VITAS Healthcare, a subsidiary of Chemed Corp. (NYSE: CHEM), recently launched a targeted hiring and retention wellness initiative designed to ease workforce strains and increase capacity for patient care, paving the way for sustainable long-term growth.
The program, which includes one-time retention bonuses, is focused on building up the company’s supply of licensed nurses, nurse managers, home health aides and social workers, Chemed CEO Kevin McNamara reported in an earnings call. The bonuses for 12 months of continuous employment range from $2,000 to $15,000 per licensed health care professional.
Launched on July 1, the company hopes this will relieve some of the labor pressures that have squeezed its operations during the past two years, Chemed and VITAS executives indicated.
“We’re being proactive and aggressive in terms of the hiring and retention bonuses and requiring phenomenal talent from other competitive programs contiguous to our operations,” said David Williams, executive vice president and CFO at Chemed. “So we view this, frankly, as an opportunity to really expand the quality of our overall staff. We’ve been working pretty darn hard for the last two years on our existing base of employees, so we’re putting our balance sheet and cash flow to work.”
VITAS is financing the initiative with $44 million in unspent Provider Relief Funds, a little more than half of the $80.2 million in CARES Act dollars the company has received, according to Williams.
Being “proactive and aggressive” with hiring and retention bonuses built into the initiative will give VITAS a boost in terms of sustainable long-term growth, he continued.
“We’re putting to work that $44 million of lost revenue, non-cash flow money into this retention program, if you want to look at it from an economic standpoint,” Williams said. “We view this as an opportunity to really take our great base of employees now and augment them with additional staffing that we think will give us legs in [2023 and 2024] in terms of sustainable growth.”
The staffing shortage has been the biggest barrier to growth for VITAS since at least the start of the pandemic. The company has been working with an “overly lean” workforce since COVID struck, which has impacted patient admissions, said McNamara. VITAS saw a 12% drop in admissions during the second quarter in part to due a lack of staffing resources to provide care, he added.
“We’d be more comfortable if we’re able to hold on and hire more workers. There’s the old ‘build it and they will come’ saying, and we certainly have examples of that, but admissions are down 12%, largely driven by hospital-based admissions, and we have a scarce resource labor,” McNamara said. “As we expand that number of licensed health care professionals we have, those admissions will first flatten out, and then we think in relatively short order show growth.”
VITAS brought in $298 million in revenue during Q2, a 4.5% decline compared to the prior year’s period.
In addition to the staffing concerns, the company has been battling against drops in patient days of care, which dipped 3.8% this past quarter. Though Williams indicated that these declines may have been more severe had the company not made additional investments in recruitment and retention.
Despite these headwinds, the company remains optimistic about the impact of its retention program and in turn, its ability to foster sustainable growth with a replenished workforce, according to VITAS CEO Nick Westfall.
The company has also made strides in expanding provider and community awareness around the benefits of hospice, which Westfall indicated would be key to long-term growth and the ability to prepare for an ever-growing demand of hospice care, he added.
“Our long-term strategy hasn’t changed, but hopefully [this] provides some tailwind to the industry, as well as to all Medicare beneficiaries across the country over the next 5 to 10 years,” said Westfall. “This community access initiative has been our ongoing focus to help educate providers across all of the communities we operate for earlier, appropriate identification of hospice patients. We’re optimistic around the results it can hopefully help produce as we finish the year and launch with momentum into 2023.”
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