Labor Among the ‘Swing Factors’ in Enhabit’s Hospice Growth Plans

Labor is a big “swing factor” in how Enhabit Inc. (NYSE: EHAB) will sustain and grow operations this year, particularly on the hospice side.

That’s according to CEO Barbara Jacobsmeyer, speaking Wednesday during the Citi Healthcare Services, Medtech, Tools & HCIT Conference.

“With labor, [it’s] the need to continue to increase our clinical capacity in order to meet volume demands,” Jacobsmeyer said. “We still need to add full-time nurses. We still have some staffing needs to get us where we need to be on the hospice front.”

Enhabit has more than 100 hospice locations nationwide – and counting. The company plans to pour $2 million to $4 million into de novos this year, with an emphasis on hospice growth to co-locate more of these operations with its home health locations.

Acquisitions contributed $36.3 million to Enhabit’s growth in core business throughout the course of 2022, while de novos added $1.2 million, the company reported .

The company completed one home health acquisition and picked up hospices during the fourth quarter. The purchase of Unity Hospice in November added one hospice location in Arizona, while the acquisition of Caring Hearts Hospice in October added four locations in Texas. Acquiring Southwest Florida Home Care in Fort Myers expanded Enhabit’s home health footprint by 22 locations.

With growth came a rise in hospice demand and increased referrals, but staffing volumes didn’t keep pace, according to Jacobsmeyer.

This led to a heavier reliance on an expensive, outsourced clinical workforce that bit into Enhabit’s margins and slowed its growth trajectory at the tail end of last year, she said.

“For hospice, a little over 5% of our visits in the fourth quarter were from contracted labor, and that’s gone up from about 1.5% the prior year,” Jacobsmeyer said. “On hospice, why you saw the increase in the contract labor used in the fourth quarter is that as we’re getting staffing in place, it’s now being able to go out and be more aggressive to the referral sources and say we can take your referrals. For so long, it’s been this balancing of, ‘We can take it but not today.’ Well, that’s not how it works for hospice. When you have a patient ready to elect hospice, it’s how fast can you really get that patient initiated.”