Enhabit Sees Talent Growth, Continues Acquisition Hunt

Enhabit Inc. (NYSE: EHAB) is seeing sustained growth on the workforce front as healthcare workforce shortages persist across the country.

The Dallas-based healthcare and hospice provider is starting to see some returns on the foundation the company began laying last year after spinning off from Encompass Health (NYSE: EHC).

This includes adding HR director Tanya Marion to the company’s leadership team, more sophisticated data analytics for her talent pool, and introducing a hospice care management model.

“Our HR director worked with our data and analytics team to build a robust human capital dataset,” CEO Barb Jakobsmeyer said during an earnings call. “This allows us to go much deeper than we have historically been able to in understanding what is going on with our workforce and what we need to do to hire and retain our staff so we can meet our assistance needs.”

In the fourth quarter of 2022, Enhabit’s full-time job applicants increased by 19% and 101 new nurses were hired, 41 of whom work in the company’s hospice segment. However, Enhabit is still aggressive in its approach to hiring, especially full-time nurses. Currently, about 39% of provider nursing staff are pro re nata (PRN).

The company’s new case management system in the company’s hospices has contributed to an increase in hiring in this segment, including the rehiring of nurses who “enjoyed [Enhabit’s] culture, but not [its] the previous staffing model,” Jakobsmeyer says.

Prior to the introduction of this model last year, the company’s hospice processes were designed to be symmetrical with those of its home care business. But agencies in their hospice segment experienced some difficulty with these transitions, which contributed to a sharp increase in staff turnover.

Enhabit is implementing the system in stages. The first was completed by the end of 2022, Jakobsmeyer told Hospice News at the Home Care 100 conference in Orlando earlier this year.

“The first phase was to roll out the whole concept of the model, and it was literally calls and meetings with individual affiliates to say, ‘This is what it’s going to look like,’” Jakobsmeyer said. “Then they needed to analyze the gaps in their current workforce so they could identify what they have and what they need before they can really implement the model.”

Despite growth, the company relied more on contract nurses in the fourth quarter as new employees were hired. Currently, 30 out of 41 new hospice nurses are being orientated.

This resulted in a 12.1% year-over-year increase in cost per day, as well as lower clinical productivity and higher travel and mileage reimbursement costs, CFO Chrissy Carlisle said in a report.

Labor pressure continues to limit opportunities in some markets, including seven for the hospice business and 62 for home healthcare.

The second hiring priority is to strengthen the company’s sales team. Between December 2021 and the end of 2022, Enhabit’s direct sales workforce decreased by 83, although the company reported 60 new hires as of January.

“Our regional leadership has been hard at work over the past four months on a new organizational structure. We announced the first phase at the end of the year, and the last phase in mid-January,” Jakobsmeyer said. “Historically, our sales and operations team has had a very different reporting matrix with little to no alignment. Now that the new structure has been created, there is full agreement. We are confident that this alignment of sales and operations will contribute to both clinical and operational success.”

Enhabit’s fourth-quarter consolidated net revenue from services fell to $271.1 million, down 0.4% from the prior year. However, the company’s hospice segment saw growth of 4.8%, reaching $54.6 million in the fourth quarter of last year. This is more than $52.1 million in the fourth quarter of 2021. The average daily census at the company’s hospices also rose 2.9% last quarter.

The company continues to focus on hospice growth to accommodate more of these operations alongside its home healthcare facilities. This includes plans to spend between $2 million and $4 million on de novos this year.

Enhabit also continues to hunt for acquisitions in 2023 after completing three in the fourth quarter of 2022.

“We continue to believe that growth is an important part of our long-term strategy and we will continue to carefully evaluate acquisition opportunities in our portfolio,” Carlyle said.

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