The chairman and CEO of Addus HomeCare offered a Goldilocks outlook for his company and the home care industry as they emerge from the COVID-19 pandemic and now face a possible U.S. economic downturn.
Dirk Allison told Wall Street analysts during an earnings call Tuesday that many states are now flush with millions of dollars in American Rescue Plan Act (ARPA) funds, which are being funneled to state Medicaid programs to support higher wages for direct care workers.
“The states are probably in the best financial shape they’ve been in a long time,” Allison told analysts. “Even entering into a slowdown, we are very confident that state budgets are in good shape and should be able to handle the costs of Medicaid plans.”
ARPA included $12.7 billion for states to invest in home- and community-based services through a temporary 10 percentage point increase in the Federal Medical Assistance Percentage (FMAP). Some states, including New York and Illinois, included permanent minimum wage hikes in their annual budgets that also support higher wages for direct care workers.
Downturn upside?
Allison said all of that funding to boost caregiver wages could give the home care industry a leg up in recruiting and retaining workers if a downturn in the U.S. economy forces other industries, such as fast food and retailing, to curtail hiring.
“One of the things we’ve found over the past several years is when the economy is slowing down, it tends to be beneficial for us, especially on the nonclinical side when we look to hire caregivers,” he said.
Addus, a home care, home health and hospice firm, regained its financial footing in the latter half of the first quarter after struggling in January with ongoing headwinds from the COVID-19 pandemic. On Monday, the company reported first quarter earnings of $0.77 a share on $226.6 million in revenues compared to $0.74 a share on revenues of $205.33 million during the same period last year. However, net income for the company decreased 4.8% to $8.5 million in the first three months of the year due to the financial impact from the ongoing pandemic.
