Amedisys Sees Slight Easing in Labor Stresses, Cost Increases

Jan. 19, 2022
The home health and hospice company is investing more in longer-term bonuses rather than raises.

Is that a light at the end of the workforce tunnel?

For Baton Rouge-headquartered home health and hospice provider Amedisys, the answer to that question is a solid ‘maybe.’ Leaders of the company, which also has executive offices in Nashville, recently said they saw improvements in their labor situation “throughout” the fourth quarter and that – while workforce issues remain a headwind – they’ve been able this month to absorb the omicron wave of the COVID-19 pandemic without hurting their operations.

“Hiring was good, retention was good, clinical capacity was good and quarantines came down all the way up until the last week and a half of the year,” President and COO Chris Gerard told analysts and investors attending the 40th JPMorgan Healthcare Conference last week when asked about Q4 trends.

Speaking to the impact of the omicron wave, Gerard said the Amedisys team has been cycling affected employees through quarantines more quickly of late and that, while the situation is “very fluid” as the latest virus variant grows and falls in various parts of the country, Amedisys’ investments in flexible scheduling and other initiatives have given the company a leg up in the battle for talent. (Among those other initiatives is a $5 million investment in tech-based staffing service connectRN.) Amedisys employs about 21,000 caregivers of various kinds at more than 500 care centers across the country.

Looking ahead to this year, Gerard, Chairman and CEO Paul Kusserow – Gerard will take over the CEO role in April – and CFO Scott Ginn said they have been able to ratchet down their forecasts for labor cost increases. Speaking on the heels of reporting their third-quarter results in November, the team had expected total labor costs to climb 6 percent, a number drive higher in part by the retirement of many in the sector and by others switching to travel and shorter-term contract work, where compensation is climbing strongly. Now, the executives said, they think that increase will be between 4 percent and 5 percent – still roughly double historical averages – because of the company’s heightened focus on multi-year sign-on and retention bonuses over pure salary increases.

Kusserow and his lieutenants also told JPMorgan conference attendees they also see Amedisys as well positioned to further consolidate several of its markets, particularly as labor cost pressures and the end of federal financial support via the CARES Act add to smaller companies’ struggles. Kusserow called his team’s M&A pipeline “very nice” and Ginn added that home health remains the company’s top priority with hospice also being a candidate if it lets the company enter new geographic markets.

A notable 2021 deal for Amedisys was the $241 million acquisition in August of Contessa Heath, a home hospitalization and skilled nursing venture that added a high-acuity and risk-based arm to Amedisys’ offerings. That purchase has “delighted and surprised” the Amedisys team, Kusserow said, by opening the door to potential broader partnerships with many of the company’s health system partners. If the Contessa model works well for home hospitalization, hospitals execs are telling Amedisys, it might make sense to have Amedisys also coordinate home health programs more broadly.

“These folks are the real deal,” Kusserow said of the Nashville-based Contessa team that started its business in 2015. “They can do it where there’s a lot of imitators out there who can’t.”

Shares of Amedisys (Ticker: AMED) fell more than 7 percent to about $136 on Jan. 18. Over the past six months, they have lost nearly half of their value after rising more than 60 percent in 2020.

Sponsored Recommendations

Enhancing Remote Radiology: How Zero Trust Access Revolutionizes Healthcare Connectivity

This content details how a cloud-enabled zero trust architecture ensures high performance, compliance, and scalability, overcoming the limitations of traditional VPN solutions...

Spotlight on Artificial Intelligence

Unlock the potential of AI in our latest series. Discover how AI is revolutionizing clinical decision support, improving workflow efficiency, and transforming medical documentation...

Beyond the VPN: Zero Trust Access for a Healthcare Hybrid Work Environment

This whitepaper explores how a cloud-enabled zero trust architecture ensures secure, least privileged access to applications, meeting regulatory requirements and enhancing user...

Enhancing Remote Radiology: How Zero Trust Access Revolutionizes Healthcare Connectivity

This content details how a cloud-enabled zero trust architecture ensures high performance, compliance, and scalability, overcoming the limitations of traditional VPN solutions...