EHC Encompass Health

Crissy Carlisle Chief IR Officer
Mark Tarr CEO, President & Director
Douglas Coltharp EVP & CFO
April Anthony Founder and CEO of Encompass Health - Home Health & Hospice
Barbara Jacobsmeyer EVP & President Inpatient Hospitals
Matthew Larew William Blair & Company
Whit Mayo UBS Investment Bank
Matthew Gillmor Robert W. Baird & Co.
Kevin Fischbeck Bank of America Merrill Lynch
Philip Chickering Deutsche Bank
Brian Tanquilut Jefferies
A.J. Rice Crédit Suisse
Frank Morgan RBC Capital Markets
Sarah James Piper Jaffray Companies
John Ransom Raymond James & Associates
Scott Fidel Stephens Inc.
Call transcript
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Good morning, everyone, and welcome to Encompass Health's Third Quarter 2019 Earnings Conference Call. [Operator Instructions]. Today's conference is being recorded.

If you have any objections, you may disconnect at this time.

I will now turn the call over to Crissy Carlisle, Encompass Health's Chief Investor Relations Officer.

Crissy Carlisle

good and Operator, you, morning, everyone. Thank for Call. you joining Encompass Earnings XXXX Quarter Third Health's Thank on also call Coltharp, me Patrick Price, and Barb With the President Darby, Chief Tarr, are Jacobsmeyer, Corporate Executive President General today's Officer; Accounting Mark Counsel Financial and Home Officer; Secretary; Rehabilitation Doug April via Chief Anthony, Treasurer; and Operations; of Health Inpatient Senior our Chief and Officer; in Duck, Chief in Julie Financial Hospitals; Fay, is Hospice phone. segment, Executive call Ed Birmingham of Vice Andy participating today Officer President

Before website release, if do supplemental at a are filed have earnings related we and SEC begin, X-K Form not the already information with quarter our you on third the copy, available

you release. greater the detail are the supplemental X harbor safe the earnings which on in On Page the also of forth of will find set page information, last statements,

March filed. Form XXXX, filings XXXX, earnings XX, including them. ended the you year in SEC we new June uncertainties which company's Form September release materially are the our projections, will cause many our X-K, and such of Certain XX, make encourage and when XX-K are statements, which December During XXXX, to XX, results actual expectations risk could the uncertainties, estimates for to and quarter from to and XX-Q risks the rules, discussed the related subject control. XX, CMS and call, and forward-looking the of XXXX, that ended beyond the for We impact read the differ Form expected are

a projections, current as to forward-looking presented, place update forward-looking future and estimates to which We undertake cautioned are statements. these duty only estimates, are not reliance other on undue information today. not speak on of events do based of and You guidance the

call information measures. certain will on non-GAAP supplemental include Our financial discussion this and

information, the [Operator yesterday X-K the of at and available part all website. For Form comparable SEC, directly Instructions]. GAAP is press the measure available are release of such measures, which end filed the reconciliations related with to supplemental at is the the of our on the most of end

With over call the I'll to that, turn Mark.

Mark Tarr

and you, the We're volume very in both strong segments achieved growth with morning, our pleased the Crissy, of Thank quarter. everyone. good in

inpatient Hospice the discharges X.X% contributing X.X%, revenues EBITDA side, basis, coming total, same-store in same-store specifics is XX.X%. the XX.X%, Alacare X.X%. with that his of revenues total total store Home On increased consolidated Doug admissions from X%. adjusted a comments. operating admissions our adjusted each for and grew with On XX.X% health while was year-to-date X.X% increased X.X% grew Alacare acquired X.X%. contributed On and provide growing and the X.X% will a EBITDA Within XX.X%. basis, grew locations were admissions up recently hospitals. segments grew same up

the During we progress quarter, development excellent made on opportunities. our

to new Idaho, continue our opening portfolio rehabilitation first venture of our inpatient expand hospital that by We Boise, in XX-bed state. in joint hospital hospitals a

year-to-date our beds in opened new our additions Katy, bed also and hospitals, Texas, added XXX. bringing We existing XX a hospital to XX-bed to

a In addition, from changed agreement, XX-bed the equity partner with of our of as governing the amend our method rehabilitation this hospital in a July discussions accounting to result Arizona, hospital hospital joint Yuma to effective X. venture consolidated

nearing the Alacare acquisition open Health XX, to Boise we with The bringing to and scheduled for total and clinical of X for patients. and markets openings X open expand already created completion. including closed overlap new in collaboration in us, development benefits hospice XXXX, to our X home our IRF across health XX new and to markets XX-bed XXXX. Our new to Alabama of markets. On in XX remains hospital scheduled also to Hospice, locations portfolio, Katy new which overlap Home added robust the enabling more and IRFs California, July pipeline hospitals in Murrieta, X, our us more overlap

Our basis integrate of and increase delivery outstanding collaboration X the the a XXXX. XX.X% in third clinical are quarter working job CARE A rate quarter XXXX. point achieved segments together doing to third of an XXX over

AHA/ASA efficacy continued in educate the Stroke the physicians, the half an of part the co-branded in form also our We were Heart year, guide strokes. as setting. After continue IRF released or meeting downloaded Stroke American payers of of focus patients guides the of first from efforts stroke rehabilitation copy approximately distributed hard with Life on After and to recovering patients Life In needs hospitals. we website this XXXX, Stroke from along on XX,XXX to and Earlier via our Association,

entire outcomes, have also continues in our and social in home X channels, readmissions of the that improving of and clinically solutions have post-acute reach addition, X reducing AHA/ASA media our health markets our expanded patient sites All focus episode agencies. model. we over with post-acute overlap Progress currently to sites cost care across these In We collaborates by expansion are the our of prediction by pilot digital in hospital resulting XX-day on lowering for million CARE. include audience readmission of people. development our

readmissions all this model will XXXX. our refine rollout broader to are that we part As of we also the in playbook hospitals be a continue prevention to of this of model, preparing

our in tireless front, of rehabilitation We for payment believe this inpatient regulatory transition. and to the focus each segments. tool for teams to remains X, October a CARE our our on thank the were prepared, reimbursement hospitals. efforts regards system them our hospitals their impacting Effective transitioned fully On I changes

entire functional changes. plus and of of measures XXXX, new conducted clinicians portfolio our across During including the of quarter for training the documentation our outcome all on requirements hospitals, we XX,XXX third system

reliability to the rates. XXXX and this rates turn in us for company our the our for first Our X up improve allowing estimate basis the focus new payment on continues our reimbursement of quarters We expectations that documentation, fourth and Medicare will in points of to flat result clinical system Medicare XXXX. quarter be for education will inter-rater in is to revise which reimbursement now XX

to prepare Home X, for data adjustments. Patient-Driven how or of net of our X.X% market Health, to of we estimate on available much proposed PDGM. decrease will is behavioral information, the level This realize. any provider of net rate January update. rates. we Model, and Based In base difficult PDGM CMS implementation of offset we on X% Medicare implementation Groupings the excludes from It X% potential the can any X%, and by now assumed reduction continued assumed proposed the analysis behavioral XXXX, continue believe the our behavioral reimbursement base that the changes changes assumed the the with the will impact in Recall reduction estimate of certainty rate basket

assumed the As change is largest is patient-by-patient related coding, to and behavioral coding matter. a

to rule, a or spreading As risking be moderate multiyear the remain final in base CMS XXXX, rate impact a responsive of over to we await eliminate the single assumption. that large of hopeful many at the least possibly of reduction industry with destabilization we issuance will than our requests CMS year-adjustment period the impact behavior-related rather

to In the have continued pursue meantime, relief. legislative we

technology the the House We and legislators regarding in potential concerns implications we bipartisan receiving significant In about focused undertake any efficiencies as drive negative utilizing the to are encouraged behavioral prepare the support meantime, understand implement PDGM. that may by CMS' changes from assumptions provide what both pleased and and remain our we are on alike, future. incremental to both to we the resulting Senate, are providers beneficiaries

the driving the segments neither and new reaffirmed of Based through predicated systems we to of changes X guidance We changes previously, and expectations release. long-term our outlook proven demand The revenues, EPS. our do we a operating increasing and remainder ranges services found for our believe payment stated adjusted demographic months net to current the affirming these XX XXXX positioned XXXX slides earnings have are can accompanied we've company. of as the company our be full trend An on we supplemental for are of track outlook that EBITDA year so. XXXX, the the record being Page first well for for operating the of able adjusted our on a for our As provide. for results work on

it I'll With turn that, Doug. to over

Douglas Coltharp

everyone. and consolidated I'll Mark results, flow balance summarized the and begin and sheet. QX you, the morning, move EBITDA drivers the for so revenue with I'll I good when results. revenue the and EBITDA into cash segment Thank Mark, discuss then operating

same the last related capital period flow was Adjusted compared and the The in accounts free for $XXX.X in to year the increased primarily year-over-year as working more the increases million to first to both specifically related X activity decline for to receivable million TPE cash net year. segments. months of $XXX.X

to the supplemental of due expected cash $XXX These for XXXX can million, for assumptions XXXX be million on payments result from found Page up of range modestly downward million flow in free $XXX $XXX cash adjusted $XXX to taxes. Our cash million, updated our for of previous XX expected in assumptions primarily to adjusted revision income free flow an our information. a range

senior of XXXX, debt a we due $XXX divided the X.X% advantage which was $XXX in $XXX.X favorable portion markets due in the September, and notes, took in of the notes to conditions principal million During million call of a used and facility, XXXX million new notes billion the A notes credit of notes had quarter. and $X between these of to Alacare used balance proceeds from second million X.XX% highly the evenly capital revolving all of our settlement $XXX repay the DOJ fund in issued in XXXX. of $XX million acquisition our been senior

used will these of a these of shares rights of from Health the proceeds million notes the Home be XXXX to notes, notes fund senior which QX. call exercise $XXX appreciation fund our from in also Proceeds rollover will on and X. November Additional were settle further used stock to purchase

revolver duration by low at QX ratio capital notes. end aforementioned of leverage giving was with replenished the forma and proceeds relatively new X.Xx, pro capacity the the use our rates enhanced coupon the our debt Our to structure of effect increased on under further and after the

have pending we of also will Following debt XXXX at $X.X X.XX% $XXX completion beginning of the the billion notes to $XXX the largest senior call, maturity approximately approximately our million. year reduced from of million

on have the distributions. X million common shareholder in repurchased cash augment the operating quarters $XX.X our returns dividends investments of with shares. common to continue our million and we $XX.X Through We of our of stock XXXX, paid first

negatively for driven by Moving a discharge. debt related unfavorably for increase bad X.X% and to per segments, the IRF XX by reduction on X.X%, and was business increase Revenue revenue in in outpatient discharge to XX City a recoveries X% it in was growth reserves increased market. 'XX. of a business interruption growth in impacted segment due now effects the impacted the Panama inclusion quarter the revenue discharge QX basis QX point basis approximately growth million and ongoing other $X.X Hurricane by Same-store of to to points the QX Michael revenue, primarily was for insurance attributable of in X.X%, on

Our to bad debt to XX.X% positive as prior with of up continued Advantage trend in X.X% to related XX.X% primarily QX. reserves year-to-date. to in year traction grew increased MA Revenue are QX and discharges Medicare TPE due the denials. in plans compared period, increased X.X%

million During $XX.X QX, activity generated denials, QX, Palmetto. we experienced the was TPE of Approximately our by highest XXXX. XX% level new of since

to have that reviews. we our by point, round none received at anticipated hospitals, would Palmetto and have of our February were since we progressed of to XXXX initiate notices they X. previously, As in transition XX those stated TPE have some

level of our the resolving also ALJ of XXXX. we previously a although, the claims been And higher made We number adjudication on resolved highest see of no backlog. has through progress large claims QX collections did denied had process,

were basis X.XX reserves X driving to each There basis for accounted year-over-year an productivity in stores primary spite over SWB related $X.X as factors compared bed, new ramping accounted insurance or new as a percent Since QX the points, XX.X%. bad of hospitals. of increase 'XX, hospitals year, occurred year-over-year The SWB recoveries the as in frame in increase and of aforementioned 'XX. SWB. Preopening level these XXX year, than we evidenced X employees to respectively. those up larger to than X the in consistent per time a prior and X.XX increase opened hospitals occupancy in in in 'XX business of opened points basis this The May XX interruption million in QX XX basis expenses debt the and operations in opened year. EPOB, increased XX similar the labor Each is last points by and have QX points. higher in additional the of began revenue occupied of we for

While this is run, in good term. the news in it increases cost the long near

A X basis to and documentation tool transition points. training the under past accounted preparation months, patient's on XX been XX majority had functional hospital each been on distract working our a at for FIM, X October measures. captures from individuals have for Finally, new our not of The the improve training abilities October to reimbursement. of focused remained focused the majority the we a for with the of this hospitals so number limited basis in CARE until employees which the on our orientation as accurately that

will described have $X assessment Mark The investing QX payment our QX. we for in resulted is involving 'XX. of CARE system This by is our new training incremental throughout training and expanded systemwide in preparation his in QX in clinicians. costs training As all comments, we we to FIM conducting XX,XXX approximately different and complicated be years, of increased activities compared very cost the from tool million used as plus

segment by QX of result basis. EBITDA these a As but factors, up on X.X%, adjusted a remains X.X% IRF for declined year-to-date

and admissions Moving episode to due revenue now home XX.X%, of volume driven our revenue admissions. of up QX same-store Health health XX.X%. former X.X% patient Home and primarily per up Health growth XX.X% the the revenue inclusive increased Hospice by XX.X% mix basis QX segment, XX with was increasing in by revenue declined with hospice locations. Home revenue Home Health Alacare points, for to

revenue up was period. per impact the year The prior X.X% X,XXX, XX% attributable growth locations, also the included X.X%. increase largely of acquisition, hospice Alacare increase the QX episode Alacare for but to QX to of in Medicare Excluding same-store Hospice admissions QX. ADC over in former was the revenue a climbed

see flat QX to per continued cost of compared due relatively to visits cost and as revenue $XX QX XX.X% at year. During held in trend percent XX.X% a With in increased in down QX, integration primarily of caregiver QX, in Support as per we from positive optimization. 'XX, the visit overhead of last Alacare. $XX and to episode

these of $XX.X year home hospice As factors, over EBITDA million. and QX result period for prior XX.X% a to health segment increased the adjusted

the for And questions. now, operator, we'll open line


[Operator Instructions].

Larew line Matt with comes Your the question first Blair. from of William

Matthew Larew

updates two in wanted I dynamics reimbursement to ask the about to XXXX.

and us number year? kind first confidence distribution that? like points sense for On the driving XXXX. on side? potential for you a just like this basis is -- PDGM PDGM, give more employees there's On additional learnings It any your the sort whether for looks a next gives range it a of in from of side, XXX of increase the point select upside what's basis additional better on a of broadly, And could sounds training over that expectation you XX from the

April Anthony

Matt, this is April.

the regarding So question. PDGM

agency we the that of the impact X% bit adjustment. level deeper was CMS agency reported, As behavior individual originally we that dug little had which into of the a included what basis impact the of the file, in had file discovered we X.X% CMS was some

result, is about buckets file mix mixed that, And we and bit. So together based was as able our little the of X.X% of realized through not at to impact they a patients. our cull would a that of we realize to result X.X% began that when on that the the sort adjustments was we behavior what had be found -- of

impact kind we what of rule assumed base was there. between the a the a that to be potential behavior of as behavior or really the the point was And because if starting it call implications for alter reality changes out and wanted the clear the rate is to the so legislation, final are classification We result assumed component change.

it's it say, improvement would of as I is reclassification. as so a not much an And

Douglas Coltharp

behavioral about as other make trying to provider, solely proposed Matt, each the we've on reduction on that to we and included, level behavioral we X%, discovered we estimate to two. is the us all to true also a the CMS's the base CMS adjustment assumed we those the is What We The and the each PDGM engineer behavioral providers rate ability be because the to provider's to the because for unknown each impact. buckets. changes maximum used there's provider would separate make. the so focused the in be full to amount changes been pricing in of focused impact now, QX, and the impact of and are able that out. impact status reductions rate file then did giving the you individual were base take assumption PDGM reverse appeared specifically, that separate had that about of of on able that of tried PDG we're the our proposed from that then much our And about

Matthew Larew

internally, Okay. Understood. it's to also optimize and to of as And number using MetaLogics then institution-wide done clinical utilization then preparing and referred on to tools referrals. a things you've there's focusing other whether well you try visits,

would update from those Just separate PDGM if be you sort have removed wondering, on some of efforts any of that and April, component?

April Anthony


We mentioned our optimization, and in earlier. as continue see to improvements progress productivity in Doug nice

seeing are of leverage overall in our density We sort discharges. move a toward nice overhead, which hospital-based nice a also improvement market-by-market scale from but our seeing growth an helps seeing also an we're and on basis, perspective,

new set working also that help scheduling that productivity each us but of further which cohort we're So manage only just a enhanced are these includes combined will that the tools but not well CARE Homecare for to really of us and which enhancements all growing not patients Homebase redeveloping only in MetaLogics tool, We module, we're think with the the components, optimization. with we that in of plan with on patient, right right with give technology play CARE growing the which PDGM. will

us combined, going help of the changes of we think behavior some today. mitigate that stick PDGM, to be is of prepared if they and particularly, as the are impact same All

Douglas Coltharp

the from clear, QX It now point mitigating strategies. the changes some any of X.X% that to of X% was the in or not patient understanding our community. estimating in that reflective basis be to understood had simply was any XXX from provider movement, by mix file was the But Matt, embedded things not CMS


comes of with Your the UBS. line question from Whit Mayo next

Whit Mayo

for for choice you, is my this delaying it's is believe the first this I April thing a question now review spring. just I that but Maybe good coming prepayment still demo. back CMS presume

spend can you're like talking preparing you? this what about for a maybe about phase delay So the you alongside minute this means for this, PDGM? just How thinking spring and

April Anthony


we knew come So RCD back could that at XX-day with any notice time.

to We admit really it being disappointed X, December total X for when a reform. month before payment came back will

so of set to really another a payments, agencies month payment two to timing just CMS change relative cause X later X And say, of it's this basically less XX than is have to for XX-day payment large being processes challenging, with to processes going XX-day hard to worked days the of and industry create before the at hey, the particularly because set period. for

it been that pace data that ensure away to Homebase at until that, done. Palmetto system we automating a administrative of the to continue they of some build December working to with really invest for think, unfortunate to work But us that Primarily, back interface transmit an large take successful so reality were as going prepare our with for Homecare was that there to process by the be was and for between are that same recognizing to Texas segment. is, advocating that more can continuing CMS still recognizing May is come the that, intermediaries system the we between that an fully and had in as of I Homecare X day the the interface Florida March preparation we at and that'll reason efficiently. let that March. burden it'll we're if And result, some The CMS timing. a of part And suspended Homebase

era, that will And got that we so actively prepared the half. and certainly delayed in it's so new PDGM all think we're preparing that not And half but are it, for that now. it and for be grateful

Whit Mayo

helpful. back you're a a maybe maybe MA the business growth talk quarter? little for Doug, more that's bit MA. And strategically the No, spend just doing what can the Just to you minute on target in IRF

contracts, expected I that payers remind think the slides the be Just might supplemental I'm they're the put us that how and lower be anticipated maybe you based out. are that. how for And structured reimbursement to Maybe responding off FIM? misreading

would MA around be color any just helpful. super So

Douglas Coltharp


with contracts, on rate discharge under also continue and we increasing of see on with therefore diem trends basis. MA basis a amid movement then the revenues both to positive number with the So growth to case regard versus per and the being paid a --

my That discharge XX% as the so stroke for And I be XX%. mentioned year-to-date on basis, neurological. and with up focused quarter we to predominantly to comments a around continues and in regard growth, were

plans So of value higher the patients. are acuity, clearly, seeing the MA of more Encompass the the IRF around setting particularly, IRF Health's and medically setting, complex

So we've room there. got we run still think to

and those delta of We have in about revenue And of right favorable. increasing contracts terms now there, we're number settling returns a to versus X% Advantage about our Medicare is an of shrink. to diem. There's law a MA very on of payed case some to down the per case discount a basis so in, rate fee-for-service the XX% rate basis. the between but of are We continues that transitioning diminishing

Medicare move the higher actually I X.X% we're they're X.X% plans number increasing to the terms rate the of will your patients. a next the for discharge move That rate Medicare you the think fee-for-service. more in predominantly to basis, as versus up tied you relatively the see of for fee-for-service increase so should an say, those seeing growth I in contracts is that price Medicare year, on reflects on the if revenue fact the year-to-date the per rate basis Advantage acuity within in schedule, tandem. of we assumption, us, case look directly

Mark Tarr

amount on considerable then starting care terms to of overall and of working spent having home-based are and time that recognize our our plan our facility between cost acute patients and outcomes. readmission ties and with in and reduction with back a just proposition hand-in-hand that and to we've setting outcomes, and care, value clinical MA the know hospitals. of in more the our of focused the more collaboration those And you as impact the great But on selling base

So I think the build MA momentum with plan. to just continues

Douglas Coltharp

to to have just bit wonderful April to that, a Whit, lay do Medicare that trying team the job would value And elaborate little apparent would with of out Advantage also because think her plans. a and continued those proposition be you for to readily Home Health many And plans.

the they lagging value are providers delivered health their by home proposition quality the So is in us. table such that awareness of as to

so counterweight of and remains weight, making XX%. we're result, MA bit see you IRF the actually north a between side, growth it when look the rate. we that fee-for-service, on differential a as a the rate And Home a clinical it in Medicare of rapid the the against when is Advantage at Health And on progress in collaboration

measure we rate payers. clinical specifically, So all the collaboration based on market's overlap the

you for mid-XXs. markets in The collaboration clinical same low recognition for Advantage Medicare is the in both fee-for-service, our QX, for where Well, that by segments is Medicare the value just payer to XX%. rate those see

progress will results Medicare But and in the for bring a the be they're that making based April near if growth Health will side the going that team just bit Advantage. the so their to growth that to clinical clinical we're in IRF and across We little rate. rates kind it the efforts segment Home on this MA, and be they see collaboration have counterweight able And posting we pairs. term it's up to quarterly the in ultimately despaired have the continue a we're IRF of collaboration of appropriately and raise all underway, to the on think on that glad her for


Gillmor of Baird. Your question from comes next the with Matthew line

Matthew Gillmor

to side. wanted on reimbursement the for outlook I on Home XXXX follow-up the Health

estimate that next April the on call understood if year? that influence and updated update provided Doug does I that think figures for to changes maybe could does, I also estimate And regarding the will those the impact EBITDA how us? you it the outlined, Doug last

Douglas Coltharp

segments, in Matt. Yes. It does both

won't not you occurring, the you recall, assumptions changed. call walking have and So growth, SWB I of assumptions, in the we deleveraging all but if pain the on where both through the of business everybody was that had put for this segments through

impact XXXX so legacy to business changed through roll the in the EBITDA all businesses. pricing that QX if both $XX the And aggregate headwind those $XX kind call, And whereas I consolidated analysis carrying the to in XXXX is getting has had were million. estimated same million, we of an of you outlined we that into which rounded

get of a range million $XX to now You $XX million.

of the we gotten -- depending within of it it's in the side, So gotten to headwind. range price fall terms on IRF the where has $XX million $XX better million

Matthew Gillmor

of respect the pipeline, development a us in just supporting are happened could was I to opened? demographic to hoping also to in side, if with ability openings you're the rate I additions if doesn't beds capacity assume bed good seems the I XXXX ask to and running little be to faster a a higher on new existing the the And respect And especially IRF Okay. IRF sort your outlook on but bed about about go-forward expansion XXXX, normally of then the with update it wanted new to know. to faster year higher trends like just your your facilities. know you now get That's good growth? bit future, Or feelings

Mark Tarr

this Matt, Mark. is So

our excited continuing a X-year well We bed positive for we robust to just about as are need of we we noted We grow be consider demographic blip. the expansions, tailwind with are don't opportunities We very segments, pipeline our think you both we very the and to of this services company as a in hospitals XXXX as well for positioned operating moving advantage continue what to for new both have. taking see tailwind. is forward, the think

Douglas Coltharp

are always a that right on timing predict, open to able not a play, into some to depending which from doors this California about going be beds we be authorities, XXX in comes this flat. U.S. a bit year. can supply has to capacity are whether demographics involves we'll and there over be out Mark every if at year, not we've before, the bit the which last approvals is total of difficult to Murrieta issue that year. deliver the in on a there Matt, referenced but And get IRF or that the relatively able that's may decade, beds been suggested, back And the you aggregate good little be licensed as of year look we

we see year to expanding there that, may annual targeting both year to bed the that number So to we portfolio. and -- more do opportunities, from fluctuations on we're for basis, of some adds expansions an as and be candidates again, novos also the de consider to

raising target And we'll consider the so have opportunity hopefully, well. to that as

Mark Tarr

Matt, space we're new year. the developing in such as this hospitals of project that the also excited about we're Idaho Boise, some

have state for X We scheduled coming up of Iowa.

starting we're explore we some where great there some So to think opportunities. are states

Douglas Coltharp

our CONs see as being to And that able states in have to requirements. procure the benefits well expertise regard with you're of continuing to CON

have of more units. IRF CONs have providers any services the than of other We

the things with opportunity, to learning the have and the could and the we requirements to ascended of CON throw pipeline some we're curve able in exciting mix expertise, years then there and So pretty revocation happening ahead. be in regard Florida. development evaluating into a are still And leverage steep that the the


Bank of America. question Fischbeck the next with line of Your from comes Kevin

Kevin Fischbeck

you there X.X% not impact way a the you you're assumption in change was you be correctly, so how from number? to And about do? not that just PDGM. X.X% be that way about the that what glean much of the for if total saying offset. really Is from -- is you that good might that that CMS about assuming think can CMS, from amount there guess, to file how Or adjustment I that could I in it outside? able Is that behavior is do the that nothing question you Is I a originally, guess, number, describing we X%? offset? were behavioral that I able guess would to this X.X% the in their included understand think

April Anthony

is They're what glean does can't we've No, from X% to Medicare our the in proportions should agency we've of that opportunity. X.X%. you'll light that realization. going is file realize the be actually impact exactly that that that in agencies do the What the that X.X% full assumed saying everything assumed, is you

so telling us. And that's exactly what that's

So not realize other could of us. the they in words, we in into had the impact categorized for already the X% what X.X%,

Kevin Fischbeck

CMS I I with agree more analysis? But do guess asking you that was

April Anthony

Well, based it data. older is on

comorbidity done expected. set, that what based proportions and of And the of in because that gave view And the the an the really the opportunities. opportunities took on they'd and at we kind that application have agree so the data looked opportunities, that, LUPA it identification that's do and they impact it they is coding all episode-by-episode of

accurate will patients. predictor So we be agree one, that be the with and changes I that's and the data. patients an the XXXX question the mix patients always and their forward XXXX The for the of opportunities is, where because think of changes, question in patients us from won't discharge of future going universe as

an proxy, utilizing can seeing a patients match And never it'll set but be be be exact data then. we'll older an with so that

as to our what can't of the we revenue result, them are. still in If Mark sets regardless is a incremental those And to of along a Medicare's also exist. apply exist we'll opportunities, to those mentioned, assumptions follow we with in What prior we of know produces that and the necessarily that that rules predict, training realizable, a mean proportion what we will coding doesn't, coding because really have great. set new in XXXX. coding opportunities guidelines simply consistently was patients identify is guidelines realizable As data coding implications that it staff the that coding are understand if doesn't

So mix. on we're certainly have, always impact but necessarily rules XXXX to patient we as we that they'll our predict can't the training have those

Douglas Coltharp

the Kevin, to separate, as do and rate I reduction said, change. to from PDGM behavioral in this, both we the assumed we base and impact continue it's the think the useful

a believe which be things, was the cut. in from patient continued of which that -- lot available X% this PDGM mitigate since referrals, will time based offset the has will more now frame occurred in the among negative impact, X%, evolution data On which a hospital-based is we to which our or includes other mix, that

So put range. it flattish back into a

the it strategies unmitigated that opportunity that train at our by to making in primary the assumed proposed a with period this, a and reductions behavioral further base has might to reflect available any believe of on rate we base to talked had is want competitors about, that of for other if adjustments, April it's we than have remind offset the we our that of and result of as been path be cut. the And When types of we those as of the productivity not are but things portion that don't impact that or level -- what we the is mitigation If along you an as kind productivity time. we we margins providers. would we to of some offset then mechanisms prevalent use same any for look rate

Kevin Fischbeck

beyond, of you're in we does potentially that something you on you loaded? new the that and next training Okay. -- there versus labor guys Or at year, for talked Doug, wage this and just that I bit and there's year for everything your like something costs inflation to said include cost clarify extra the side? else giving assumption quarter up maybe quarter. hasn't cost above cost changed training there the an kind this come training us whether about assumption system to fully wage all. just is saw just earlier, more all the next you Did a said

Douglas Coltharp

now have the Well, the into doesn't XXXX results training. And the and we with if we that had beneficiaries, us on rates for training those base, of find should not kind growth the through of most and cover use right PDGM broaden hundreds we're the thousands, the X% generating built of we to we that regard to to SWB to for year's quarter is as used consistency in case. first the the get early and SW, base cover costs utilization so assumption say anticipated we are the to really with that. training user we the then to cost. whether tens in group that from may not inflation that our the those next add But game now, that's in It's sufficient need of numbered it too numbered so same or then the assumptions it to you'll change if


line Your with Bank. next Deutsche comes Chickering question from of the Pito

Philip Chickering

adopted in the reductions at through agencies have What's for been you out XXXX? rollout MetaLogics of us per business for agencies roll realized episode? walk you the MetaLogics? look what home timing your using percentage Can point, what MetaLogics longest, we health the have have this at the And that the

April Anthony


early out So moment. stages the rolled still Texas we in in of locations of at the We XX are this state deployment.

X-wave first then time We MetaLogics of get the that have come to that deployment done wave the frame. haven't put about get the plan by specific smaller of time think of final after to and a line deployment But a XX% days a few March XXXX rollout of will branches before XX we but early March a the us that early the another chunk we quarter. XX we'll likely remaining majority end on, recent our from the will of plus Alacare, addition

that to MetaLogics extent outcome. are we're outcomes, progress, simply decline is any want as that. perfect in want decline dilution the of in do are quality. And achieving can without any balance the suggest efficiency achieve our the only data to that a obviously are improved relatively that branches implemented with in small we so result far some that we seeing we so visits, nice which part with no We where visits Don't the albeit move quality still scale to important decline seeing of of a a without on implementation of

by continue to there the we're MetaLogics tool. we'll that, of the be CARE that of will early believe our further deployments see in kind and encouraged same So results the results

Philip Chickering

Okay. up possible to Any that. hearing of quality? you I've using guys of to XX-plus in follow have reduction that seen? the ballpark of on sort Great. percent And then Is been without what sort any just visits MetaLogics changes guidelines, is of

April Anthony

more range. conservative say probably it's Yes. XX% a realizable in the approach. It's probably We XX% and the would range more than

added As we get handicap would the XX% opportunities. But further into think in little bit we I may of we improvement. a more it, range it more find


Tanquilut comes of next the line question Your Jefferies. with from Brian

Brian Tanquilut

how in your going a Doug, where just moving showed impact, lot but discussion improves there's back just all parts, expectation know the these already the for to of EBITDA? same where I CARE change versus XXXX and PDGM, with been year's for expectation that quarter's this you slide in on on tool you're the of home then yet land your thing obviously, last health, that about changed buckets. just Has the moving terms view EBITDA feeling versus would

Douglas Coltharp


from both amount mentioned I to headwind million. previously, is has think segments the as primary these business that the $XX across that will I $XX approved XXXX we deleveraging by thing million SWB the base against changed has price to increases carry XXXX of into due

of And of volume the come on think solely XXXX growth, so what need we to that in back when achieve down. we burden has

before of do headwind, assumptions but the $XX mitigated, the unmitigated otherwise is in much range to and get suggests we of on appears order you any the range. be this use of that that it that growth reasonable year. portion if again kind rate volume Now did the And depending million do more X.X% QX, $XX in aggregate somewhere again a same math growth margin in to health the X% achieve cut we on need math not EBITDA to you home math consolidated to in base million next your that to into the proposed

Brian Tanquilut

nest, the in changing are open side? as the opportunity sense. dynamic you think guys especially rehab lower And to the with I on that inflation, therapist PBPM you for then about on side, does this this an Makes wage just SWB, impacting see

Mark Tarr

this. in on seen portfolio, to doesn't It the it's see still there We've of hurt ask where trend Barb they weigh a but broader -- number across markets our would right. have. has of You're back we we've to of portion therapists been early homes and on I'll have some the nursing what tell

in of types within and certain that Barb have an to on the therapists indication less I'm least be on. that. a at pressure to markets that a from going ask just on could little weigh So supply/demand would salaries, pressure

Barbara Jacobsmeyer

hospitals don't therapists we're the I already impact see still is and of competing other an market. on to against improving because think our where starting different acute know the work it'll the availability component have areas the if we're it do that Yes. I care salary in therapist.

filling paying a we're So them. hopefully but more be it positions smooth, what our little see I bit impacting will don't


Your the A.J. Rice question Crédit Suisse. with line from next comes of

A.J. Rice

quarter. X.X%, in of those metrics metrics but Health there? only biggest at anything admits talk were some That's to the of business the looking divergences same-store up about in seen, we've episodes one the up Same-store Home Just X.X%. were in the

April Anthony

it's you little of grow episodes timing bit or Yes, as Obviously, related. the delayed. a end XX-days admissions, the

when So see number. there of is always you in a lag a timing little strong growth admission a bit

as as that certainly driven episodes. But that. mix. So the is by Alacare bit of bit We're part duration mix I big of much think anything, of on XX-day a our patients timing had differing recerts, of of of historic that from balance, just a seeing because part of a we the we're proportion a little seeing our also that decline is little of in

Douglas Coltharp

markets we phenomena are -- A.J., all Health going that's relatively have in don't to ultimately, is use but a factor to again, was strategy. rational large and higher be in to will that regarding But to that because have the away plan it'll one going hospital a a the is payer doubt go that come more recertification. not we a know recertification be around on XXX%. begin declining prove that other quarter names also elected providers short-lived short-term QX. then but we to MA But name using a no for see they for that But the that to impact weighed approach us to the and readmissions, packed we navigator That believe patient not only that going us I'm navigator. Home going patient that,

A.J. Rice

generally? Okay. And any then how is side. just a trending expectation? about couple pipeline follow-up, relative a mentioned about acquisition Alacare, you your you to And had other the on comment times, Obviously, to of ask that

April Anthony

going now are the were There days to be far. integration a completed to We we're fit. of seeing Alacare good we efforts. that integration with Certainly, confident be our results partnership, XX that efforts in integration good pleased the still we're though. and from into so that, confident and going that's And going think how was

scale team integration pleased progress, So process but days, XX been that's we've pleased across take although onto the with we're with the Alabama that to we'll organization organization. recognize vast going than down have so we're with performance. that with longer we that's also match integrating Alacare's they to definitely an that and that our the able culture the pleased something continue of size going bring with pleased the We're the to be

On fourth be substantive the time into from ideal size it's quarter Home upcoming, with the Health here, acquisition. the PDGM being in another's cautious certainly we're not site to jumping perspective, a development I think

planning create markets that's have create the results. PDGM months things in But back of actual the cost-effective be pipeline smaller going three in you of to because get disruption the then think market acquisition that in PDGM opportunities X some -- my the quarter guess little And us some can appealing us us in of think active really and to next a starting quarter quarters kind for being growth. I second do then the see measured think we We're very will is next find I drive first year. opportunities that bit the in there's into are going more to approach future of some key help of first you'll particularly we take as our the a that


of Markets. question line from Morgan RBC the next Your Frank comes Capital with

Frank Morgan

may overall much there an for opportunity of change Alacare. Just to the mix, and was maybe maybe kind then patient specifically you so metrics, of called the you know what makes have do question, labor there? pricing that opportunity your -- I'm some is when some the So going better of didn't really And are guess or earlier see basis? -- that business they relates to have your was it you the that I you yield PDGM, because recert see on Is curious already? mix on as opportunity to there to because overall back like I that your you get it Encompass any there. Alacare rates. having the that an of rate out you just that think where impact levers already things just legacy about back even But

April Anthony

lot the we'll to heart really our really a part on months. in working of growth, relationships opportunity. of the be programs, start be We think We about X able the be think there with programs further really focus with encouraged the begin the an the program of IRF implementation Alacare. being acquisition with able by for and we're We months, to really our programs. driving first our those we'll relationships, markets. successful think Alacare the on locations. expand improve And X to in specialty Encompass specialty collaboration changes going have in We we're X-month don't orthopedic come but next be Yes, specialty of those family then be new we programs that we'll surely there. to some all things We our our in think particularly our until feel to the that pushing slowly administrative kind are into to specialty of those clinical building because generally CTCs, organic proven hospital able us to partners our going hospital very mix for to bring mark available new

pricing our result experience So improvements that their to consistent like be also in very with over a improve I'm their as very confident with able see That's of time, we'll I do feel that. large-scale will we other acquisitions. then We are to of they achieve on to start right and formula. But we'll again, can takes our bit the results of following got get first that once them time. they enhance the little kind a processes that margins.

Frank Morgan

of terms PDGM? in And

April Anthony

that legacy to bit was more than because of the for a that nursing the is therapy mix be has a -- Alacare think, heavily than of base oriented PDGM, will branches bigger the I oriented. going be positive partly for been business, it it

good will actually guy a little better PDGM a And the of case get in of bit business. so than the base will they

in And so time that that'll differential of XXXX the frame. help normalize rate some

Douglas Coltharp

X% reason to just terms to be the estimate our our impact and though, in the we of Frank, mix the the QX Alacare. estimate inclusive include was [indiscernible] was of of the the estimate clear QX, of was that inclusive in updated estimate well X.X% PDGM Remember, part we improvement X.X% that as of in because And the getting that in the both Alacare patient first time had as business provided


Your next question from with Piper line Sarah Jaffray. comes of James the

Sarah James

fundamentals to here. little the wanted get back a bit I to

before partnerships you've education level, initiative best you've leveraged able consumer Encompass talked the local opportunity XX,XXX hospital kind you've market example And able the share in can and an you you SNF how on been of XXX,XXX achieve national of you've down for You've break if the and where single taking on big-picture I'm a wondering this a push with in gaining from of to if have the average of out a case a move share case caring strokes. to of traction level, about an been made acute you cases. or stroke to spike that needle

April Anthony


bring So that patient side. the are able care the from taken claims stroke to of lot a a at more just stay level admitting hospital to that of the a lower And show look in a we've stroke to successful from a have data. been at at Medicare a referral acute we perspective, length acute care

pull to a day them skilled facility or being nursing two able So than can. a sometimes sooner

what them length on move And to ability some our it's those actually only instances, stroke acute that But patients We claims care the a data, go are quicker, stay to readmission patients. is -- have hospital can also if half the has helping Medicare it say manage their our with skilled we but lower. is those is facility. the not rate of readmission grade, of rate in

referral market local their that those shared at that And the to key and value see so is we can information that bring with sources them type patients. a so they of

when and strategic a that a Stroke families to a And advocates versus those educating thing their their should when can American sponsorship the inpatient consumer allowing in care. they obviously patient work ask side, family. rehabilitations haven't using tolerate be skilled then had rehabilitation to stroke And you're a that inpatient consumer on Association really of receiving these in more patients sort in be to Heart level patients communities is from care for stroke on

Mark Tarr

Sarah, partnership we're very Stroke pleased with with Association. American our

various chapters the differences it's rehabilitation Stroke Heart activities on market. of do that these hospitals I exposure we the in hospital Association to in that collaboratively Association and in an Encompass the our does facilities the what think gain the with additional goes local versus Health nursing and between skilled market in help

going XXXX So would with anticipate and having into that we're with continued relationship. very pleased momentum that

Douglas Coltharp

to way getting regard stroke Medicare around on market how is elaborated at to I Advantage. that to generally then previously great of a think share, we're I and with some back both gaining Sarah, the specifically numbers look

And of up we've Medicare discharges book XX.X% is else. that are a same-store. know business we on IRF XX.X% patients Advantage year-to-date our so market coming basis, stroke. also total the the somewhere percentage on growing So within isn't were are side MA within from up our yet, modestly that increased quickly, the those and And in

that and SNF efficacy to we of coming are from majority of probably vast have them facilities. the plans IRFs, other treatment say but of better coming venture in the of a because the Some I those treatment are from our would the

Sarah James

properties capacity the the being you what existing is that to I accommodate excess very within Can excess know leverage to there walls That's demand, have? guys add that, you this you footprint. side being for into remind the other of increasing And out Okay. able helpful. then just us or beds build able

Douglas Coltharp

therapy particular nursing IRR one expansions. central typically the us, and rooms. build All stations to and on private see of opportunity, enough It we'll accommodate of XX-bed is we're XX for up to not XXX. increments, gym forth de the bed that excess an range. even on and bed on We high bed the like is accommodate that so typically may or be will the either XX expansion the initial market and mid-XX% the typical very we've expansion unusual, see be depending to in in returns every floor is acquiring the an we'll XX infrastructure built the that novo or to rooms build plan private instances a expansions, when So we'll buy typical land de building land points novos we'll the


next James. with Ransom line comes Your question from the of John Raymond

John Ransom

code is We a have have the of a old from that system code the of not heard some PDGM in new had of your the peers patients that that challenges one did system. in

just than wanted a breadbox? bigger found So if also so, if you had to see is that, I and this

April Anthony

generalized that effectively unspecified. weakness absolutely case. is that are kind specific. old that the these questionable John, nameless them in sort of new the PDGM are codes of Back Take encounters, called the Yes, but iteration prior less left it in muscle of they PDGM rule,

can't has the for muscle why longer. if so don't weakness, utilize basis you diagnosis And any a patient know you that

Health there's across And specific all groups patients these within a Home certainly less so cohort using codes. provider of the that spectrum were

we're XXXX, have really and in the more specifically. with specificity certain going we experiencing that forward basis to patient a get physicians to to code work make sure why more combination collaboratively more about Going of of a symptoms is the that can

bigger that. It we'll so Is Maybe. it physician that's stop has with longer to that significant. admit reimbursement if going tools potential than find alert those to I no will find collaboration is terribly more think a it which to don't back provided, the going It dealt lot so acceptable and can't code with utilizing it's patients be the choose significant, them sort they past a take basis where of, just think I breadbox? with. the diagnoses, say and that the longer something an about. for receive to not to code, to be hey, Homecare going this testing payment be and of you also one system it that's go incremental some concerned with physicians the that to clinicians, was, no the identify do is they are the being even patient to what within that to that Homebase experiencing? in the possibly the will have the system We're if for codes and literally physicians

John Ransom

-- corollary with I the give to and you And -- more brick in PDGM? it the be so isn't the scoop much mom going can if this be and that buyer market the small just shifts episode the yet is, maybe wasn't and mean, now capital that backpack deal partial of this can about a -- and share you went has agency bad just just so between this Do much see Encompass up these your we're pops, to And cut. to we -- changed going we some so, outlay? view how this learn closures, another to then for about or share financing and not let's away it's a a are

April Anthony

you're think right. I Yes,

this just sophisticated manage for the environment who providers like it. small solution complicate help I clinicians a through is to and change for further this, those technology lack the their think

my decrease interested To enough be second cost-effective probably patients going similarly of will it, if that So at sources the that the begin going agencies as business hold buying disruption to either take look opportunities be that or that the take you earlier the they've will some we do to be and in in in wouldn't quarter, this those around think that of really think point, the to community, I see the gate. timing of the of may think be hire we are be to that is of share disruption. caregivers. referral on there if able to we be of market claims folks support and going some I got even likely in and challenges at out early feeling business process out PDGM by buying as step will are that community you the RAP the frame, payment issues probably are their we be intermediaries there April We some either to in just well amount, will look that in first there time in part that the what the of few but weeks really all think there pain will be opportunities where just that of kind

think think second do hard to the it to the going We'll both, little So bit disruption but it's providers be pretty significant. I quarter. a of small-scale hit to is beginning going pretty be see I in


question Fidel of Your with comes next Scott from line the Stephens.

Scott Fidel

First Health on obviously we than down in question that different year-over-year in Home quite side. Hospice. IRF just saw mix which it was was MA, the on the and payer Noticed

using answered one that relate Or that before, to clarify actually navigator did were affected other just that have to the payor may You the well? factors it? want as any large whether there and

Douglas Coltharp

Alacare That a was the factor was a too. factor mix and

Scott Fidel

Okay. Got just do preparation have for you PDGM. XXXX question the my estimate that the it. second incurring just, is a And then of what you're costs are in for total

April Anthony

here can this that things impacts the of the some with months in and leadership it's and We training to estimate so PDGM an advanced a in really September ongoing to us training going do first preceptors learn day -- more there'll those our back a going will that. the yet. have focused locations. are their training. that this ongoing be that preparatory it's X to for we're that cause that don't training, reinvest of to week field on think back and X of training. We a reality we'll of is sort training this go processes around session of Dallas go country couple in sharing that to sort to on on specific do The kind large-scale have And be but had We've trainers meeting also be great an PDGM, they began through of going year I a

because to for and payment going be care to it's the transformative we of the things. a coding implications some means so the a it probably we it's rules of time it's take about transition, year kinds and of all patients learn all and change, impact advance prepared think what to is going this for really to way not going we And of think XXXX, be as to in

division kind So planning. it bake in the we'll Health year and throughout that our I see the think of into ongoing Home


back will I closing question-and-answer That concludes our period. call now the turn for over to remarks. Chrissy

Crissy Carlisle

has please you. additional joining again XXX-XXX-XXXX. today's call. for Thank you at questions, me Thank If call anyone


joining Thank call. you today's for

You disconnect. now may