LHC Group Inc. (Nasdaq: LHCG) President and COO Joshua Proffitt is more bullish than he’s been in “quite some time” about the growth potential of the company.
That’s because the overall increased demand for home-based care has created an environment for top-line growth.
“The strong demand that we’re experiencing really shows no sign of letting up, with at-home care coming to the forefront right now,” Proffitt said during a presentation Tuesday at the Cowen 42nd Annual Healthcare Conference.
Lafayette, Louisiana-based LHC Group provides home health, hospice, home- and community-based services (HCBS), and facility-based care. Its 30,000 employees deliver care in 37 states and the District of Columbia.
During the presentation, Proffitt highlighted some of LHC Group’s growth levers.
Regarding the heightened demand for care services and the top-line growth it would bring to LHC Group’s home health and hospice segments, Proffitt noted that the ability to get more of the company’s clinicians back and reduce reliance on contract labor would be important.
“In addition to accelerating our growth, our labor costs should be stabilizing,” he said.
In terms of organic growth, LHC Group expects to see an estimated 5% to 7% on the home health side, with 6% to 8% growth on the hospice side.
“We’ve most definitely experienced prior years north of those levels,” Proffitt said. “So I would say that’s a pretty conservative proxy for what the next few years could look like organically. As the labor environment continues to stabilize, we could see organic growth higher than those levels.”
Aside from organic growth, LHC Group expects to drive growth through its joint venture arrangements, with selective, tuck-in M&A activity, according to Proffitt.
Most recently, the company finalized an expansion of its JV with Baptist Memorial Health Care, adding Elite Home Health in Jonesboro to the partnership’s portfolio. LHC Group first entered into this agreement in 2017.
Moving forward, Proffitt noted that LHC Group plans to be purposeful when it comes to expanding the company’s footprint to drive additional market-share gains.
“One of those areas that we’ve talked a lot about is that untapped growth from co-locating our home health with hospice, or with an HCBS,” he said “You’re going to see more and more of that between now and 2023 and 2024. If you put all those growth levers together it gives me a lot of confidence in those out years.”
Referral rejection
Proffitt also touched on referral rejection during the presentation.
Typically, referral rejections happen because providers are unable to take on the high volume of patients looking for care services due to staffing shortages.
In January, the home health industry’s rejection rate was 58%, according to a data analysis from CarePort, a WellSky company.
In LHC Group’s case, the company is significantly below the reported rejection rate, according to Proffitt.
“We’ve seen an increase in referral non-admitted, but nowhere near as dramatic as what we’re hearing and reading in the space,” he said.
Since the company’s rejection rate is lower than average, Proffitt believes it’s unlikely that referrals are going to competitors in lieu of LHC Group.
Additionally, the company is taking steps to ensure that patients eventually receive services.
“If we have a slight delay in processing the admission, we’re still staying in contact with both the referral source and the patient, as appropriate,” he said. “[This is in order] to get them, as quickly as we get an employee back from quarantine, or are able to hire. When you look at the growth in the referral sources, … you want to keep good relations and keep that sticky, so to speak.”
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