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EHC Encompass Health

Participants
Crissy Carlisle Chief IR Officer
Mark Tarr CEO, President & Director
Douglas Coltharp EVP & CFO
April Anthony CEO, Home Health & Hospice
Barbara Jacobsmeyer EVP & President, Inpatient Hospitals
Matthew Larew William Blair & Company
Bradley Bowers Bank of America Merrill Lynch
Matthew Gillmor Robert W. Baird & Co.
Benjamin Mayo UBS Investment Bank
Brian Tanquilut Jefferies
A.J. Rice Crédit Suisse
Philip Chickering Deutsche Bank
Sarah James Piper Sandler & Co.
Call transcript
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Operator

Good morning, everyone, and welcome to Encompass Health's First Quarter 2020 Earnings Conference Call. [Operator Instructions]. Today's conference call 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. ahead. go Please

Crissy Carlisle

Chief and Patrick Encompass Operator, Health Officer me Hospice. everyone. you Secretary; President, Anthony, President Thank the Financial April Coltharp, Thank Barb and General Officer; First good Encompass Counsel, Quarter of and joining Jacobsmeyer, and Tarr, Mark Health's today Rehabilitation With Executive Officer; XXXX for Home Doug call Chief Hospitals; you, Inpatient are morning, Executive Darby, Earnings Chief on Corporate Call. and

do already filed On and on the forth set have statements, you SEC the if information, quarter earnings detail information, at greater copy, Page in available begin, supplemental first the harbor supplemental which the related you we Before are encompasshealth.com. page not of our last on of website are with will also a X safe earnings release, find X-K Form the release. the

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

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

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

supplemental Form filed as to earnings the the yesterday of GAAP the SEC. end at end at available the reconciliations measure X-K of part measures, the release comparable directly and is information most the the such For of with

of website. on are which available All our

remind to everyone X X submit I to Before everyone it will the over follow-up turn we and to that would like question allow rule a question. adhere to to Mark, I question

additional have in please to queue. back put the yourself you If free questions, feel

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

Mark Tarr

Crissy, mid-March, I and families in the XXXX and are everyone. impact hope from healthy. and for of to into good and you, heading we home, February a had experiencing Thank safe, morning you a began significant start year. your a that In at pandemic. We the strong momentum lot COVID-XX January

on the focus touch our the my the response I'll environment. current on our for While results quarter, we comments to will pandemic in operating

taken I'll liquidity both have Specifically, of supply safety, enhance relief we segments, efforts Doug employee and by will and under government. credit and and address in observations steps management, chain ensure availability legislative current regulatory business federal our address the our our patient to agreement.

of our workers against enough part value I critical heroic care this and care well-being. efforts national a our our our during period. of the health how contributing patients are Our cannot exhibiting are frontline nation's and appreciate COVID-XX, excellent in and actions to unprecedented teams and providing emphasize we employees much the to this infrastructure battle

field, our To profession our million inspiring for and contributing commitment their off. our your in time I to country's an to and $XX workers of future. our we you paid invested segments additional to both in approximately thank your of support efforts, safety front-line recognition award of teams In the for through

paramount us of patients and employees our to Encompass of importance Health. at safety is The

of segment the comprised updating place and backgrounds, state stay with task working of our taken to nonclinical. patients COVID-XX We the evaluating on a daily federal to up latest and from for speed and safe. steps information to stay and have their clinical employees in are measures resources, of leadership help well-being, variety ensure to forces forces constantly both task These including numerous the creation company each

protective focus employees. the pandemic And increased resulting to forces our primary personal particular, of created health patients for been A for not care has the task PPE equipment The chain is and utilization management, of chain challenges. and have from all challenges of the availability supply COVID-XX we supply providers. in immune

normal of prices had have suppliers have suppliers, that We as premium are XXx PPE and managing experienced allocations limited as through visibility paying find alternative our reduced primary pricing to and much elevated these into believe weeks. production both the persist We domestically internationally, but challenges, several for and including cost at production capacity, least schedules supply expect shipment and next increasing, we status. is from

here pause employees are for to secure resiliency resourcefulness. our supplies thank clock, members working medical PPE, you around to chain us. need the who and safe. for the demonstrated other and have commitment and They patients keeping supply of Thank I your our and teams

In our including hospitals addition screening limiting steps in safely discharge caregivers, training order entering and physicians, patient We required to our home. employees, persistent visitors taken patient in efforts primary implemented to for anyone hospitals, PPE, a our to we vendors. include secure while other procedures to have

distancing We our are rooms performing recommendations inpatient also needed. as following gyms and therapy the in therapy CDC social

assess frequently patient For home-based home, is including status prior else to we visit. health home and calls the sending current our their self-screening staff for home employees in our implemented anyone risk of who all are factors and within into the performing for previsit the clinical care, protocols to telephone the

halted home nonessential working at field we addition, home, personnel have are office and In and nonessential travel. most

shift let's growth our to States, lines all volume to were experiencing in United of cases and COVID-XX growth. discussion taken operating the them. in have business explosive Prior strong current the to of Now actions trends we the response

the have experiencing lower we volumes in both we in beginning volume April. and began segments However, decreased mid-March into in March trends saw continued

has slowly entered of rehabilitation lower-than-planned at We average with exited to hit inpatient X,XXX. volumes ADC X,XXX. levels. We we March slowly level of low steadily our In point current a approximately an X,XXX. although beginning and approximately its daily of recovered weekend to recover, it segment, are of pre-pandemic The believe March that ADC with remaining census time, Easter X,XXX. approximately an Since

and episodes, weeks February starts includes expected additional starts X% which of of to by our March In-home compared trends the recertifications January to XX% in are in April. average they a suggest of Recent decline care and decline. health, approximately off an and XX,XXX, the dropped leveling of

number volumes the both at In XX segments. have stable census lower remained contributed XX believe February factors going XX to April. relatively The January We hospice, XX our decrease have levels to deferral hospitals. of an acute an to care ADC has the and in average of COVID-XX a from served pandemic related in estimated surgeries in of in elective the

have April. While not of of we care elective level our large surgeries in management and volume, hospitals of significantly care need our our this multiple home approximately XX% admissions. are in impacted patient the a The therapy represented deferral who surgeries these do take elective down with our and health is percentage historically of medical interventions. our for business rehabilitation as overall patients has post-acute Those comorbidities volumes of that inpatient patients have

to rehabilitation policies hospitals. our at reduced care lowered care have care acute emergency transition census department and liaisons levels acute orders Shelter-in-place by and limited in clinical place hospitals patients in at coordinators. access visitation severely traffic Restricted turn, caregivers and have

health provide decline Assisted home in in in-person our living embarked down, existing to home to been health facilities which ability admissions care patients. has also has a and resulted

care officials anxiety to the their patients COVID-XX among post-acute new addition, the during treatment impacted In for admit home. family patients. message and and the of acute risk has and to and heightened health continue has and exposure the The clear regarding patients from consistent public ability stay meaningfully members government at care large, to to care been our existing

attacks having fear other to lower chosen volumes. some life-threatening an not of treatment in census and and virus. care turn, medical our We at or emergencies to in go hospital in resulted consistent to heart to contracting acute for a call believe so it has This and strokes, care been decrease has continue and, served further to clear XXX hospitals choose that acute individuals has due have

in contracting virus of receiving cannot address While patient's we've for to care patients while steps care. we in the taken these our fears care acute a address hospital, fear

are For appropriate. therapy segment, more example, we possible when inpatient rooms in our and inpatient conducting individually rehabilitation

we services, our phone in-person pre-visit with with possible. calls and visits conducting supporting telephone patients home-based when care are For

are in constant are We and willing by to we provide ensure ready with to patients. the communication care needed know they our referral sources

conversations During phone this time, risk care. and we with and are conducting the bedside to associated educate segments families post-acute avoiding on their virtually using patients

resulted an segments, the episode visits inpatient our of a in of length exposure in proportion has period. LUPA a the in volumes fear in resulted our overall of decrease limiting per which decrease in stay elevated and rehabilitation in in segment health, to home addition In

we At But this in pressures near-term on patient, creating COVID-XX to impacting this expect the revenue continue when choppiness expenses. end. at we operations. summarize, pandemic predict minimum, per quarter. second and volumes, To reasonably it is may our cannot It's a time, the

I for we still segments. beginning rate both see gradual to and our earlier, run X admissions XXXX, in of although increase As months the in first are well below mentioned referrals

of or testing CDC's For COVID-XX follow inpatient believe from CDC our the before encourages markets. some exposed We negative of our tests results. we that improvements rehabilitation may a hospitals, this the guidelines virus. for accepting The admitting the COVID-XX for was turnaround patient strongly in in patients be two resulting positive

we obtain to X timing the days more some receiving most patients the United results Thus, XX we obtain. hours. the days, X to across in April, are testing In X spread from within were acute are markets, we to XX able taking to began tests care of now results can hospitals. markets, take COVID-XX results As results quickly early in improving. In and States, of

complete remotely. patients, believe and now hospitals, referral to families. communicating our also managers transition coordinators are and adapted improve obtain working processes to and our directly the have with learn to sources, care in information in to acute their clinical care liaisons find stay They We ways liaisons had Normally, remotely communication work with case to contact prescreen and patient procedures. order in and to

and Encompass our communities. we patients be here country our and for long Health of to trend the to in ensure hear to for expand elective will care for hospitals our in care we are over order times the resources starting markets We continue that must believe acute stewards Finally, are our several this to unprecedented and our good resuming family. term the weeks. next are some are These surgeries, we of

implemented are developed compensation to to considering to our in greater structure labor our to significant costs staffing to volumes variability market-specific our lower inpatient visit structure furloughs. cost patients demand, manage After lengthy operating changes In segments. create volume. consideration of both to health, respond to a had level in in In-home we response current we we with declines align have segment, in plans rehabilitation

another XX, COVID-XX regulatory April As described X-K on in pandemic part legislative companies is Form the of federal nation's ability government. our the our from combat important to filed we and and relief

are The to and along providers actions CMS, of health Congress, been House, The White includes appreciative and care guidance the adequate ensure throughout of Cares a efforts this waivers decisive taken patients relief by continue We scale have of access to that HHS, Act, is by to CMS. the unprecedented. series issued the care with help have pandemic.

the XX, temporarily X% Specifically, X XXXX. sequestration, program payments, the December May suspends through of automatic the for Medicare as known period Cares from reduction Act

and payments Act the Department received to Services revenue on healthcare-related COVID-XX. support Human receiving fund date, providers of million. XX, and from We began health distribution to Cares lost $XXX the Health care approximately April attributable also grants we or have authorized expenses to to relief of

these we've on and permitted terms previously funds restrictions are subject conditions, use. including noted, to As

will portions, keep and able At use. any, what estimate cannot this be from further these we time, clarification we if funds, of to and HHS, reasonably without

them. are We and funds or special these accounts permitted these while itemized in we the are terms, associated holding with use funds dispersing assess and not spending conditions,

relief other for XX% a our week. include day be the per For able minimum the of X must of and patients to inpatient regulatory hours of suspension therapy requirement efforts per temporary rehabilitation days rule tolerate segment, that X

and health accept the of maintaining For certify our status relief have they of the allowance to practicing care homebound for in with to includes revisions environment. to services patient the during visits need of our home laws actions physician the in health and of patients the hospitals assistance, of emergency, home care required nurse provide orders practitioners capacity care flexibilities public state eligibility in period health, and accordance types for ability assist definition for the physician acute the hospitals encounter. and regulatory purposes and telehealth given enhanced These agencies face-to-face current hospital to

Medicare care and relevant tele business. organizations managed visits. health Advantage for which constructive have for from organizations, permitting post-acute our and pre-authorization We've few response care, are also paying for is seen a waved particularly Many a home managed care requirements

to proposed of rehabilitation adjustment market regards April update a Lastly, update of fiscal inpatient CMS XX, for rule rule-making basis offset basket in on notice X.X%, productivity facilities of regulatory net includes comprised of for X.X%, released its proposed XX updates, basket points. of a XXXX. The by a market

routine changes. does or new existing expected, the It on measures not and As measures. quality proposal minor focused amendments include any quality technical updates to

patients effective our estimate rehabilitation through Using XXXX, rule believe X, of reimbursement in October our that an segment, currently from year XXXX increase our inpatient would March we X.X% rates X, fiscal XXXX, Medicare XX, XXXX. within result proposed October in

each change and rapidly, to market's a to I with want my that it. operating to COVID-XX to environment response the our emphasize close, I pandemic continues along As remarks bring prepared

X-K April so filing XX, with our in uncertainty, XXXX As much noted on guidance. withdrew our we

business further to because we provide strong by all In base confidence this, thing substantial made aging for we financial year targets, an the This and as of segments targets the not prospects confident businesses. supported withdrew we've as growth served is has We for the one based our our foundation our both increasing XXXX remain in investments of well. those of a our X-year addition, the in services demands Throughout changed. on population.

working Whether a and of and of the We current or care time are thank through their frontline is someone support home, ability all difficult Health foundation have serves changes I our what record from daily a want altered who for catalyst in believe clinician resilient proven currently of patient future they its organization are function employees a overcome to lives. in a people. in working our you in challenges. Encompass track whose routines this providing doing situations, is and to I

values, are core stronger our in together. we noted As

it results. With Doug that, I'll turn over for more our to financial details on

Douglas Coltharp

onset with good QX, off strong and some year. a liquidity everyone. morning, the I'll bears cash start the pandemic, prior and COVID-XX of I'll and repeating, to were Mark, this discuss Thanks, start observations flow. we It then really to on

first X.X%, health hospice discharge our first validation months including continued had up This business As of model. Home was in year, strategy of in disclosed, previously the X.X% trends serve momentum over same-store were the admissions and growth X.X% the March. XX.X%, part IRF admissions of XX.X%. in X and further including same-store. increased These as

increasingly the For Expenses including our supplies. in the PPE volume increased cleaning March segment, slowdown by IRF of and per revenue sudden Section in discharge in impacted was which were QX and line with expectations, to isolate. our demands is impact the for negatively estimate GG, difficult the of

virtually resulted into the The in March and segment volume decline across factors. end IRF we the extending conditions, and in back believe of of April cut a it number we all experienced patient from

acute hospitals due impact to elective our remaining both of choosing due patients, exposure. in to markets excess capacity appears was care from seek care, these that neurological care COVID-XX but modest many a stem the the inpatient the may they and impact in did there surgeries, been not stroke we choosing to post-acute a created performing care patients appropriately to This experience ceased in nondiscretionary patients larger from like acute surge conditions but as forego to are and COVID-XX in patients believe fear the of of viewed as have nature, setting. For not

place. as patient have Other the country a in major as is appear result declined sheltered much of nondiscretionary as reduction and from viewed conditions trauma in a resulting of accidents to

thesis. why surgery the highly demand Finally, pre-COVID-XX will to trends correlated elective can see return to have no these April replacement for and the not We patient in normalizes services joint are this levels experienced lower procedures. environment such as conditions as reason extremity we volume support

We continue Medicare Advantage. to see trends strong in

Medicare QX to of higher more stroke inelastic Advantage our patients. owing including portion in relatively business Our XX% likely same-store XX.X%, Medicare be This concentration to increased than discharges growth. proven has of fee-for-service the

For Medicare stroke were discharges patients. XX% of our QX, Advantage

at as many remains say discussed environment. has of Investor development team early within we pleased continued Our business robust, March. significant current I'm state Day progress that of novo the midst even in projects the opportunities IRF Florida, our make de on our the pipeline to the including to in

In integration segment, and the responsible the with revenue continue pleased very of growth. hospice be home which we health was primarily the QX to Alacare, for

COVID-XX rollout to We this us also made pause the pandemic progress of on has significant module, although MetaLogics the the care deployment of initiative. caused continued the

COVID-XX As stated, effects exacerbated Mark the the have greatly PDGM of been by pandemic.

The has was the increase was episode, QX positive X.X%. LUPA largest of reversal effect -- the a in PDGM excluding impact per Our minus substantial revenue episodes. within been ZPIC

For business anxiety the in declined declined exposure per regarding This prior XX.X% due heightened of patients COVID-XX was families, year episode to and in QX, largely period. the their to our XX.X% decline versus resulting visits.

substitute Although to do reimburse patients telehealth in-home LUPA portion visits Medicare for a the visits visits of not able decline not for our and us visits, the telehealth of does to we were the in support needs determination. count these

acute reimbursement. and censuses visitation community, away under PDGM as from a had been hospitals has carries which shifted have declined source implemented, restrictions our institutional care mix Additionally, lower referral into

a Finally, have of increased lower early under admissions our are have an payment as reimbursement XX-day declined periods classified as PDGM. again stabilized, late percentage recertifications versus resulting and in

take by in our believe by hospitals, home the been time of care to volumes of Our rebuild. evidenced but in number our resumption for increasing pipeline decline We of mix. rehab surgeries elective to a acute will an patient musculoskeletal elective the the category health by surgeries it's this of with improve have cessation trend negatively the significant going impacted this markets,

with rate our For flat clinical QX essentially XXXX. was collaboration QX XX.X%,

our collaboration have all-payer Advantage the growth prior Medicare business we calls, weighs the in rate. discussed on as down accelerating IRF However,

on As provided the Advantage each it can effect, XX this and be demonstrates slides, supplemental Medicare to and both fee-for-service in the seen collaboration Page order Medicare of for progress. we've rates illuminate continued

collaboration Medicare year increased For clinical Advantage increased to QX, in rate Medicare XX.X% the XX.X% to prior QX the XX.X% period. and XX.X% fee-for-service 'XX, in from from

I'll turn financings we of XXXX, Dealing flexibility now to in deal consideration during to took pandemic unprecedented and a the fall the flow. have was certainly liquidity cash but we when substantial actions global of engaged provided set proactive a not this with circumstances. with

unsecured issued those senior to utilized We we and retire that recall capacity notes credit XXXX XXXX $X between our under facility tranches of proceeds to XXXX may billion evenly fall, maturities. our and last You X of notes. split replenish a totaling portion revolving

also date our maturity $X amended We and the senior facility, to to revolver billion credit increasing XXXX. the extending commitment

During hand. of and ended funded that the million. home with equivalents and quarter approximately exercise cash puts on of our totals tranche and [Technical available revolver the final QX, under We million X.Xx. $XXX the cash the approximately million the leverage $XXX unrestricted the with at we Difficulty] equity health SARs, of $XXX

our We believe received the revolving our We utilization the full covenant the this have helps in completed effects financial future. amount ensure through XXXX. our time, an facility for persist contemplate fund increased throughout providing the or amendment have the if of any the the to relief note credit Care Act of not do I flexibility should pandemic that of credit senior might receive facility, we substantially year. access to amendment to even plans

of and utilization evaluate to the We conditions funds. terms the continue these governing

X and to that holiday to the Turning activity share lower to at $XXX least the reduction million of planned project higher mitigate the repurchase and taxes, covering December a suspension The of of largely serve expenditures, partially in expenses. impact will capital our deferral a period of are sequestration on based of negative under a through and factors program. XXXX cash Medicare May number XX, pacing payroll revenues There flow. million $XXX

questions. And for now we'll open the line

Operator

Instructions]. [Operator

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

Matthew Larew

volume stratification follow-up on comments terms about your sort wanted of I to levels. of Doug, some of in patient

And referral the quantify What you've bit. down if procedures your in return on things that back focusing from to trended potentially little May are what you to things like of hearing how factored on markets? of in your procedures? categories stroke half into April? maybe could help a on LEJR? again, in looked wondering And you're outlook like sort prioritization your the Just like then of March, started partners And some of X what patient

Douglas Coltharp

Well, Matt, there. there's a lot

the first part Let me of try to question. that start with

what X is in think April seeing of different periods. I like March, we're a much So very transpire tale

second of for half. So March, April those half kind very from we've from trends dramatically of that a second And in of March. continuation the changed first the April, in into reversal volumes the obviously, of a half seen the to

in part XX%, the first lower excess the such we declines in seeing than XX%, stroke of conditions of across down joint all For patient XX%, in March, of rebound down more as comments, excess predominantly really trends were been really categories. April, neurological the down all and were seen of as replacement are in those the in lift his we've categories. we across The discussed weekend Mark, but that Easter a volumes since in seeing nondiscretionary categories,

procedures, elective market-by-market see to prioritization of resumption had the book time business of building. enough that and how terms And place is is thing. haven't we the taking it's really really of In how a

Mark Tarr

back home lot will lot phone evaluate But just with hospitals you liaisons the have add in will care us during impact elective where on even coordinators having on. back transition benefit start in a procedures. up care have aren't regaining hospitals Matt, do for clinical activity they a in lost that positive and we that to and care again acute worked though This and the ability health help the to period. elective volumes to and more our impact our social potential Mark. procedures, our the our have once workers planners the over discharge hospitals as have is I all rehab clearly of clinical patients this conversations versus procedures one-on-one referral just having firsthand to our the sources the think Having I'll patients a acute from elective

Douglas Coltharp

lot I during prepared know the the Matt, of ADC you script. comments Again, I the portion Mark worth and trends a we the comments, think but threw in it's that referenced And his at underscoring.

inpatient reiterate we running ADC to sit with X,XXX. X,XXX. at rehabilitation we hit on Easter point an ADC of of We our an segment X,XXX. those, So And in a today, came low into March, weekend

the With of And exactly an the as sloping now at off that almost we trend curve. March, low XX%. we've half we beginning point, were with regained from up today that of back sit

Matthew Larew

whether you as Got impactful the too post-COVID? most it. taken a those might then April And ability have changes, most That's power rule actually alluded follow-up. legislative of you of of wondered rule helpful. then a actually changes? impacted patients or a to additional you the sort number as be about I just those think just or what changes. Mark, have and of thinking in result be to whether able if chime maybe your Barb staying of sort have those And

Mark Tarr

first start to comment. will ask with April I'll I Barb then and

Barbara Jacobsmeyer

the not communication needed hour of more to had this hours therapy. three the on so early tell bit and patients. I working the there the big takes a of may with time the care we'll that and support particularly communication, patients the come a the tolerate but acute able side acute waivers waiver folks waivers IRFs We to the many to what's referral But may that's X-hour been medical I rule from rule. able to to lot one historically But a XX% rule be because little the medical sources. And of Matt, is be the could care side, of be that. a oversights, will on focused impact exactly waivers greatest to are to some that has And say those remote, today, coming usual. necessity, the the It's think admit -- our hospitals. So and from have understanding than both maybe that that little coming X going the benefit probably these

April Anthony

the On NPs value the PAs to is and kind the able Matt, to prospectively. would long-term for orders I side, us health be biggest for sign of say, ability home

think have and of a the being date to for give time, NPs whole open and of it's PAs, going minimal larger avenue communication to to our where in we going much I are many create provision easier markets impact, patients rural have for referral stabilizes a I those of that that's NPs new us to that's they flow And source over going is, is PAs. that's by new practices and up future. a that, the primarily served long I where as but think say us. us had term, relatively opportunity would there in when

the think value home. to the have the biggest we've our near high-risk homebound this is term, to I seniors Obviously, probably in ability in seen environment, virtually presumptive a status. advised are stay

a more help this the and them to anything, it's rely administratively So the during but the recommendation again ability homebound status course of homebound physician's certainly that on document probably for PAG. to be has than helpful, been

Operator

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

Bradley Bowers

Brad on You actually today. have Bowers for Kevin

that have some Is of getting normal you're that you counting that the home more it business is not Or the than the a COVID? that side is might for? been not fluctuation? of were telehealth health on because business, So down admissions. FSOs of result reimbursed Or

Barbara Jacobsmeyer

completely down episodes as an seeing sure frame March, not out. have ended broken XX late episodes. move following I'm even slowdown impact question. nature, on certainly, admissions to half a X days the May in really though start as really and your fading in episodes on June in second of more time the of we'll kind decline, I'm see but are because we in But XX-day periods, we're into start that the happened that Well, episodes admissions But as those not pull-through payment we has impact still

anything of I the in don't PGM. seen ending think specifically waterfall. a indicative It's that just we've nature of our necessarily episodes

don't anything So still I there. think there's

Bradley Bowers

just way from the as Or majority any you that of pricing? that. quick quantify And the could the follow-up helpful. decline there the a impact Is in then Okay. the That's to LUPA? is that

Barbara Jacobsmeyer

a they we even episodes patients as payment. So utilization those are count when receiving low still

more still an a in March were is they're episode Because the decline reflected So episode per even than on in LUPA. rate. if X% X/XX I And decline half the in that we're in looking they at episodes. the of would the say accelerated back are the the related the is episode impact of it in to of considered revenue COVID LUPAs LUPAs being per revenue about because of

Operator

of comes question the of Baird. from next line Matthew Gillmor Our

Mark Tarr

Matt?

April Anthony

Matt, we you. can't hear

Matthew Gillmor

sorry. had I'm muted I myself.

some that. you're where grant, sort just waiting to you the about terms. you Are of talk about for? just to HHS for was little clarity the could And you about then looking clarity process? back you're know do stand the I still I seeking you? Sorry hoping a on come Cares bit. you in Can talk

Mark Tarr

Well, this too. Doug ask and Mark, I'll is weigh in to

that think of language accounts, those when around the get we which or using of until additional funds out to and said, we clarification There's additional have anticipation conditions moving of them terms we we've that a I parked we no like get on. clarification. specific lot as

lot done appropriate past, ways relative think has to there to a there's or use lost the the you If language expenses. information of types this back of for about revenues not government of funding been are similar how definition around in

circumstances We and know -- the money, in we're free stance around funds. very our just being diligent are a we're we on language of very it's So cautious review it. not taking and these

Douglas Coltharp

a me this. as approach caution least let of examples couple why got of Matt, a Yes, try we've of you at just sense we give to

attestation of how be know terms conditions the will open-ended. be. what and fact. And after onerous can form clear might don't added it that First, is the be the or those might seems and those we And current additional

time. funds extensive example could with is will second at we'll to example, it onerous. require those separate not Those be remains an legal reporting A requirements this at requirements are as those prove And aggregate entities. likely to we and to also point or purposes. And the increase somewhat XXX whether as for utilization and reporting able auditing, funds received unclear or to funds be

Matthew Gillmor

implemented Can this what then of helpful. per sort on on enough. cost sounded And sense Got there's That's to how us versus release. little you're a of plan that seemed And thinking health? visit new labor a forward? it. health for like some going with move already quantify you're of kind comp what a a a to a as that give Fair the home way the home to really side, then bit it approaching initiatives, press you Is there you've on follow-up model.

Mark Tarr

Matt, Mark. to a say this Barb I'll in. ask points weigh and few is and April

very Just side. using working a reminder, with to up patients models COVID anticipate in we acute gearing hospitals, acute this various care we through which much coming are as went care a primary these were into all surge the our referring period,

sure So service we make care acute are we to partners. there to wanted our that

through not never But we to And surge. that flow our acute we the make so we careful would sure the our through. patient We to if of for that been be that flattening markets speak a stuff managed surge but big so labor wanted cares pandemic distancing this of that we action a and think it, eliminate measures were would taken I very our outside quicker to see came coming you acute and responsible to answer social being patients part surge needed the care anticipated we help luckily. today, how looked in to manage of of post-acute. were at and lot setting, and taken almost have the of not that have saw to would've And marketplaces of do through and curve other

change. furloughs So I'll compensation ask relative to then April Barb on talk to first the go the and to about

Barbara Jacobsmeyer

we for we before you been decrease the and important protective to we during because were as therapies, not has flex bedside includes metrics, That first, equipment. I mainly prior was the that furloughs, that the productivity the time. what think things it like note the it's evaluating is but of staff, would our to occurring the it consider that, So to labor doff started COVID-XX dawn in and personal that that time flexing takes

is it savings to we've hospital came approximately about really furloughs, of FTEs. affecting So their are the metrics. markets. make using from When to at volume our staff may then would looked half furloughs as hospital look It news. to will the to time at Mark their initially. opening folks back the starting And pulling be pay off are as be anticipated, a comments, we've recover. dollar also, had in difficult there And hospital the that this furloughs time to earlier his markets, but alluded be some good really X,XXX It's associate we time that by than on is decisions obviously, labor to in as manage

April Anthony

visits discussions, XX% our our we health performed prior percentage full-time home market, hourly as have pretty by -- a and right the of -- know around full-time our has high staffed. you historically from been salaried In

decline to did And that see mid-March, through we a hard a of it's so rapid when April, continuing like in into beginning correction. quick course you make

staff we we valued to along said, both take very to the if way. that cautious, wanted as the care surge, to And come, staff to available but Mark our had were of also it be to support the members ensure

our going I go the have our I with we're visits full-time that to members. what staff and that to of of been the week our being of move have to taking which you the begin -- since going to suggested, making staff trying move middle pandemic, fully That to visits the some make as visit this per staff definitely our And March this our is into and offload so align to good as we of and said, to continued we actually think we being time use way don't see that increase think a good full-time model. to the are decision, decisions percentage allow recognize eighth have that alterations. per those we of all completed make week-over-week We by to staff visit more we're sources.

the the is that getting our full-time lot that a organization, that from that a very patients our had of are we've supports sure on our of think benefit care outcome We best quality focuses having supported. over mission the culture that and staff years dedicated the make of

both think employees retain those status in find do full-time a of so way the variability more little structure. cost our we bit that to to can And we and yet, a create

hope to full-time honor create be still yet So and members. staff that will adjustments of that some we some announcing our flexibility

Operator

line the of comes next of UBS. from Mayo Whit Our question

Benjamin Mayo

the And you that you point? about at about early, capital point? it's XXXX just more Doug, takes might I hear It at this was go think spend? plan you're thinking on do might puts could super this you're your into plan can't how reprioritization the just your just to be X-year how of what little helpful but What fling I you're bit outright? a hoping deferring, out elaborate know and

Douglas Coltharp

Yes.

to again, that be the capital CapEx. original believe with out to of regard we'll spending, we million planned $XXX million $XXX So taking our

like and that, to environment, And of they're a and But the novo XXXX status at local of because permitting It's availability is activity not the major overall what state and happens that you on the remodels the or consequence. on of choice. extent, of at terms beyond. the both forth, things Because and can't all. any It some personnel projects. bulk materially slowed then change where of is so by project favorable requirements has related at not have pipeline zoning like not driven personnel of working level of and to a number administrative even de to also, licensing lesser to to given and some work pacing just the looks frankly, and be we in going variance get they're home work

some X is in it the is. bulk supplemental to But could another. the projects slides, Although the you indicated that year that's of there this overall, shift see from where possibility

consolidation further We emerge that not health hospice that there $XXX spend. environment, to $XX into that itself are allocated but out for far, of opportunities the additional be this year. and so along going also million that and We have home do million manifested getting think has to we're

this we reason guidance set dealing prolong going XXXX, how circumstances, of there's our is the an terms be. because of for we're year. to know we with don't that In impact And severe, unprecedented or COVID-XX pulled a of

a expectations to into Now both our not the us from on side coming again, the that we've a that have segments, business. of to it we trends is we there the of obviously but if that looking business are in year, very April. seen extent, year. had in the resurgence going COVID-XX we IRF position in community or anticipate in that's may materially an could fall this of impact And trend the different winter medical beginning back continues, in XXXX many If some end be particularly the of that at next which put is optimistic on by the where

community. that be going prepared be we'll the will medical to into for believe better with think deal case and the I we response, entire that the Although,

Mark Tarr

very to on year. February. remain XXXX. hospitals X pleased We're prospects, as up our this be We Doug We long-term very hospital committed in opened growth to in bringing Murrieta, our starting already California, mentioned,

on We new And in and Virginia. health then Fredericksburg, coming coming then one on in have the the June, we'll X year. agency of have end acquired Toledo towards we've home

But very growth we're prospects excited very about our the excited, long term. Lynchburg, So actually, we're for Virginia.

Douglas Coltharp

pleased very in most development, even projects to And the work acute that moved continued organization Whit, about things comments, as in adding our team I'm to make progress status. both pipeline care the to individuals mentioned the and one and our as side, home on I has at have business hospital of my is development business on

Operator

question comes Jefferies. Our Tanquilut line Brian of next from of the

Brian Tanquilut

we you guys a all and doing we unemployment. I first COVID, my are I of well safe. high we're hope possibility question facing assuming past look recession, as guess normalize, is, the

of your and talked I prepared in done resiliency you've well you've the think, the Mark, tough or how you okay remarks, in your past in about business done environments.

that given record through track kinds of can how the environments, thinking that us provide? you have walk you the services guys about So just that and you're especially in recessionary you

Mark Tarr

Yes.

great nature doesn't been impact it the our just the deal. senior not So seen in anything, If it's the population, Brian, fact recession-proof, we it's historically given business patients an of and recessions. our from impact

clearly sense as there and I see [indiscernible] through said, We'll from a impact give some this, be of we near-term will normalcy. So pandemic. this

to continue our services for believe grow. that We demand the will

home we're settle down, earlier, the committed will things pandemic. on said long-term there believe our front both significant We I As of prospects to opportunities segments. the that growth health once in be

that we that side have opportunities markets the attractive believe on of We of a we'll IRF growth the number business. have our outlined

our So and grow. we're opportunity of the to for services underlying continued the very in confident drivers need our

Brian Tanquilut

growing that. of you rate well appreciate quite second then any Barb. driving in thinking for guys. for like thoughts differentials? guess faster Medicare been question has we there MA be the terms book? on than the what's of rest about And I Is Advantage I is that Yes. Or my anything should growing

Barbara Jacobsmeyer

growth have it's really I proposition. Medicare them think value we data, I side, of their don't a the things understanding but data. been on mean, couple have the about we claims

a nursing provider. can to compare much markets a particularly in we obviously skilled that the the information we our show readmission rate becomes to less MA that when cost in how bring facilities to So

we really the moved side to talked CMG level away those I allowing convert when value stroke really MA DMs to are our So about that's the from -- the us on past, as certifications to can particularly helped Doug been the what's have hospitals. has proposition, And being that's many Medicare. so over been the them years, on understand really the the like think the admission, we've in piece with a of side per we

made progress there. we've great So

Douglas Coltharp

Yes.

of differential Medicare our quarter for and to do patient a Barb down Advantage rate, but in with percentage of has it suggested, to business large to increasing Medicare Medicare payment was that X%. book And fee-for-service part mix. moved the case relates between Advantage to fact we as the also the Our first that an

first the was in and As for in carries XX% discharge. I mentioned, mix revenue that quarter, higher patient of stroke, our Medicare a Advantage per

Operator

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

A.J. Rice

behind of of you assisted on think, I also about evolving? the of I of their those living the just of out mention we the how lockdowns and the driving talked or seeing in because in health. the Anyway, X post-acute referrals -- volumes versus the can is of coming -- sense home track I when home then risk of main taken one softness may people others? visits worried of the taking each sounded on like get lack how It the setting, that, in there about health guess guys they're each add you was Can those in and a separately, one we think say dip care lockdown. home on the the can -- roughly they're obviously, drivers when you're acute area you much

Barbara Jacobsmeyer

It's to made our totally, bit up difficult that total we them referrals. has down high-teens to pin but think elective mid-teens of a of the component historically surgery little level

of virtually three as decline much care, but of hips They're significant we those decline -- we've or that's those the by components. seeing the from dry in not procedures kind a pretty the basis of less a patients those for risk When we dropped seen seen rejecting at points. little of to a and we've a up haven't seen admission, some referral orthopedic have significant. all conversion look results break So X in still and about components a because been our Those joints fracture, happening shoulders. of are if

are current of initial this then jumped sort our to a But the up they're weaning that the we LUPA but about time. down level rates at that of accepting visits we're from level to seeing seeing the admission, patients a point have XX% pre-COVID sort mostly X% are

via with not one's home more care we're billable bit space. slim here admission of are conversion really And support little in less the telephonic a interactions. once fairly mentioned, which lot slim want of interventions, they that Mark that number patients to the a get doing So a in the as so of yet those they visits

Medicare in those and impactful nurses relates patients relates but they IL rates and support count that who our well at is we way, it but can't to access certainly The having it We to some not it communities are can stage, as visit. will patients bit our less the we substantive that say would in, as therapists. I AL at component the do see revisit we because admissions is LUPA a this point. hope less might that more a little let But as serving were

opposed more as in pure we've so created as market to being well LUPAs And that just seen volume.

elective our So procedures as of I low been census not and have the would at moment. say declines, result most a hospital occurring volume of

A.J. Rice

with a everything obviously, clearly a that's you played been Or this But There's watching would, smaller thought were worse? some from a noise drive that? be would of I deal follow-up people they to available now the are of PDGM, for else need better know then you offer to something? out. more of tracking you how when And sort you seeing is face-to-face, that's the that people PDGM federal said go willing just maybe that or the lot it's health guess or have on some we I are can't somehow crisis given agencies. Okay. time able maybe of but on. hard complete And that home guys take mitigating to is the given assessment about the you how inquiries an money to was you it going thought as that

Barbara Jacobsmeyer

Yes.

So me let your address of sort first question PDGM. about

a the which through I PDGM of we painted pretty process the that was feeling bit our with quarter. think recurring impact the costly I frame, PPS realm we LUPAs within about think better coming mid- going PDGM would. time a little half From the into a be kind hoped were from managing expectation rate good the to and more was took had wind moving of that it feeling down basis, We were turn a of expanded. like PDGM. as in that we March back fourth basis, out March we as But per-episode the the hard in far slightly as were pretty found transition the that than effectiveness the and actually rate definitely we

think the about acquisitions. the then necessarily into PPP are we're on Medicare, perspective all Act small by loans live acquisition And created dollars, to of of PDGM enter to discussions we folks for the have a seeing proactive not pro Cares having and the payments of What the is, through struggling those from combinations bridge advanced obviously, to these providers, side agencies are it. of who those rata small share a kind time

those X the is slowed federal But that in right haven't we have seen wide-scale talking so things that about programs reason down now. front. on think transactions sort level support of we And interest a

Operator

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

Philip Chickering

back larger believe impact a script said from Going staying in the I hospital. hospital I sure that staying directly to of not length the hospital to IRFs seeking the the patients. that looking you neural at some then within want those for understand in second, are make patients I and or care, but stays an patients the the was in just are longer in being in I stroke patients the just Are discharged IRF home? the these where going? into setting know patients

April Anthony

Yes.

I think both. it's actually

hospitals have situations, Those those that units. don't part their other in and they elective You patients because they keeping. the things. those do are surgeries have And that the have distinct are

particularly it much long those impact in so those I taking for we times COVID-XX patients was seeing overflow not XX back the waiting It were that The of length is come. initially, March in there distinct coming have a the did we're that results stay April. standpoint But longer So back, and early to those tests. -- those were part -- quicker not the that get were feel from hospitals also lot and staying our XX do of units was patients days now. days, test are results that the

quicker we're so patients able get back half to the much now we as move acute IRF of our to of April. the those hospitals And into out care

Mark Tarr

they that important point sure had making open their really lot managers case a to where I all care. work they and to patients these lot to on COVID note or think from visibility down them types the and all winding and hospitals suitable capacity hospitals acute care also of started planners they sent for relative it's And took of our for of patients, when discharge -- what our types is that acute to patients care home what away of and gave be phone. had us a would

think also continuum acute relative the just flow post-acute. very overall the was I through from it distracting of to to patients

in about hospitals. I pattern elective access a the planners very discharge will to what's on-site be ability will the more said, have think that more important with have normal it's know in know lot the a increase procedures, note going to there'll care -- I acute to with on like that So

Douglas Coltharp

down a in of to period they to longer The IRF well of and last pre-authorization her than of responses for benefit plans MCOs anticipated folks on Pito, see more specific the those level. the April I Difficulty] market-by-market our before become way think impact starting of down [Technical now have relief one thing took make those the to of benefits Medicare and the be Advantage volume. time is speaking for in that, regulatory have it way clarification any would guidelines for now We the general, could within time as of to [Technical that and the alluded to earlier took the within most And disseminated their just to on had items that the the described it believe on actionable we're Difficulty] the Barb side. elimination all volumes.

Philip Chickering

the that. of if coming point? April, this understand then And a And you're seeing it, telemedicine, of the game if Okay. reimbursement margin to this the is could health ask ton pressure I can televisits at becomes sense. starts reimburse televisits on home it and That for -- But I changer for margin Medicare lack permanent? from effective how a makes your be of

April Anthony

the that done interaction. seen thoroughly eyes health can that. think certainly valuable a for televisit be their and patient, observing taking on their replacement vital her directly, status. well is There communicating It's putting the I signs, we nurse have a no

we think addition it's And small we and business. for on that so it substitution but just an do significant but something be care, would see think live hands don't would never equivalent an replacement that hands-on a We could perhaps to as it trade. potential we of supportive a interaction, think volume be

Operator

[Operator Instructions].

Sarah from line question of will final Piper Sandler. come Our James of the

Sarah James

comments as made if I'm from earlier the to April the beginning normal the visits. out of get until difference be of I the vaccine to April, -- you they through on is to new to within one So consumers to any the or 'XX on have a end the living might towards up health health of month you open end the beginning Are of this used about of they wean with a different their you month the contagion of than saw visits? some that follow there home choosing wanted saw consumers of sort back sort the wondering month in created. opening that

April Anthony

I seeing actually And are it's We think that. return multifold. a to

I of you that seeing realize think without we're these week we're, ALF go that kind eighth of some time. period particularly, the pandemic, folks extended of of for communities care this that -- ILF into if again, that can't

dramatically. more for and caregiver as both so in could available our the readily the PPE, come the patient And for risk and proper went as fully in became dawned down we PPE community

not therapy or just some get week your the X factors. of those home, without also risk of individual it, same to So open we've facilities guidelines of your up your duration those seen you kind it this of PPE. of their of but of it. reality, falling, to a back a into in us full But We've really go X the quality under with only seen that starts and you combination to able life, and be X may affect not and notice of weeks patients

to come so this. postpone to bring negative an that And We've going able patients term, term, impact. the conversations and long really back. a been elective choice. I realization it have it's might be really I able have to patients that is with to as but short I have think health need this not

about that we move the bit point we're We of that rate, frame. to of seeing high hit time that sort LUPA into we And hope May XX% a down at a in certainly a hopeful as have little I begins come recovery. seen now so slight mentioned, direction. our And signs

Sarah James

in Great. community And April shift of the that starting mix the last the referrals community us institutional see question institutional you call, the versus referrals of referrals? community are in and to less. any And to trend? is, pay guys understand earlier a payments reversal mentioned from difference in help you that you away then Can

April Anthony

last referrals, progress two believe. weeks seen April, driven of by being a in bit of overall and the trend, In Yes. we we've little referral institutional our is it

don't hope see procedures and of of is, sign opportunity. The encouraging that that steady as have reimbursement increase fact, to episodes community. reimbursement an front are early elective differential, trickle begin I of that in early in institutional number states that's the slowly a right that between flow so statistic versus And come a to in me, online but there a differential we'll back

difference to so could definitely pull system. call. in is data, Crissy and within that the there that that structural PDGM more the And can a just we specifically provide But reimbursement after you

Operator

Ladies and now Crissy any to gentlemen, that Carlisle to remarks. additional turn was closing floor for question. the I'd like over back our or final

Crissy Carlisle

for again today's you call. Thank joining

questions, additional call have you at me If XXX-XXX-XXXX. please

Operator

Thank This you, Encompass conclude Earnings today's Quarter gentlemen. does and Call. Health ladies First Conference XXXX

may a now disconnect wonderful and have You day.