Q4 2021 Amedisys Inc Earnings Call
Greetings and welcome to the <unk> Q4, 2021 earnings conference call.
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I will now turn the conference over to your host Nick Muscato SVP of finance. Thank you you may begin.
Thank you operator, and welcome to the a medicine Investor Conference call to discuss the results of the fourth quarter and year ended December 31 2021.
A copy of our press release supplemental slides and related form 8-K filing with the SEC are available on the Investor Relations page of our website.
Speaking on today's call from our medicines will be Paul Kusserow, Chairman and Chief Executive Officer, Chris Gerard President and Chief operating Officer, and Scott <unk> Executive Vice President and Chief Financial Officer also joining US is Dave Kimberly Chief legal and Government Affairs Officer.
Before we get started with our call I would like to remind everyone that statements made on this conference call. Today may constitute forward looking statements and are protected under the safe Harbor of the private Securities Litigation Reform Act. These forward looking statements are based on information available to our medicines today. The company assumes no obligations to update information provider.
On this call to reflect subsequent events other than as required under applicable securities laws.
These forward looking statements may involve a number of risks and uncertainties, which may cause the company's results or actual outcomes to differ materially from such statements. These risks and uncertainties include factors detailed in our SEC filings, including our forms 10-K, 10-Q and 8-K and.
In addition, as required by SEC regulation G. A reconciliation of any non-GAAP measures mentioned during our call today to the most comparable GAAP measure will also be available in our forms 10-K, 10-Q and 8-K.
Thank you and now I'll turn the call over to <unk>, Chairman and CEO Paul Kusserow.
Thanks, Nick and welcome to the <unk> fourth quarter and year end 2021 earnings call.
We have a lot to discuss on today's call, but as this will be my last earnings call before we dive in I first want to thank and acknowledge Nick Muscato for all of his fine work on these calls over the years. He has taken us to a new level and I am very.
Peter of what he has done for me <unk>.
I would also like to express my sincere appreciation for all of the 21000, a medicine employees, whether you are at a patient's bedside or support those providing the industry's best in class care out.
Out of Medicine, we put quality before everything and the unwavering dedication of all of our employees has been delivering great patient care.
And this dedication to quality continues to be <unk>.
My greatest point of pride and largest source of inspiration.
I humbly. Thank you for all that you do.
2021 was a topsy turvy year, unlike any other and before I turn it over to Chris and Scott I would like to highlight a few of the many successes we've had during the year.
Though CMS has frozen the publicly reported home health stars metrics, we never let our foot off the gas on quality, we never will at some point in our DNA.
In 2021, we continued to make strides using industry data and internal benchmarks. We proved that once again, our Madison. This is second to none in home health quality.
You can't deliver great care without great caregivers, and we have made human capital our passion recruitment and turnover are science and focused hard and creatively on building and retaining our incredibly important clinical staff.
I want to thank and acknowledge Sharon burnouts and her team for putting us at the vanguard by constantly reminding us it's all about our people.
As health care of labor markets become more challenged nationwide <unk> was able to drive our clinical turnover down an additional 9% from 2020 to 2021.
Additionally to fuel our present and future growth, we increased our recruitment numbers by driving a 27% increase and recruited head count recruitment retention and turnover are continuously our biggest initiatives as having enough clinic.
Coke capacity to serve our patients and our fast growing industries has never been more paramount demand is not going to be the issue suppliers and we are improving our capabilities here every day.
While still facing many challenges brought upon by Covid in both home health and hospice in 2021, we still grew our EBITDA at 10% and we grew our EBITA margin 40 basis points, while delivering a $189 million in cash flow from operations and.
We beat Q4 during the peak of Omnia Crown.
We took our cash flow and we invested in the inorganic growth of our business, resulting in the acquisition of four C. O N DNA evolution and change the game with our acquisition of Contessa via.
By acquiring Contessa, we took a meaningful step in differentiating ourselves as more than just the home health and hospice company. The leader in its space Contessa builds risk bearing tech enable hospital at home snippet home and capitation palliative platforms.
It has become our platform for future innovation and new models for care delivered in the hall.
We further continued to think outside the box and challenge our thinking by investing and connect around an innovative solution for recruiting nurses and for engaging with our current clinical workforce differently in the coming weeks Youll hear of other investments that continue to push us.
To innovate and differentiate in this constantly evolving market finally, and yet most importantly, we delivered the highest quality care performing more than 11 5 million visits for more than 445000 patients in 2000.
'twenty one.
Amongst the backdrop of COVID-19 disruption.
And its impact on all of health care 2021 is a year I'm exceptionally proud of.
The leading quote to our 2022 strategic plan was a quote from the ancient Greek philosopher Heraclitus, you can't step into the same river twice <unk> enters 2022, as a new expanded and complete organization well poised for continued growth.
And even further differentiation in our expanding solutions for the hall with that I'll turn it over to president and CEO , COO and incoming CEO , Chris Gerard to run us through the operational updates Chris.
Thanks, Paul now, let's dive into our Q4 and full year home health segment performance.
For the quarter home health grew a total emissions and total volume by 2%.
For the year home Health grew same store total admissions by 6% and total volume by 5%.
The elective procedures as a percentage of our total episodes increased from 7% in Q3 to nearly 8% in Q4.
Much of the increase quarter over quarter was in the first half of Q4.
Where we actually saw electives reached pre pandemic levels of greater than eight 5% to 9%.
However, as the Omicron variant set in we exited the year back in the six 5% range.
We are beginning to see improvements in this percentage, but we're not yet back to the pre omicron levels.
For the quarter, we performed $13 seven visits per episode.
<unk> 0.1 visit sequentially and down 0.3 visits year over year.
On clinical mix in Q4, we achieved 49% LPN utilization and 53% PTA utilization.
We have made tremendous progress in our clinical mix through.
Throughout 2021, and believe that there is still additional room for optimization of our LPN utilization percentage as well as some additional improvement in our PTA utilization.
Lastly, the final 2022 home health payment rule has been released and I'm pleased to say that we will be receiving slightly over a 3% rate update.
Now moving onto hospice.
For the quarter.
Hospice same store admits were down 1% over a 15% Q4, 'twenty comp and ADC was down 4%.
For the year same store admits grew 2% and ADC was down 4%.
We again made good progress on hiring hospice BD ftes ending the quarter with 533.
We have previously stated a desire to exit 2021 with 550 hospice BD Ftes. However.
However, we had some planned consolidations and closures during Q4, which impacted our hiring trajectory.
Nonetheless, we ended 2021 was <unk> 48, additional BD ftes versus our 2020 exit rate.
And we look for increased productivity from these new reps as well as our senior staff to drive continued admit growth as we move forward.
Hospice ADC remain pressured in Q4, as we continue to see a trend of patients coming on to service. Much later in the dying process and not realizing the full value of the benefit.
Our hospice discharge average length of stay fell to 93 days in Q4 from 94 five days in Q3.
Median length of stay dropped to $22 seven days from 24 three days.
These decreases were driven by an increased percentage of deaths on sensus.
The increase of death on census is materially impactful to the hospice segment performance as a 1% change in discharge rate is equivalent to approximately 130 <unk> ADC.
Which over the quarter would have added approximately $2 million to the bottom line.
As we look back at 2021 as a whole our desk as a percent of current month ADC are averaging approximately four percentage points higher than pre COVID-19 timeframes.
Again, having a material impact on the ability to consistently grow ADC in the near term.
So predicting behavior is more art than science, we do think that the increased death rate is a short term issue and over time will return to normal.
Whenever behavior returns to pre COVID-19 normal and patients access healthcare like they did pre pandemic, we will see an ADC increase and as we continue to hire and retain our BD staff and grow admissions ADC growth will follow.
In summary, 2021 was a year that saw both home health and hospice continued to be impacted by COVID-19 issues and their subsequent shakeout.
Many of the challenges presented in our current operating environment, our out of our control.
But they have forced us to think differently become more efficient innovative and set us up to be even more successful organizations as those challenges dissipate.
I am tremendously proud of what we've accomplished and the care we have delivered during these very challenging and unpredictable times.
Now I'd like to discuss <unk> performance for the quarter are.
Our high acuity segment, Contessa, which offers homebase recovery solutions for patients in need of acute level care continued positive momentum in Q4 total admissions were 520 since the closing of the acquisition last August clinic.
Clinical management of patients submitted onto contest. This program continues to be a strength evidenced by favorable MLR performance relative to expectations as well as strong quality and satisfaction metrics from a financial perspective. During Q4, three jv's reached profitability, which proves that this model continues to be efficient.
Scalable and different types of markets.
We are also excited to announce that through Contessa, we closed another joint venture partnership with a multi hospital health system in Penn State Health.
This Penn State Health joint venture, which is an extension of our existing partnership with Highmark Health is another example of the demand and appeal that high value health systems have for contestants Homebase acute services.
Program operations for this market are expected to go live in Q2 2022.
Additionally, Contessa continues to add payer sources for its high acuity clinical models and.
And in the coming months, we expect a number of new health plan contracts for the hospital at home and sniff and home models, increasing total addressable patients.
We continue to remain encouraged by <unk> robust pipeline of additional health system opportunities.
Furthermore, this year, we expect strong performance through scaling of existing markets increased penetration of our newer clinical models additional value based contracts and an increasing number of partnerships that reach market level profitability. Our medicines continues to focus on integration efforts with contests are related to nurse staffing strategies for the <unk>.
High acuity programs Contessa has historically relied on third party home nursing providers in select markets, where contestants hospital partners do not have capabilities to provide home nursing.
Nurse capacity constraints and those markets have resulted in contests and not being able to admit all patients referred to the program.
A medicine and catastrophe began implementation of our strategy to in source nursing requirements instead of continuing reliance on third party providers and the majority of the markets in which <unk> operates.
While meaningful progress has been made in several markets to increase ADC capacity, I E, Tennessee and Arizona.
The integration efforts are taking longer and select existing markets, such as New York and pending markets in Hershey, Pennsylvania in Tacoma, Washington.
We are very pleased with the high acuity segment's performance and are excited about the new opportunities and capabilities Contessa has brought to our organization.
The combination of our medicine Contessa has created a truly differentiated and home care platform.
And I am very excited by all the opportunities ahead of us in 2022.
With that I'll turn it over to Scott, who will take us through a more detailed review of our financial performance for the quarter and our projections for 2022 Scott.
Thanks, Chris for the fourth quarter of 2021 on a GAAP basis, we delivered net income of $1 <unk> per diluted share on $559 million in revenue, a revenue increase of $9 million or 2% compared to 2020.
For the quarter, our results were impacted by income or expense items adjusting our GAAP results that we have characterized as noncore temporary or onetime in nature slide 15 of our supplemental slides provides detail regarding these items in the income statement line items each adjustment impacts for the full year of 2022 on an adjusted basis.
Revenue grew $136 million or 7% to $2 2 billion EBITDA increased $26 million or 10% to $300 million EBITDA as a percentage of revenue increased 40 basis points to 13, 6% and EPS decreased 16 to $5 95.
Keep in mind that prior year includes the Q3 EPS benefit of <unk> 72.
Resulting from executive stock option exercises.
The suspension of sequestration added 36 million to our revenue and gross margin for the year, which is up $13 million over prior year.
For the fourth quarter on adjusted basis, our results were as follows.
Revenue grew $9 million or 2% to $559 million.
<unk> EBITDA decreased $13 million or 17% to $65 million.
Excluding the acquisition of catastrophe EBITDA decline was $8 million.
EBITDA as a percentage of revenue decreased 260 basis points to 11, 6%.
Excluding contessa EBITDA as a percentage of revenue declined 160 basis points to 12, 6% APR.
EPS decreased 31, or 21% to $1 18 per share.
Tessa drove <unk> 13 of the decline.
Now turning to our fourth quarter adjusted segment performance keep in mind segment level EBITDA as pre corporate allocation.
In home health revenue was $337 million up $8 million or 2% compared to prior year.
Revenue per episode was up $45 or one 5%.
The increase in revenue per episode as a result of one 9% increase in reimbursement.
Partially offset by a change in our case mix.
Our visits are down <unk> three visits per episode.
Our implementation of Metallurgist care has led to a reduction of two visits since Q1 2020.
Improving our revenue per episode and lower business added 130 basis points to gross margin.
But it was offset by an increase in cost per visit resulting in a gross margin decrease of 40 basis points.
The increase in cost per visit was driven by planned wage increases and it creates a new higher pay commission balances wage inflation and health insurance.
G&A increased approximately 4 million, mainly driven by raises increases and care center administrative staff traveling training, partially offset by lower incentive comp.
Segment, EBITDA was 63 million with an EBITDA margin of 19%, which is down from 20% in 2020.
At one 5% increase in revenue per episode and the decrease in visits per episode were not enough to overcome labor pressures.
Sequentially segment, EBITDA was down $5 million on a seasonality driven increase in health insurance of $3 million and an increase in cost per visit which was driven by a full quarter of raises new higher pay and clinician training.
Now turning to our hospice segment results.
For the fourth quarter revenue was $205 million up $1 million over prior year.
Net revenue per day was up 5% driven by a 2% rowhouses rate increase that went into effect October one 2021 and reductions in our cap liabilities.
Cost of debt increased $8 78, primarily due to fixed costs associated with salaried employees on a lower centers plan raises wage inflation health insurance costs higher utilization of contractors and higher business performed by our employees as prior year was impacted by access restrictions due to COVID-19 .
As we've detailed in previous quarters, we have maintained our clinical staffing levels similar to prior year. Despite a year over year decline in census.
EBITDA was 41 million down approximately $12 million.
G&A increased 6 million due to the planned wage increases additional business development resources higher recruiting fees and higher travel costs.
Sequentially admissions increased 4% with ADC remaining relatively flat due to the higher discharge rates, which is typical as Q4 historically has the highest discharge rate to the year.
Segment EBITDA decreased 625000, as a rate increase effective 10, one and positive cap adjustments were offset by a full quarter of annual raises as well as additional bonuses and raises to increase employee retention.
Higher contract utilization and higher health insurance costs.
Turning to our total general and administrative expenses.
On an adjusted basis total G&A was 183 million or 32, 8% of total revenue up 120 basis points.
Due to the <unk> acquisition, which added 6 million additional G&A. The remaining three months of the year over year increase was due to raises additional resources for growth higher travel and training expand in higher health insurance costs, partially offset by lower incentive compensation costs.
Excluding catastrophes, our G&A as a percentage of revenue increased 20 basis points over prior year sequentially G&A is up $7 million of which $2 million due to the addition of contesting the rest of the sequential increase was due to higher health insurance costs and increase in staffing, primarily BD resources and severance.
For the quarter, we generated $5 million in cash flow from operations, which includes $27 million repayment to deferred payroll taxes.
For the year, we generated $189 million in cash flow from operations, our net leverage ratio at the end of the quarter was one three times.
Inclusive of the funding of the <unk> acquisition.
Turning to M&A in November we announced a new hospital had held JV partnerships with Penn State Health as Chris noted, we have been very pleased with the accelerated pace of and coming partnership request that contested since we closed the deal. We also recently announced the signing of the evolution health deal, which will add 15 care centers to our Texas, Oklahoma.
Ohio footprint.
Evolution is very much a turnaround and excited about the opportunity to increase our density and believe that longer term growth and profitability outlook for the asset is compelling.
Finally, just yesterday, we announced the signing of assisted care home health, adding two locations and the sale in state of North Carolina.
Im very pleased with our M&A efforts and excited about the opportunities within our pipeline.
As you can see on page six of our supplemental slide deck, we're initiating our guidance ranges for 2022.
As we have said 2022 is very much a setup year for 2023, our guidance ranges are as follows adjusted revenue of $2 33 to 36 $5 billion.
Adjusted EBITDA of $275 million to $285 million in.
And adjusted EPS of $5 23 to $5 45.
On an estimated 33 2 million shares outstanding.
There are several key factors impacting our 2022 guidance outlined on slide 18 of our supplemental slides. These items included right.
Great updates of three 2% in the home health and 2% in houses, which are partially offset by the exploration of sequestration suspension. As reminder, sequestration suspension remains at four 2% for the first quarter and 1% for the second quarter, the net impact of reimbursement.
<unk> to be approximately a positive $25 million.
Higher than normal wage increases as a result of increased labor cost pressures keep in mind. Our first half of 2022 results are impacted by raises given in August of 2021.
And incentive comp headwind of $16 million over 2021 is incentive compensation expense reflected are performing below plan targets.
Continued incremental investments in the business of approximately $8 million, which includes $5 million and additional de novo spend $3 million in investments focus on workforce optimization automation and the rollout of Metalogic <unk> product in our hospice business.
Our investments in Intesa reduced EBITDA of $17 million of acquire prior year, which is 6 million higher than originally anticipated.
Due to a significant ramp in business development opportunities and our desire to enter the palliative care at home business.
The impact of COVID-19 on our volumes in January and February of 2022 was approximately $7 million due to an increase in commissions on cotton during the first part of the year, we had volume misses a 'twenty 300, admins and restarts in home out and this is a 200 admits and houses, though the number of commissions accounting spiked with the rapid spread of omicron, we've seen at <unk>.
The decline in the number of clinicians on quarantined at this point.
At our peak in mid January we had the highest percentage of clinicians on quarantine.
At the beginning of the pandemic at approximately 7%, whereas today that percentage is closer to 2%.
Further we continue to see some Medicare advantage plans moving away from PJM reimbursement to per visit of arrangements through utilization of benefit managers. When this happens there is a short term reimbursement impact that said our M&A partners continue to recognize the value of home out for their members and that is materializing itself and the openness it's high quality.
Outcomes.
Now the 2022 impact will be between 10% to $14 million, we will continue to mitigate this impact via our workforce optimization initiatives by by delivering the best outcomes and utilizing the metal Metalogic suite of products.
The combination of these initiatives and improvements in per visit reimbursement rates will result in better margin business than in recent past.
Our effective tax rate assumption for 2021 is approximately 27% with an estimated cash tax rate of approximately 19%.
Yes.
While M&A is not contemplated in our 2022 guidance, we do expect to continue to acquire both home health and hospice assets. This year, and we expect cash flow from operations to be between $180 million to $200 million.
Some additional items to keep in mind related to our performance in Q4 2021 compared to Q1 of 2022.
The first of these items are seasonality in nature the.
The impact of AVC hospice decline combined with two less calendar days is estimated to impact revenues by approximately $4 million.
The benefit of lower health costs relate to seasonality of claims of approximately $10 million.
And an increase in payroll taxes of approximately $3 million.
Some new items for 2022, or a $2 million sequential decrease in EBITDA due to contessa, an increase of $5 million to 2022 incentive compensation keep in mind 2021 was impacted by performance coming in below plan metrics. This ends our prepared remarks operator. Please open the line for questions.
Thank you.
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Please limit to one question and one follow up.
Our first question comes from the line of Brian <unk> with Jefferies. Please proceed with your question.
Hey, good morning, guys.
Hey, Scott really appreciate all the color you gave on the guidance, but just wanted to ask maybe for you and Chris how should we be thinking about your confidence in that guidance range and then maybe Chris more directly to you.
You would take over the CEO spot coming up here whats your thinking on guidance philosophy, and how you're thinking about your approach to the business.
Being the new CEO any strategic.
Strategic things that we need to be thinking about as.
As you step into the role.
Yeah, I'll start and turn it over to Chris but.
Brian Im very confident in what we laid out there is certainly we wouldnt have.
Clarity perspective, not having January which is our first full month view impacted biomarker automate our our lives easier in everyone's lives while easier but from a.
Vision into the future and we feel good about it we still strong we think we've left our rooms within our RASM room within our performance numbers that we laid out the outperform which is what we always wanted to do.
We've got the same pressures moving in and I think the biggest thing to keep an eye on her hospital length of stay which is the one item that is somewhat out of our control.
And we'll be keeping an eye on but we've got a lot of plans out there we've proven that when we laid out plans before and we can get in front of us and things will get great results, but I feel very confident that Brian .
Hey, Brian It's Chris Yeah, I appreciate the question Ben.
Been part of doing giving guidance since we resumed guidance a few years back in.
A lot of the same inputs are happening today that has happened over time I think that.
Given what we've experienced over the last two years with with the pandemic, particularly in just how you can predict everything we just spent a lot of time looking at all the inputs and handicap in those as we come up with what we put out there is a number obviously.
I wouldn't put anything out there that and feel confident that we were going to be able to achieve and hopefully overachieve.
And I feel like that's what we're putting out for 2022.
Again, handicapping, some things like labor pressures.
Wage inflation.
A link to stay as Scott mentioned on the on the on the hospice side and in terms of philosophies I think one thing around.
Innovation that youre going to see and it's actually more of the same but what we've been doing quietly over time is investing and partnering alongside other companies out there around our space. The Metalogic investment for US has been a very very good for us just operationally and helped us be a better organization as well has been a good opportunity for us to help you.
Define and develop new tools that helps the industry advance.
We recently invested in a staffing company connect are in.
To be able to build an at home staffing model out there that can be on demand as well so.
Look for us to continue to find opportunities to partner with with some adjacencies out there that will actually help us function better operate more efficiently as well as you know bring back good returns of our invested capital as well so.
I think youll see more of that in the coming years as well.
And I appreciate it and then I guess my follow up question just on the M&A front.
Obviously, we've seen two deals here already so.
Any color you can share in terms of your view on the pipeline M&A pace this year and what youre seeing on valuations in the space.
We are very excited about the pipeline very excited to have two deals announced.
And as we are in February .
There is still as good about that pipeline. That's have had at any point in time for probably over a year I think early 2019, we felt confident and then early 2020, even pre pandemic issues, so that kind of slowed some activity down I think.
Clearly as these labor pressures have become an additional item for for operators to phase. We think that opens we will face some things up here in the back half of the <unk> sequestration suspension goes to zero.
The opportunities are strong the pipelines to all of the our M&A team is excellent they've done a great job.
And they'll continue to deliver so I think those things open up from a valuation perspective.
We're still kind of looking at and focusing on home health right now kind of a 12 to 14 times of evaluation, we think through synergies and get them to our operations.
To get those at closer to a 10 times that the year three markers. So.
Feel great about it.
Last year, I felt great tune things kind of slowed up a bit for us, but a lot of line of sight in and what's out there and it's a healthy pipeline.
I would think we're going to get some more incoming is in the back half of the year.
Awesome and Paul Congrats on the upcoming retirement thanks.
Appreciate it Brian Thanks.
Our next question comes from the line of Matt Larew with William Blair. Please proceed with your question.
Hey, Matt.
Hey, good morning, and Paul Congratulations on your successful tenure at that.
Hey, Matt.
Wanted to first ask about that.
And just wanted to sort of bridge the gap between yes, I think it's the revenue profile Thats, maybe a bit light of what you've been expecting versus some of the partnership activity in your commentary.
As bullish as you were anticipating so.
Maybe just help us understand.
You mentioned that staffing has been somewhat of a limited initial I'm curious sort of what the true demand is bad.
In terms of volume relative to the actual number of patents.
Yeah. Thanks, Matt I'd say that demand has been higher than admit same staffing issues are out there we got in front of it in certain markets that we think we've got some of those issues I think it was probably over 300 admits that we probably missed the opportunity I think thats one issue the second issue on the revenue differences that.
Completing hospital to home to the Medicare waiver program, we've gotten a lot of that business.
That's really the lower revenue.
Kind of per episode, if you want to use that label on it than typical risk base. So at some of the differential in your commentary is certainly more bullish than a topline number we see a lot of certainly have a lot of line of sight into what we think this thing can do until bullish about 2022.
But I'd say most of that is what I described as well revenues are a little off at this point and Matt just.
As the team wanted to get me out of the office.
They sent me on the road with <unk> and I've been out.
With Travis machine.
CEO , calling on a bunch of clients.
Just to reemphasize Scott's point, the appetite and the pipe there is quite extraordinary and I think.
We're very excited and I think the the other exciting thing is the types of discussions have changed.
From pure hospital at home to other types of risk based palliative sniff at home. So this is as well as.
<unk> partnerships potential JV so.
I couldnt be more excited about the choice we made with Contessa.
Got it and then a quick follow up on that one just yet.
Scott you laid out sort of the EBITDA impact year, but could you maybe give some sense for what the exit.
EBITDA.
Drag might be relative to.
Early on in the year.
Yes I'll.
I'll, let I'll can do for you I think somewhat around probably from a revenue perspective, I would say that drops at about 25% in the first half.
75 cents in the second half, 75% in the second half.
And we think the second half EBITDA is probably about 40% of the drag for the year.
I think we're optimistic that the things that can potentially change that right now.
Our view, we want to go with.
Okay got it and then just a question about hospice guidance, 13% same store.
Clearly last year had the issues in terms of BD turnover.
I have a bigger sales force now.
But what is the level of confidence in terms of building up to that 13% number and maybe what is the trend and like year to date, it's probably helps you.
Start to build towards that.
Yeah, Hey, Matt so.
I feel very confident in the number that we put out we brought 46 additional BD ftes into this year versus the versus last year.
Turnover is trending in a good direction as well, which is suggesting that our reps are kind of growing into longer tenured buckets, where productivity also increases as well the productivity of our reps today is as expected. So no surprises there I will say.
Q1, the one impact in Q1 was really around the corn teams and omicron really peaking in mid January .
And we call out that we lost about maybe 200.
Hospice admissions in the quarter, which is kind of have an early impact.
Since since the <unk> have come down and Omicron has subsided, we've seen volumes come back up very nicely. So.
I'm encouraged by you know kind of what we're going to be able to produce from our hospice organic growth perspective this year.
The one caveat is that there is still a lot of unpredictability and inconsistency in the discharge median length of stay as well as the discharge rates and so as that moves around and thats, having thats, having a little bit of a drag on the on the ADC growth Hey, Matt.
Quick follow up on contests in that Miss in revenues not leaving anything out. There was also an anticipated in 2021 assigned deal that will get closed.
Home health asset that was within that and it's kind of just looking to use that differential differently within the <unk> asset was supposed to close got held up and regulatory issues. So that was part of the delay as well we expect to get that closed this year.
Okay. Thanks, everyone.
Thanks, Matt.
Thank you.
Our next question comes from the line of Justin Bowers with Deutsche Bank. Please proceed with your question.
Hey, Justin.
Hey, Paul Good morning, everyone.
Very apt choice of music.
And congrats on the transition is going to.
It's been quite a run.
But just just a quick follow up on Matt's question with Contessa is there whats kind of the visibility in the revenue.
That you have.
You kind of I guess in backlog or in the guidance for 2022.
And then just on hospice I know that.
A lot of the discharge rate is out of your control but.
Do you have any has there been any shift or.
The way that you guys are attacking different referral sources and then.
Have you seen any changes.
This quarter in terms of accessibility to.
Some of the senior living and.
Referral sources.
Yeah, I'll grab and tests.
I mean, we feel good about what's out there I think there is some backend.
Loaded pieces, we've got so you can see we are on track probably ahead.
Track I would say of on the signing of JV deals. So feel great about that you can see as I mentioned, we're frontloading some G&A costs due to that I think that.
Isn't it.
The development that changed as.
As always when we looked at this asset we wanted and had the opportunity to build off on our pallets of asset as well as program.
That's probably moving along faster than we thought so I think there is potential upside in those numbers, we're working on some deals and hope to get those across the finish line, which could certainly help that number as well so that's something to look forward to.
Contessa.
Yeah, Hey, Jonathan on the Hospice question. So I'd say no there's not really any notable shift in referral source our segment where patients are coming from with the one exception is there is a direct correlation of a spike in the pandemic. So even when we saw delta.
Last fall as well as we saw micron early this year and hospitals hospitals beds were full we also saw a one or two percentage point.
The tick up in our actual hospital referral volume or mix of our of our admissions and then that would also drive down linked to stay a little bit, but we've seen even as omicron has kind of settled out it's not it's back down to normal in terms of what we can do as we always are doing account optimization.
We're looking into utilizing claims data.
<unk>, where we're getting business from where were not getting business from and where there's opportunities. We saw on that to our reps to be able to go out and establish relationships and build build upon that there's probably going to be more science around that.
Related to just kind of the length of stay opportunities that are out there in terms of kind of our targeted accounts and then the last question around facility access it's pretty open for US now we do have.
Again, I think that that comes and goes with with the pandemic kind of waves.
Right now, we're seeing that we're not having access issues in our markets today.
Got it I appreciate the questions.
Congrats Chris.
Thanks Jos.
Our next question comes from the line of a J Rice with credit Suisse. Please proceed with your question.
Hey, Joe.
Best wishes Paul.
In the future.
Maybe just to ask on the labor and benefit assumptions around 'twenty two I know in your slide deck I think it's page 18, you have.
2% to 3% assumption around.
Salaries, and then it says 11% growth in benefits and it looks like 8% of that is attributable to head count.
Is is that head count is there any reason to think that thats not also something that we should think about on the wages, even if the apples to apples increase is 2% to 3%.
As much as an 8% increase in head count that you are anticipating and then also on that 2% to 3%. If you break that down I'm, assuming that's the consolidated number isn't materially different in hospice versus home health.
Yes, I'd say not really the way we built at a J.
So thats kind of what we said we're going to get for our normal Reyes pipeline Theres other inflation embedded in there just from an exit rate perspective that Julien that called out Theres also probably another.
$14 $15 million that we've got in their bonus type retention payments that youre not really seeing that is reflective in that number. So I'd say, it's across both both lines I'd say the hospice is a little different because youre seeing material increases in cost per day lines because of our lower ADC, whereas we're down roughly 560 <unk>.
<unk> year over year.
And Thats, we have we have only 37 less condition. So as we said before we've kept those staffing levels at a higher level. So youll see that cost per day is that ADC expands kind of correct itself, but still be up because of other inflation pressures on the I think the easiest way to think about.
And Theres a couple of ways of course to look at it but on the cost per visit line as we've got it modeled we've got our modeled and our cost per visit from 'twenty, one to 2022 being up almost about 5%.
So that's going to be reflective of everything going on so its health insurance, what's happened what's happening.
Around labor pressures also has contractors within that number which we expect them to pull that down. So the overall inflation number yeah. As you can see it will be much bigger, but that's only half the story the other half is.
Our plans around what we're going to do with BP believes we can take those down.
We think for every kind of a shift in a quarter of a point and visits youre going to offset about 2% inflation. So as I've laid out those numbers and what's built in.
Our expectations is our cost per episode increase of roughly 3%. So you can see there is some offset planning of both pull that back down and that's on top of it we're getting roughly a 3% rate increase year over year. So that's kind of how I slice that up a J if that's helpful.
Yeah, that's great and then maybe just as a follow up.
Yeah.
You asked about.
Any latest thoughts on the discussions with them.
CMS in Washington, generally about PDGF him about what youre expecting for the re proposal it will come out in the summer.
For next year or any other initiatives that you are tracking closely.
Yes, we've got Dave Kimberly our resident Washington expert here, so yes, PJ. Thanks for the question.
As you know last year in the proposed and final rule CMS shared a methodology.
Toyed would've resulted in additional customer behavior changes under the new <unk> payment system.
It's credit CMS, they realize that COVID-19 and the continuation of the Pag had an impact on the data that continued claims analysis was needed.
I think since that time, we've seen multiple waves of COVID-19 .
Come and go we seen the continuation of the pag significant workforce issues continued growing demand and lack of capacity for home health at one would think would necessitate further analysis without instituting additional cuts Cmos also stated.
It was open to receiving input on additional methodologies and approaches to determine budget neutrality, so with that being said our team in the industry.
Our fully prepared and are preparing to respond to whatever CMS may put in the proposed rule. This summer, but I would say this I'll remind you that historically proposed cuts are typically blunted to some appreciable degree and the final rules and also a reminder, that as we sit here today.
We expect about 335% market basket update in that rule and that could increase because that market basket update.
<unk> calculated on cute also has Q3 and Q4 project to forecasted wage inflation in it by the time. The rule comes out we should be some Q3 Q4 2021 actual wage inflation in there. So we expect a nice market basket update we expect CMS to be very reasonable and reasoned and.
Their approach to any particular any additional behavior cuts if at all and lastly, I would say this I mean, we will urge CMS and our friends in Congress.
Any pag or Covid impacted year is not a good baseline year to determine anything so they should probably delay any changes until we have kind of a clean year. So.
I think we will spend a lot of effort on this the industry collectively you will spend a lot on it our peers are spending a lot on it. So I think there'll be a lot of attention a lot of very deep analysis.
I feel confident on it a J that there'll be yes, there'll be a.
Good outcome here. So you heard it right here, a J <unk> is going to be reasonable.
We're excited.
Alright, Thanks, a lot.
Okay.
Our next question comes from the line of Sarah James with Barclays. Please proceed with your question Sean.
Hi, Sara.
Hi, and congratulations on your retirement.
Sure. Thank.
Thank you.
One five the first three quarters of the year with $18 three so I'm wondering if this level of sustained so far in 'twenty two.
And then on the nurse Sharron, you guys broke that out for the full year two.
26, 8%, but.
I would like to get a sense of how it looked exiting the year or early in 2002. Thank.
Thank you.
Yes, Sarah this is Chris.
For turnover for us.
Throughout the 21.
We stated that we improved our nursing turnover, 9%.
We also discuss after our Q3 earnings call.
The impact Delta was having on staffing as well as.
This migration to travel nurses and the rates that were being paid. So we were we were a little bit of a victim of that as well.
Had.
Our nursing turnover in Q4 was in line with our expectations, but ticked up slightly in Q4 over Q3.
Coming out of the gate. This year is looking really strong for us with just a couple of pockets.
And very specific geographies that we still are having some challenges.
Being able to stabilize around a lot of that also is.
As correlated to kind of the wave.
<unk> and in the stress associated with us getting up to almost 7% of our clinicians on quarantine at one point in time in January and there was a lot of volume coming in in those same markets and I think that create a little bit of churn, but right now I feel good that we will continue to drive down our nursing turnover, that's a big focus for us around clinical capacity.
Pasty and keeping our own is our best.
Our best and most impactful lever for us to to pull than we are.
We're strong on culture, and making sure that this is a good place to work so.
We have a lot of it a lot of initiatives around that a lot of focus around that and I feel good that will drive down turn it over to even further this year.
Just a qualitative comment.
Areas that we find when there is high quality, which we are the highest quality out there.
It correlates to lower turnover and so the more we become a really good place for people to work and deliver excellent care of the more people want to stay with US and it's also helped as I mentioned in my comments on recruitment our recruitment.
It's been fantastic in a lot of that is because we stand some strongly for quality.
Okay.
And follow up question on this is as you think about.
The staffing constraints and you guys have talked about and Chris Corr can you Tessa.
Pension into palliative.
And now I'll turn it over.
How do you think about the areas of shortage compared to each other so is this more of a limiting factor from personal caregivers or is it still mainly be.
Nurses and clinicians that are.
Putting you in a position to really add Matt.
It's nursing nursing nurses and clinicians.
On both the Contessa side as well as on.
The home health and hospice side registered nurses are typically the ones that are initiating the care that we're providing and that's that's the.
The gating factor of whether or not we can admit the patient whether or not we have the <unk>.
Clinical staff to be able to take care of them, but it starts with having the nurse to be able to do the admissions. So.
For us that is that is why workforce optimization is critical we need to also continue to focus on using lower license skilled caregivers where appropriate.
So that we can continue to expand the capacity of our nurses and on the Contessa side, we find that the nurses are out there in the shortage that we're looking at is not.
Huge, but it's really kind of educating the local market about this type of a job. It is acute care in the home, which is not very well known out there and I think that is as hospital at home continues to grow and recognition out. There then I think we will find more critical care nurses wanting to migrate from the <unk>.
Hospital, setting where theyre burned out to something that is still high.
Hi acute care.
Services, but in their homes, so I'm optimistic that we'll be able to.
Catch up to the demand there let me just emphasize what Chris said I think it is exactly right and Thats what were seeing in the marketplace. We've actually are looking for.
People, who are getting quite burned out in hospitals, who have hospital skills to transfer and do that in a less intensive difficult place in the home so.
That once people hear that messages.
It's a very attractive message for the hospital type of nurses that we need to recruit to do hospital in the home in Hollywood and the home and sniff them now.
Thank you.
Thanks I appreciate it.
Our next question comes from the line of Ben Hendrix with RBC Capital. Please proceed with your question.
Hey, Thanks, everybody, Hey, how's it going and congrats to Paul and Kris.
Alright, Thank you Ed.
Just turning back to Justin's question with regard to hospice ADC given that your admission volume referral mix in diagnosis mix.
Essentially in line with normal pattern.
Can you help us understand what's driving these late admissions to hospice care in the medium length of stay headwinds I guess I'm trying to get my head around how that volatility normalizes and how that might play out in terms of timing. Thanks.
Yes, Thanks, Ben I'll take that this is Chris.
We think that the key driver here is just basically disruption.
In the normal kind of accessing healthcare and if you think about during the pandemic over the last two and a half years number one.
Lockdowns happening throughout the country at multiple multiple stages.
Waves of the pandemic coming on access to doctors' offices going to virtual environment versus an office environment.
People also have a fear of even getting out and going to the doctor. So what we feel like really is happening is people that are somewhat.
Hospice appropriate.
Delaying getting just their typical checkups or diagnostic testing and diseases are being kind of identified later in the in the process, which means they've had more impact on the patients and if you think about it.
Just the journey to hospice is starts with kind of a diagnosis that would suggest life expectancy of six months or left less but people when they first get that news will typically aggressively try to fight that.
Whatever means they can and then at some point when they accept end of life care is there as their treatment and they can move on to hospice. So we think that theyre getting diagnosed later, we think that they are then trying to kind of.
Whatever it is.
And then at the time that Theyre coming onto hospice is theyre just closer to passing than they have been in a normal kind of a normal environment. Prior to 2020, when the pandemic first began.
It was relatively predictable youre discharge rate in your median length of stay and it's pretty consistent based on your segment mix and what we've seen is it's just been it's been pretty erratic.
Consistently erratic if that's if that's.
Phrase.
Four since then and it continues so far in 'twenty two.
Thank you.
Thank you.
Reminder, we ask that you please limit to one question and one follow up.
Our next question comes from the line of Joanna <unk> with Bank of America. Please proceed with your question.
Hey, Julien Hi, Thanks, Hi, how are you, yes, so I guess one question.
On the <unk>.
Front of that.
From a labor so you mentioned that.
Pretty good hiring momentum is a 27% increase in liquid at com.
Do you have I don't know may be understood, but that net hiring number.
I'm just trying to assess how much you increase.
Clinical staff for last year.
Okay.
Yes, we don't.
Don't have a net hiring count right in front of me, but Joanne I'd be happy to kind of follow up with you and kind of get that out there.
We do know from our clinical capacity, we have expanded our clinical workforce throughout last year and rolling into this year have seen seen positive momentum as well, but we don't have a quantified to the number of actual clinicians.
Net new.
New nurses, new clinicians less turnover, but it.
It's net positive I just I just don't have the number I think.
I think in my comments, we talked about gross hiring of increase of 27% on.
On the net side.
<unk>.
We're clearly in the positive area, but we don't have that number and I think also remember that there is.
What we've seen in certain cases is.
Some of those folks that we've hired moving into PRN and we're working very hard to particularly with connect RN tools and these other things to really start to increase our efficiencies with the PRN pool.
And utilizing new technologies, and new techniques and new incentives so.
We keep we keep at that top line level, and we keep driving our turnover down obviously, we're going to keep more and more people.
Alright. Thank you so much I guess I'll lead.
To the next.
And of course next question because we only have two minutes left.
Thanks, so much.
Thank you Joanne I appreciate it.
Our next question comes from the line of Matt Borsch with BMO capital markets. Please proceed with your question.
Hey, Matt.
Hey, how are you.
Although not by thanking Joanna Q.
Let me just ask a question I know you've gotten a lot of versions of the business. We're looking at.
Constraints on clinical labor.
<unk> project forward to a year or a year from now.
And let's assume really well past any.
Further variance of Covid, how do you think the labor force.
<unk> is going to compare.
In a year and half.
A year year, and a half Q, what you're adding 28 in 2019, how many residual headwinds thank.
Thank you will still be dealing with in <unk>.
What things will be done by then to offset that.
Yeah, I think that's a great great way.
To state the question, Matt So for US I mean this is this is all we're about and this is what we're focused on.
And we do feel like if you think out a year or two away.
And assuming there is no really kind of new variants and things that are going to be driving different types of demand.
We feel like this migration of the nurse to the traveling nurse role and the wages that theyre able to get for doing that I think that settles out I think it's new and it's a new scene for these nurses and I think they kind of like it and they're getting paid very well.
Obviously, that's related to the demand from the hospitals and if that settles out where there is less of that unless competition and nurses want to get back to where they have a stable job and they know what theyre going to be expected to do and know where theyre going to be stay in.
Living I think thats going to create better better kind of stability for us for us.
<unk>, our clinical capacity is on several fronts, it's one making sure we're using our clinic clinicians at the right level of their license we have opportunities in hospice is still further opportunities in home health, where we're using registered nurses and we can be appropriately using <unk> and <unk> that will create additional capacity for us.
We're also seeing tools that are helping us get smarter with how we're using our clinicians metal largest care was was.
Great one to point to and how it has helped us optimize our business per episode, so that we're not providing unnecessary visits for the patients that are not at any value add to the patients. We are now utilizing muse for metalogic on the hospice side to get smarter with our clinical capacity. There. So what I think youll see is youre going to see better.
Six.
Within how you utilize your existing staff I still think that it will be challenging to hire enough in net enough new staff to fully meet the demand. When you think about the demand Thats go moving into the home and what was accelerated with with with the pandemic. So I think technology will also be utilized more in terms.
Providing virtual visits and telehealth visits and things like that to offset the lack of kind of.
Access to nurses, if thats appropriate.
But.
And then I think that theres going to be consolidation within the industry also that's going to allow those that are high quality.
Very stable solvent providers out there to really start to amass.
Clinicians to be able to to.
To be able to take more market share as well so I think it will be a shakeout.
The industry I think the ones that are really prepare for that and taken a serious we've been working on this for two years.
This is all we focus on right now in terms of when we think about our headwinds for the next five years. So those are all for it I think we'll be in good shape.
Still think there'll be more demand than supply.
But those that don't I think we're going to be are going to be very very challenged and a quick coda to chris's very good response.
We talked yesterday, Matt about the Mckinsey report.
Again, if it's a quarter right we will take it.
We're in.
25% of health care can be shifted into the home.
Meaning it will turn into a $270 billion industry or something like that.
I think we believe that the demand is definitely going to be there to drive care into the home that it's going to be increasing.
The game is going to be do we how do we attract and retain and make them productive the people that.
That can do these types of things in the home. So we get it we've seen it we've been prepping for it for two or three years and I'd say, we're way ahead of everyone else in terms of how we think about it.
That's all that's great that's great. Good for now thank you.
Thanks, Matt Thanks, Matt.
Our next question comes from the line of Andrew <unk> with UBS. Please proceed with your question.
Hi, Hi.
Hi, and congrats again, Paul Best wishes, you will be missed.
Wanted to clarify a few comments in response to a J S question on the salaries, increasing only 2% to 3% for the $16 million of incentive comp in 2022 can you confirm that that's related to clinician bonuses and it was unclear to me whether thats included in the cost of service line or whether that's going to be included in SWM.
And the G&A line.
Yes, the $16 million is not the clinician line that's.
So that's just on the G&A lines, so that incentive comp plan reset for 2022.
Theres been some thoughts that maybe that's a catch up in 2021, it's not it's just a new plant we start accruing as if we're going to achieve plan, which is at 100%. So thats all G&A line I think.
And then we could elect to sell better as I look at it now and understand some of the confusion, but we've laid out in our guidance thoughts are the 2% to 3% is just general what we think and are as we would raise pool. There's also numbers we've put in for.
In addition, our bonus retention, that's just locked into our numbers that we're using to guide to the year. So that's why I kind of went back to the example, if you look at our cost per visit is up roughly and our modeling about 5% over prior year, which is going to include all of the noise and cost per visit.
And that certainly would include the health going up it will include contractor, which is going to be roughly at a plus 10% top 10% to 14% type of additional spend we're estimating this year additional rate I'm, sorry, but that's being reduced by the fact, we believe we are going to bring contracted utilization down so a lot of things going on in there, but it's clear.
And that number you can see we are reflecting a higher growth in that cost per visit.
I've talked to and mentioned that as we bring that down from a cost per rep visits per episode, we can offset at least 2% of that for every two five reduction.
Visit.
Got it so the retention bonuses are flowing through the cost of service line.
Yes. They are yes. They are just not in what we laid out on that right who's got it soon okay.
Okay.
Just a quick follow up on the investment in connect RN, it's only a $5 million investment. So far is that an area of focus that you'd like to invest further and what kind of impact of return are you expecting from that investment.
Yes, Andrew this is Nick.
Doubt will make any more equity investment into that asset.
But where we are going to invest as kind of our time and attention to help.
Part one of them to develop a home health specific solution.
In hospice specific solution historically that company was born on servicing staffing needs of the sniff industry.
They look to expand vertical as I think it was a very timely and very nice partnership.
They've been wonderful partners as far as helping us think through how to Giga Fi our home health and hospice workforce. So we're spending a lot of time developing.
That that asset for kind of home health and specific home health and hospice specific operations, probably won't be any further equity investment in there, but from a from a return perspective.
Think about.
Our PRN workforce.
That's relatively from a visit perspective relatively unproductive if we're able to.
Incentivize them and engage with our clinicians in a different way to give them kind of ship based worker base work that.
And that really takes the awful lot of pressure from the.
The hiring and retention side of the house and these people are already trained.
On homecare Homebase already onboard it already credentials and so.
It can really be a nice lever to pull from a productivity perspective. So they are as you know on a $5 million investment the ROI on getting an additional visit out of that PRN workforces substantial.
Just one last point I know we're over but this is nick's been leading this so I give them lots of credit as well as the team. The fact that we're making investments in people that are.
Forging way out in front of forging new territory in areas that we know strategically are very important is really important for us as an organization cultural leader to always look.
Head and partner with those change people out there so that we don't get surprised by it. So we're part of the change not not acting and reacting to the change and I think thats something unique here and my guess is youre going to see more of these.
Thank you. Our next question comes from the line of Scott Fidel with Stephens. Please proceed with your question.
Thanks Scott.
Hey, everyone, Thanks, and I Echo the congrats to Paul and Kris.
My question just to I'll try to package it into one is first just any.
Guidance or thoughts just on the EBITDA split when thinking about the first half versus second half in 2020.
And then the follow apart would you see on cash.
Yeah.
I know it's early here in <unk>.
2022 by just given the importance of modeling this in the out years.
Any initial guideposts that you'd want to give us just in how youre thinking about that revenue trending out into 2023 problems from that 56 million.
You've provided for Russia in 2020, Kevin Thanks.
Thanks Scott.
Say from a revenue perspective, and you can certainly go back look at our historical patterns.
Unfortunately, I have been a little bit disrupted here in 2020 in 2021.
But we're looking at I would say somewhere in that 47% to 48% load in the first half of the year.
From a EBITDA perspective, I think youre going to.
And as I had in my prepared comments, we've got some pressure coming from Q4 to Q1 normal seasonality issues with.
That happened I laid out the fact that to get health insurance kind of reset, which actually helps us with a positive 10 momentum from there going from Q4 to Q1 payroll taxes with few of the suite of resets as a drag of about three and then losing two days in hospice because of the short February is about another four so thats a combined that's a plus III as we roll forward and Thats <unk>.
Normal seasonality type issues. We have also talked about some ammo contest pressures in January the impact to US and then we've got two new items coming through.
One is contessa as we talked about the investments that's going to be a Q4 to Q1 drag of roughly two and thats driven by us putting more G&A spend it's not a deterioration of performance and then the reset of incentive comp plans or roughly five so thats a negative.
The negative 7% for those two items.
On the seasonality and the two newest negative for you had some noise on.
On the omicron, so it put its coming down a bit from Q4 to Q1 with naturally are historically its been kind of a flat to plus one so you've got some pressures there so usually.
I'll start out there in Q2 is generally a great quarter for US and then we'll build off of that.
And then Scott thoughts on the casting any early signs of us you'd wanted to give us on 2022 top line.
No I think well I think we laid that out when we did the acquisition I think we will stand by those kind of numbers. We've put out I would just say that I think that there are some things that can develop here that can really kind of kick start that earlier than anticipated but.
We're just talking right now and that's really around that pallets of asset.
And Thats, we believe thats going to expand earlier than we thought so more.
More to come.
February hopefully, we'll have some more news on that as we get to our next our Q1 earnings call.
Thank you. Our final question comes from the line of Whit Mayo with SBB Leerink. Please proceed with your question.
Hey, Whit.
All right we're at the end.
Save the best for last.
So all in all that.
I got to figure out.
Got it okay, better Thats Star one thing.
Just go back.
Can we just go back for a second to the comments that you were making about MAA and I think Scott you said that this year, we're going to see some of our plans.
The transition from something that resembles PDGF to a per visit and then you referenced this maybe being a short term headwind and I'm just trying to understand really what's going on here and then it sounded like you referenced something around maybe home health benefit managers. So can you just sort of just unpack this a little bit and help us sort of understand it.
Sure. So I mean, I think there's a couple of things going on one is we've seen this if you go back probably a couple of years ago, We had a major player.
Hum CMS reimbursement down too.
Pip harvested method I think just systematically I don't I don't think a lot of them are big fans of it we do still have some out there and some that are still going to stay on that.
But I think as those historically move forward Youll, probably see a greater move to just pay less per visit and that's my commentary around that the good news is the early indications of the if you go convert our PDGF type revenue per visit too.
Yes from a PD GM revenue per episode to a revenue per visit number we feel like some of the contracts. We're negotiating are alright, good ballpark going down to that but there is still not going to be at 100% of the Medicare the Medicare rate. So that's a little differential there and then the comment just around benefit managers at least see that you talk about the.
<unk>.
Layers out there as I use that that.
It's really just more pressure on the on.
On the utilization side of our services. So if you think about from the per visit we're just selling <unk>.
Visit as we go out there has been a clinician in.
We that's not really anything new for us we do that.
CMS side from a reimbursement perspective on our Medicare business.
So thats not necessarily a bad thing as long as we like the rate because that just means it frees up capacity and somewhere else. If we if we see that and can use that from a rate perspective to really manage that business a bit so.
It's just something we have that we know it has been out in front of us, but feel good about where Medicare managed care team is.
We're negotiating rates and obtain a push that we think they see the quality aspects of our business I think some of this labor tightness will help us from a leverage perspective, we will continue to use that.
I think that will bridge us up to a nice 2023 as we get through the.
The haircut from move into a PDGF reimbursement to a per visit.
Whilst comment it's hard it's hard to drive utilized utilization management, when there's increasing scarcity of the asset youre trying to negotiate with so.
And again, when you have our quality and you have our ability to recruit and retain.
We think that increasingly that's going to move more into into leverage to the providers versus.
The <unk> in the plants.
Got it and just one last follow up on this is as you look at your MA book today, If that's what you want to call. It how much is still PDGF like reimbursement how much is.
Per visit maybe where was it a year ago.
Maybe you don't want to guess as to where it's going to go but I guess I'm just trying to think about how that book is transitioned.
Over time.
So today our.
Our PDGF like book is 12, 7% of our home health revenue and per visit is 91% I don't have a year ago, but I would say it was probably closer to maybe.
Probably closer to half.
Split 50, 50 between the two and just moving more to the per visit side.
I think that over time, I actually I think you're going to see new types of models come out a payment that may not fit squarely into either one of these buckets things like chase rate and things like that that could be actually an opportunity for us to want to take more of that business and actually do it at a better margin than we're getting today. So.
So.
Again, I'll take the catalyst is going to be the labor pressure that the industry is facing that's not going to go away anytime soon it's going to make it more and more challenging for these plans to get their members access to care in the home, which is going to drive up their total cost of care. So I think we're running into a spot here now where theres going to be some leverage and some.
Some some.
Some genuine desire from both sides of the table to account to something that makes more sense.
Is it.
As we're thinking about this strategically what this is very interesting to us because we are contessa, which takes risk we are driving utilization management to a science with the metal logics piece.
We have high quality, so we know what sort of product, we're delivering with incredible accuracy. So we're clearly moving to a place where we can bet on ourselves and by doing that we can go to the plans and so you don't know utilization management. When we can do all that for you.
One just to be clear it so I don't confuse anybody because they use a different terminology, but if you look at page six of our slides we got our revenue sources and you can see we were referring to that PD GM like reimbursement, we refer to as private episodic so private payers that pay up pay us episodic and you can see the split on page six for those who want to go back and take a look at it.
Thank you Lady.
Ladies and gentlemen, we have reached the end of our question and answer session. I will now turn the call over to chairman and CEO , Paul <unk> for closing remarks.
Alright, Thank you very much Alex and thanks to everyone, who joined US on our call today I would also like to again, thank all of our caregivers, who delivered yet another great quarter and year of results.
Finally like to thank all of you on the phone and the webcast for your interest in <unk>.
As this is my last earnings call as CEO .
As I am moving to the role of Chairman I, just like to say, how proud honored and humbled I am to have served and led this organization for the past seven and a half years, it's been a life changing journey to serve our patients and employees I believe the best time to transition leadership is when in.
Organization has a clear idea of where it's going and a great strategy to get there when it's at its peak strength hitting on all cylinders looking at problems in executing hard to make them opportunities. The team. We have built is second to none and knows how to.
Move our strategy to completion I'm, leaving you all in the very capable hands of Christian <unk>, who is one of the best operators I've ever seen it.
Is it is it is an exciting time to be at <unk> care in the home is the right space, where the highest quality asset and I truly believe that the company. We have built will lead innovate and change how health care is delivered in the future.
As you can tell I'm beyond excited to continue to watch this story play out, albeit I'll be cheering, everyone I'll be cheering on everyone from the stance.
Please take care. Thanks for taking this journey with us and buckle up the best is yet to come Godspeed of medicines.
Thank you.
This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation and have a wonderful day.