Now that the Patient-Driven Groupings Model (PDGM) is the new normal, the home health industry is entering the most pivotal time for consolidation since the shift to the Prospective Payment System (PPS).
With that in mind, Lafayette, Louisiana-based LHC Group Inc. (Nasdaq: LHCG) expects to see a major spike in terms of market share gain and growth over the next several months.
“For [LHC Group] and the history of the company, every time there’s been a significant change in reimbursement, the two to three years following that change have been spike years for us in consolidation,” Keith Myers, chairman and CEO, said Monday during a presentation at J.P. Morgan’s annual health care conference in San Francisco.
In times of major industry disruption, it’s the organizations that have a better infrastructure, more disciplined processes in place and a strong balance sheet that are able to capitalize on consolidation, according to Myers.
Like for so many other companies, success under PDGM is paramount for LHC Group. One of PDGM’s biggest changes has to do with therapy visit-volume thresholds.
“We are not seeing a reduction in visits, but we are seeing a change in the visit mix that we deliver to the patients,” Myers said. “We are able to use extenders more than we were in the past.”
Aside from thriving under PDGM, LHC Group will continue to look to joint ventures — a calling card for the company — as a key growth strategy.
“Today, 50% of our volume comes from joint ventures with hospitals and health systems,” Myers said. “The other 50% [of our volume] comes from freestanding locations.”
As the industry moves further in 2020, those watching closely on the M&A front can expect to see an equal focus on the acquisition of home health and hospice assets from LHC Group.
Currently, the home health segment of LHC Group’s business accounts for 72% of the company’s revenue, while hospice accounts for 10.3%.
“For acquisitions going forward, home health is going to be natural for the next two to three years, but we are pushing our team to focus equally on hospice,” Myers said. “The goal in the next five years is to have at least 75% of our locations where we have home health, co-located with hospice.”
During Monday’s presentation, Myers was quick to assert that — while the company is on the lookout for new opportunities — it plans to avoid acquisition for acquisition’s sake.
Additionally, looking ahead, landing value-based payment agreements remains top of mind for LHC Group.
“One of the things we are really focused on is building new models and engaging with various payers on value-based arrangements,” LHC Group CFO Joshua Proffitt said during the presentation. “It starts first with being clinically proficient … and then being nimble enough to operate in a new model like a PDGM. You apply all of that discipline, rigor and operational expertise, [then] translate that into new conversations around value-creation.”
Overall, Myers remains excited about the strides home health has made as an industry.
“It’s safe to say that home health has a tailwind right now,” he said. “When we entered this business we were far from that. Ten years ago we didn’t have a seat at the table that allowed us to really have leverage in policymaking, and certainly not with payers.”
The post LHC Group Says It’s Not Cutting Therapy Visits Post-PDGM appeared first on Home Health Care News.