Q3 2020 earnings key takeaways

Throughout the years, Encompass Health has weathered many changes. From regulatory and payment changes to recessions, we’ve managed to successfully get through them all, and the same can be said for our newest challenge — the COVID-19 pandemic.

As reported on our third quarter earnings call Oct. 29, we remain confident in the prospects of both our business segments, and in our ability to overcome the challenges associated with this pandemic. We serve an aging population in need of the services we provide in both the hospital and the home, and COVID-19 hasn’t changed that.

In some ways this pandemic has shown the value and need for our services even more. To date, our hospitals have treated over 3,000 patients recovering from COVID-19, and we’ve had good outcomes. We’ve been able to return about 80 percent of them to their communities following their rehabilitation. Our home health and hospice segment has also cared for more than 3,400 patients recovering from the virus.

Inpatient rehabilitation

Our inpatient rehabilitation volumes recovered substantially in the third quarter. Total numbers were still down 1.5% compared to the third quarter of 2019, but that’s a significant improvement from the 10.7% decrease we saw in the second quarter of this year.

The fact that we continue to open hospitals and pursue opportunities in other markets shows our confidence in the need for our services and our future. For 2021, we’ve already announced plans to build eight new hospitals. We’ve also announced eight new hospitals scheduled to open in 2022. And, we’re not done making announcements.

Home health

Our home health volumes also recovered substantially in the third quarter. While same-store admissions were down 4.6% compared to the third quarter of 2019, they improved significantly from the second quarter of 2020 when we saw a 17.3% decrease in admissions.

We’re also optimistic about opportunities with our home health and hospice segment among ACOs and Medicare Advantage payors seeking value-based payment arrangements. We have partnered with more than 100 Medicare Shared Savings Program Accountable Care Organizations around the country, adding nine new ACOs to that list in the third quarter of 2020.

Also, after several months of unusually slow mergers and acquisitions activity in the home care sector, we are encouraged that the pipeline of acquisition opportunities is re-building, particularly for hospice.

Continued innovation

Just as we’ve continued to expand our footprint during this pandemic, we’ve also continued to find innovative ways to support our clinicians and improve patient care.

We introduced ReACT in 2017, which predicts the risk of an acute care transfer while a patient is in one of our hospitals. In October, we built on that model with the rollout of our readmission prevention program, which predicts the risk of a hospital readmission after a patient leaves one of our hospitals. In our overlap markets, our hospital and home health teams are working together to ensure a smooth transition to the home and have established clinical protocols to help mitigate the need for both emergency care and hospitalization for high-risk patients.

This is another way we are using data from our electronic medical records from both segments to predict a potential decline in health status and act in a timely manner to prevent it.

Moving forward

Despite all the uncertainties out there, we are confident in our future. We have worked through challenging times in the past, and we are working through the challenges this pandemic has presented.

The world around us may have changed, but the need for the services we provide to an aging population has not.

For more information from our third quarter earnings call, visit investor.encompasshealth.com/events-and-presentations/earnings-calls/ for a full transcript of the call and any supplemental information.

Mark Tarr is president and CEO of Encompass Health.

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