With more than 210 home-health, hospice, and pediatric home care locations, Encompass Home Health & Hospice is not only one of the leading Medicare-certified home healthcare agencies in the United States—it’s also one of the most forward-thinking agencies out there. In recent years, the company has jumped headfirst into Bundled Payments for Care Improvement (BPCI), the innovative initiative of the Center for Medicare and Medicaid Innovation that was sparked by the Affordable Care Act.
“I guess one could assume that because we represent more than half of the participating home-health providers in the country that we’re putting a lot of faith in the program itself,” says Luke James, chief strategy officer of Encompass.
“I think it’s less about faith in the specific program we’re participating in, and more about faith and belief in the services we’re providing and how we’re able to improve those services over time in a manner that increases patient outcomes and creates savings to the healthcare-delivery system.
“It’s not a perfect program, but it allows us to prove . . . that we are capable of producing increasingly better results and bringing real value to the overall delivery of healthcare services in our country.”
In fact, Encompass carries more than 50 percent of the 100 home-health providers participating in BPCI, a reflection of the company’s willingness to take risks and share in the savings that are produced by the outcomes achieved.
“We’ve been able to partner with technology companies that help us identify risk within our patient populations, and this allows us to take the risks presented by these programs in a measured fashion and have confidence in our approach,” James says.
Of course, in addition to BPCI, James must deal with ACO and Comprehensive Care for Joint Replacement participants, among other payer partnerships. The challenge is in finding balanced, healthy growth to position the company for success.
While Encompass, as a home-health organization, can’t lead an ACO, it can lead a BPCI Model Three, which James describes as an exciting proposition for the company.
“We had participated in ACOs as a downstream provider, as a preferred provider, and as a partner. We had participated in BPCI Model Two with hospitals and physicians, but to lead one ourselves, have control over that, and truly own the risk and the outcomes for better or worse—it was up to us and what we could control,” James says.
“It’s not a perfect program, and there are certainly flaws in there, but it allows us to prove our value to the market and to ourselves that we are capable of producing increasingly better results and bringing real value to the overall delivery of healthcare services in our country.”
Rather than rely on legacy locations for its sole source of growth, Encompass’ acquisition strategy has been to seek out new home-health agencies. It has been full-steam-ahead in this regard for the past decade.
Agencies aren’t able to move into new geographies on their own, since the Medicare home-health marketplace is highly regulated. There are numerous moratoriums in place, and some of them are “certificate of need” states, where the state doesn’t even issue new provider numbers.
“The only way to get into new markets is to acquire, and we have been one of the most, if not the most, consistently active buyers over that span,” James says. “Others have been highly active and then had to stop because the strategy didn’t work out. They bought certain companies and couldn’t integrate them or had other challenges. But we’ve been able to be highly consistent in the volume of transactions that we’ve done.”
The secret, he shares, is to not take on too much risk and ensure that the company doesn’t chase bad deals.
“Our philosophy is that you can’t pay too little for a bad deal or too much for a good deal—within reason, of course. We’ve found that you can get yourself in trouble by trying to close a certain number of deals or get into a certain geography by taking on a company that’s just not a good fit,” he says.
“We try to buy the highest-quality companies we can and those that we feel are going to be the best fit with our organization. And if that means we do a few more some years and a few less in other years, we’re good with that.”
James believes the real magic that makes Encompass’ acquisition strategy successful is its integration team doing things similarly across the organization so it’s not just a roll-up of sorts. “What we really strive to do is for our integration team to truly integrate each acquisition we buy into the culture of Encompass, such that every office that we’re buying looks and feels just like every other Encompass office across the organization,” he says.
“There are a lot of companies in disparate geographies around the country that go by the same name but operate very differently from one another. But here, it’s truly one company, one heartbeat, one culture.”
James admits that he didn’t know what home health was until 2003, when he was doing ride-alongs with a clinician for his summer internship, traveling from home to home to treat patients. One year later, he began working with Encompass as a financial analyst, working his way up to VP of business development and then to his current role as chief strategy officer.
His direct responsibilities include business analytics, helping operations and sales with data reporting and dashboards; M&A issues, where he built his team and aided in sixty acquisitions in the last twelve years; and working on strategic partnerships.
The majority of his time is working with the strategy team, making sure that—as healthcare continues to evolve—Encompass proactively seeks those opportunities out to share its value proposition in ways that can benefit those parties.
“All healthcare providers have limited bandwidth and limited clinicians and caregivers,” he says, “so you’ve got to make sure that you’re focusing all your resources and those caregivers on the right patients at the right times in order to yield the best outcomes at the lowest cost.” AHL