While COVID-19 might have slowed growth for the Company’s home health and hospice segment during the first half of 2020, Luke James sees potential for the remainder of this year and into 2021. James is president of Encompass Health – Home Health & Hospice. In a recent conversation, he discussed opportunities for future growth, as well as what the company looks for when acquiring new agencies.
Is there potential for possible acquisitions in the second half of 2020?
Yes, the back half of 2020 is likely to produce opportunities for acquisitions-especially among larger organizations. Opportunities among smaller agencies are not yet back to a level likely to produce a significant number of closed transactions. If there is no additional stimulus provided to smaller organizations, then we do expect 2021 to be an active year for these types of acquisitions.
Will COVID-19 impact us in meeting our growth goals this year?
The COVID-19 pandemic did impact our patient volumes during the second and third quarters. Restrictions around elective procedures, caring for patients in assisted living facilities and general apprehension surrounding non-emergent healthcare services will continue to provide short-term headwinds relative to meeting our growth objectives. The pandemic also shortened the effective portion of the year that we can spend building our pipeline of acquisition targets, negotiating terms and closing those acquisitions.
We do expect home health and hospice acquisition activity to increase in the fourth quarter and that may potentially help us work toward our growth goals.
What can we look forward to in 2021?
Looking forward to 2021 and beyond, we feel very good about our ability to meet our goals relative to both organic and inorganic growth. The demographic tailwinds are there: we provide care in the least costly setting available, home has become an even more preferred place to receive care among older adults, and there is pent-up demand for sellers and buyers on the acquisition front.
How do we identify the markets for acquisitions/mergers?
These efforts take several factors into consideration. Our primary goal for acquisition-related growth is to increase the number of inpatient rehabilitation facilities and home health overlap markets across the Company; this number currently sits at 89, and we are working on more. The second goal is to increase overlap between our home health and hospice markets across the Company.
The third goal is to continue to build scale and density across our geographic markets to ensure we can effectively service each of the broader markets and states we serve. For non-overlap markets, we look at the long-term viability of the markets, the existing competitive landscape, the payor makeup and the referral source profiles to determine prioritization of our activities.
How does clinical collaboration play into our growth and development goals?
It is a very important component of our growth and development goals. The growth-related element has a couple of primary goals:
- To increase the number of patients who benefit from our clinical collaboration so we can provide that coordinated care across the inpatient and home-based care settings
- To allow us to work in new and innovative ways with payors to deliver these services to their members and beneficiaries
- To expand the value proposition of our Company relative to our competitors
How has the pandemic changed our strategy/development?
The pandemic has accelerated our focus on telehealth-related technologies to expand the level and types of services we provide to our patients. Medicare has given us more flexibility in this regard and encouraged providers to take advantage of telehealth technologies in developing the patient care plan.
We are constantly assessing remote patient monitoring tools to provide greater insight into the care needs of our patients. This will allow us to ensure each patient is always getting the level of care they need in order to meet their goals and keep them safely in their home. We are also focusing more on developing our skilled nursing facility (SNF) at home model to effectively treat patients who historically received care in a SNF following a hospitalization.