Enhabit Home Health & Hospice executives told Wall Street analysts Wednesday the 0.7% Medicare rate increase for 2023 won’t cover rising labor, administrative and sequestration costs at the firm this year.
“All in all, we estimate we have approximately $40 million of adjusted EBITA [earnings before interest, taxes and amortization] headwinds to overcome in 2023,” Enhabit CFO Chrissy Carlise told analysts during the call.
Enhabit separated from Encompass Health on July 1, 2022, and has been building out the company, making three acquisitions totaling $36 million last year in home health. It also added seven new locations in home health and hospice. While the company hired a little more than 100 new nurses at the end of last year to cover the expansion, it also had to rely more heavily on contract nurses before the new hires were onboarded.
President and CEO Barb Jacobsmeyer said at the beginning of this year nearly 70 hospice and home health locations still remained short-staffed.
There are some markets where we continue to have some staffing constraints,” Jacobsmeyer continued. “While we anticipate having more normal merit increases in 2023, there are some markets where we may have to do some market adjustments.”
The company said they remained laser-focused on staffing since labor comprises about 90% of its per-visit and per-day costs in home health and hospice. To that end, Jacobsmeyer said Enhabit’s human resources and analytics teams are working together to develop a platform that will provide better information on staffing.
“This is allowing us to drill down much further than we could have historically in understanding what is happening with our workforce and what we need to do to recruit and retain staff so we can meet the demands for our care,” she said.
Enhabit reported a challenging final quarter for 2022. The company’s revenues fell 0.4% in the fourth quarter from $276.1 in 2021 to $275.1 in 2022.
