates, outcomes. initiation to well hospitalization

that we would So, those ones main the are focus on.

John Ransom

Okay. be of kind gets And nice-to-have is or that’s a this rolled tool that in ability think is episode episode feature? that as make tool Do you coming kind of and adjustments. in Medalogix meaningful to out could the having the a out

Barb Jacobsmeyer

No.

I think it will be meaningful.

of In just a has accepted at Medalogix status It Pulse. changes and any our that fact, Muse, of hospice that. their we similar because in been to snapshot. are status the piloting that versus and well current by It very new patient clinicians called is the looks tool

does So, our we by quicker than that patients well think And will others. more this help us even received also progress it because be some clinicians.

be it versus apply Some initial of I helpful think make the need will decline the us to snapshot to at and for do this start appropriate visits patient know the of those current where that care. to when status and we and

pilot, where the excited moving. about it’s excited we’re into So, early but

Operator

Thank you.

Our Borsch Capital will from next Markets. come Matthew question with BMO

Mark Tarr

Hey. Good morning, Matt.

Doug Coltharp

Hi, Matt.

Matthew Borsch

talk health. My of you Hi. demand you question turn you unmet you that away in talked was, home first that went? that to amount about the where Can had think to

Barb Jacobsmeyer

to hard say went. where of kind It’s it

of you from dealing perspective. when some I at with a market a same think of the have lot look in been staffing folks challenges the

we provide metrics, something readmission it to competitors to as And relates quality will but of the to because so, initiation seen, the rate able particularly It’s team timely be accept have potentially that care. that care. of local some markets though, the that not our hospitalization, consistently great have that said we timely there’s that our the referrals, have in provide reason initiation we of is we

I that own staff. referral a than that. accept dollars help though We used do won’t some agency mention our we cost can tend agency have we about will us we with also unless more certainly So, $XXX that. visit because to per

short-term tunnel, But orientation hire, can’t a use somebody the those coming. afford if agency where even quickly resources just so we’re we for period it a We that solution, and we that where available. market light at referrals to don’t that in they’re end those of the we see though then keep will we we can out so time use only of have is or either

Mark Tarr

increased and referred not receiving actually various somewhere are referred up and certain stay wide that of including And it recent that home agency in health wind whom of elevated. for that is number periods to to settings, patients XX% initiate in And, more who lack just staffing. a XX% has seeing up care Matt, they about between My costly. is to where companies historically, in-patient guess you’re substantially that are of show reasons, is been length

these of to be so care we’ll contribute with to And plans. think all going some that and I discussions MA that’s having managed

Matthew Borsch

just amount follow-up, needing touched right that doing curious the of headway – up I’m you the the demand you why selectively can’t some turn picking if already Well, possibility reimbursement differentials. you’re of my MA on the reimbursement front. you’re to away on just volume the make of that, maybe guess facing that picking given not on I and

Barb Jacobsmeyer

Yes.

consistent mentioned So the conversion we rate.

markets full both be we’re we any So We accepting is away something place, we will say would What the that’s market-by-market wouldn’t first. turning from referrals watch. in we have certainly be episodic initially. all because the it those I staff where accepting episodic –

make that it The other heard the sources us, episodic watching we’ve thing with are to business we’re that that are is referral sure that non-episodic doing sending from our what is type of referral close team years you patient. actually us their is just I one there truly to door that they because give the kind are of over can’t sources said sales

us sending So, additional us admissions. the that quarter at X,XXX additional of here that one. X,XXX non-episodic sources again us we We XXXX, an at referral sent see are year full an were happy we that referral us year last sources when Those Medicare. sent those that looked to Medicare that non-episodic sent in looked

So, we’re very that following closely.

Operator

Thank you.

Stephens. next will Our question from come with Scott Fidel

Mark Tarr

morning, Good Scott.

Doug Coltharp

Scott. Hey,

Scott Fidel

Thanks. good Hi, morning.

just know to that basis in point industry, wanted XX back about, ESG-specific had of the for by rates had the question, IRF to offset outlier proposed thresholds. First and reduction the talked partially proposed the an a you and rule, you the that X.X% then I go in had X.X%. estimate CMS mentioned that predicted

reduction similar or you any of that the impact in do thresholds the whether is net interested Just from estimate that X.X% outlier have proposal?

Mark Tarr

was have rule. little exposure the high-cost it and impactful, particular that it same this proposed way in such we that on So, the is rarely outlier was

providers greater it much other such a we have simply percentage. extent does to affects because that than a So, just low us,

Doug Coltharp

inclusive, is that it’s Mark just Yeah, mentioned. phenomenon all of X.X% that the because and

than one-half in of less the payments. We have of X% way outlier

Scott Fidel

a at X.XX% XXXX this high then, a use of discounts And the IRF adjustment. Got risk similar, MA around we if on MA as to book I’ll as get the follow-up, normalization I around to maybe, sort and ongoing the to bump. just since some getting it. be try And X%. rate return assume bit and look and just benefits more guess versus an the is And rate we’re discussion fee-for-service. even exercise my to plans, just hospice they’ll that to before going in in we are That’s HA alone, proposals from X%s if of the relatively

your guess, opportunity line MA the question segments, any the for X%? MA you be much would X.X% gap more that business see healthier of will increase with with that I sort you So, my to your do in rate that the that close Or two be is, to would assuming getting? themselves really be updates more rate plans

Mark Tarr

the It’s latter.

Operator

to this Thank I closing the you. presenters no We – additional over time. any back to would at I questions am our program now like for or turn remarks. further showing

Mark Miller

If Thank anyone has you any joining me at additional XXX-XXX-XXXX. questions, please call call. for today’s again

Operator

today’s concludes event. this gentlemen, and Ladies you. Thank

disconnect. now may You

Encompass Health (EHC) 30 Apr 222022 Q1 Earnings call transcript