Aveanna CEO: Higher Wages Key to Bringing Clinicians Back

For the exhausted health care labor force — many of whom have left the industry — money talks.

Aveanna Healthcare Holdings (NASDAQ: AVAH) recently conducted an analysis of workforce trends that suggested that higher compensation may be the most important consideration for prospective employees, particularly in light of rising inflation.

“We’ve just finished a pretty deep dive into our work pool, and we’ve learned that right now caregivers that have left the home care space, specifically private duty, have left for more wages,” CEO Tony Strange said at the RBC Capital Markets Global Healthcare Conference. “We need to make sure that we continue to press [reimbursement] rates in order to pass those wages down to caregivers to entice them back into the home care space.”

Labor pressures continue to be the hospice industry’s biggest headwind. These intensified in late 2021 and the first quarter of this year as the Omicron COVID variant pushed hospice staff into quarantine. 

Aveanna was no exception; in January and February, the company had as many as 3,000 staff quarantined, up from a range of 200 to 300 in late December 2021, according to Strange. 

The Atlanta-based provider is countering with a number of strategies, including streamlining its onboarding process for new hires. This includes offering virtual on-demand training classes for new hires, removing the necessity of two-day, in-person orientations.

The initiative has reduced on-boarding time by 80%, Strange previously indicated on an earnings call.

The company has coupled this acceleration with efforts to create more flexible scheduling for its part-time clinicians, as well as offering same-day pay. This includes the roll out of a caregiver smartphone app designed to give employees more control over their own schedules.

The company also recently experimented with a “Return to Work” initiative intended to bring clinicians who have worked in home-based care back to the space. But despite the inclusion of one-time signing bonuses, the program did not perform as well as Aveanna leadership had hoped. 

Despite seeing positive results in the program’s early weeks, the Omicron surge all but eliminated those gains.

“With the benefit of hindsight, I’m not sure that the juice was worth the squeeze,” Strange said. “While we did have moderate success, I don’t think we would go back and re implement that same program.”

Outside the labor issues, Aveanna is implementing technologies throughout its business lines to support growth and boost efficiency.

Among these investments is Aveanna’s adoption of the Medalogix machine learning platform, which analyzes patient-specific data to identify the services best suited for them earlier in their disease process, including predicting when they will be eligible for hospice.

They system is also designed to flag patients who are at high risk of hospitalization. Reducing avoidable hospitalizations is key to demonstrating a home-based care provider’s value proposition to payers and referral partners.

For its hospice and home segment specifically, the company has integrated the Homecare Homebase electronic health record system, designed to streamline documentation processes, which in turn can support improved regulatory compliance.

“We do believe that Homecare Homebase will help us drive efficiencies as we go. Our gross margins in home health and hospice are good today,” Strange said. “We think they have an opportunity to get better if we look at our utilization statistics and visits per-patient, per-episode. I do believe Homecare Homebase will grant us some back-office efficiencies that will allow us to manage cases clinically and operationally, as well as billing collaboratively and timely.”