Publicly Traded Hospice Execs See Signs of Improvement in Labor Market

Some hospice company leaders have signaled the labor market may be showing signs of stabilization.

Executives from 13 publicly traded home-based care companies participated last week in Jeffries Financial Group’s annual Nashville Healthcare Services Burr Tour, including contingents from Addus (NASDAQ: ADUS), Amedisys (NASDAQ: AMED), CVS Health (NASDAQ: CVS), Signify Health (NASDAQ: SGNY), and Enhabit Home Health & Hospice (NYSE: EHAB), among others. 

A number indicated in their remarks that they saw improvement on the labor front, according to a research note by Brian Tanquilut, equity analyst for Jeffries Financial Group, and Taj Phillips, equity associate.

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“Not surprisingly, labor was a key discussion in all our meetings, and the takeaway is that we have seen the worst of the tightness in the nursing labor market,” Tanquilut and Phillips said in the note. “[Management] teams talked about reduced nursing turnover (i.e., nurses leaving to travel), increasing recruitment success, and declining use of and bill rates for temp nurses.”

Providers expressed optimism that the recent rises in labor costs will slow and eventually crawl back to historical levels of about 2% to 3%, according to Tanquilut and Phillips.

The note showed that the high rate of inflation is driving higher than average payment rate increases with insurance plans in their 2023 contracts. This is of particular significance for hospices that also provide palliative care, home health, or other upstream services.

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The executives’ statements reflect the experiences of their individual companies, rather than industry-wide data. Each of the attendees represented a publicly traded company, and other types of organizations may be seeing different results. Also, labor trends likely vary to some degree from market to market.

Nevertheless, discussions on the tour were not all sunshine and roses.

Investors have been less enthused about health care services in recent weeks due to negative volume trends, the note indicated.

Contributing to those trends were spikes in employees using vacation time during the summer months, though that has started to abate as autumn approaches.

“Comments from management teams we met with suggest that July, indeed, was soft, likely due to increased vacations (both among clinicians and patients), but trends appear to have inflected in late August and into this month as school has resumed in most markets,” Tanquilut and Phillips wrote. “We would note though that current volume trends, while still generally sluggish across the space, appear to be reflected already in current Street expectations and stock valuations.”

Signify Health, soon to be acquired by CVS Health, was among the companies affected by vacations. This led to reduced volume early in Q3, which is now starting to recover. When physicians in particular return from vacations they tend to ramp up their caseloads, pushing volume upwards.

For Signify’s new parent company, CVS Health, more deal announcements are likely in the next 24 months, particularly in the value-based care and home health arenas, company executives indicated on the bus tour. 

C-suite leaders from the home health and hospice provider Amedisys remarked that the company will soon lengthen its reach within Medicare Advantage. 

“[Management] expects to announce MA contract by the Q3 earnings calls, along with the Contessa contract previously discussed, as well as details on [general and administrative measures,” Tanquilut and Phillips reported.

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