Addus CEO: Medicare Advantage Plans Starting to See Personal Care’s Cost-Savings Potential

Addus CEO: Medicare Advantage Plans Starting to See Personal Care’s Cost-Savings Potential 1

Like others throughout the home care industry, pinnacle executives from Addus HomeCare Corporation (Nasdaq: ADUS) continue to be enthusiastic about emerging Medicare Advantage possibilities. The Frisco, Texas-based organization presently has contracts with massive MA Plans to offer personal care offerings to their contributors during 2019. It continues to get hold of referrals below those contracts. Addus President and CEO Dirk Allison stated Tuesday in the course of a convention call with traders. While Addus became already optimistic about its MA inroads, the agency has become further advocated by means of the April statement from the Centers for Medicare & Medicaid Services (CMS) increasing supplemental benefits flexibility to better take care of chronically ill individuals.

“We are running with those partners to gather suitable records to permit Addus to assist Medicare Advantage Plans as they retain to amplify and refine their supplemental advantages offerings,” Allison stated. “I accept as true with this a nice step closer to increasing the provisions of our offerings underneath a value-based price system. We keep considering that these opportunities will expand as MA plans begin to recognize the fee-saving capability of personal care offerings through a greater incorporated care delivery version.” Overall, Addus’s first zone 2019 net carrier expanded by using 27.2%, jumping as much as $139.3 million compared to the $109.Five million the enterprise netted in Q1 2018.

Meanwhile, Addus’s Q1 internet profits checked in at $4.9 million, equal to the $4.9 million the business enterprise pronounced inside the same period final year. The employer’s domestic fitness and hospice carrier lines brought $10.6 million in sales. Addus is often a domestic care offerings organization — with more than 33,000 employees — that presently presents domestic-primarily based care offerings to tens of thousands of customers across dozen states, with mainly strong market presence in Illinois and New Mexico.


“We are happy with our strong economic consequences for the primary area, marking a notable begin to 2019,” Allison stated. Q1 profits reflected a strong growth in same-shop revenue of 5.6%, frequently driven through higher sales within the New York marketplace due to the ongoing narrowing of provider networks inside the state. Addus also noticed referral volumes inside the first region return to greater everyday ranges in New Mexico and Illinois, consistent with Allison.

“We are pleasantly surprised with the aid of the Addus organic boom of 5.6%, which became nicely above their target of three% to 5%,” Dana Hambly, an analyst with impartial monetary services firm Stephens, advised Home Health Care News in an electronic mail. “While the private care enterprise continues to be widely considered as a commodity-kind enterprise, we assume the overall shift to fee-primarily based care will start to discover the possibilities of this provider to hold down fitness care fees, mainly for our most prone citizens.” “As other states circulate to slim networks and as Medicare Advantage plans provide the carrier greater widely, we see this as a massive possibility for businesses like ADUS,” Hambly delivered

Acquisition plans

Addus is transferring closer to the end line on its deal to accumulate the belongings of Richmond Hill, New York-based VIP Health Care Services, a home care issuer that serves approximately 1,250 clients across all 5 New York City boroughs Island, and extra counties. The deal, which was first announced ultimate November, is expected to shut on June 1. “Together with our South Shore operations in Long Island, we believe that VIP will allow us to offer full-marketplace insurance to our MCO companions each on Long Island and the five boroughs,” Allison said.

VIP Health Care Services has annualized revenues of approximately $50 million. Addus and VIP Health Care Services could have blended sales of extra than $110 million in New York upon the entirety of the deal, which will become the enterprise’s enterprise second-largest marketplace at the back of Illinois. In addition to VIP, the agency’s improvement crew is likewise working with other acquisition objectives and making development on some of the capability deals, in line with Allison.

Illinois charge timing problems

The lack of an official fee boom in Illinois to offset the Chicago and South Shore minimal salary growth stays on top of my thoughts for Addus. Addus saw their first zone margins impacted through about 70 foundation points compared to the margins within the first sector of 2019. “Our group has persevered in working with the national affiliation to educate the Illinois kingdom leadership at the need to bypass the price growth, and we hold to consider their knowledge and guide already accelerated for our industry,” Allison stated. “While we have no assurances that the upcoming country price range will encompass this fee growth, we accept as true that we were a hit in demonstrating the significance of passing a compensation boom to offset the mandated minimum wage increase the enterprise experienced.”

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