The injured and ailing in need of a little TLC need look no further than LHC. LHC Group administers post-acute health care services through home nursing agencies, hospices, and long-term acute care hospitals (LTAC). The company operates through two segments: home-based services and facility-based services in rural areas in about 20 US states. LHC's home health nursing agencies provide care to Medicare beneficiaries, offering such services as private duty nursing, physical therapy, and medically-oriented social services. Its hospices provide palliative care for terminal patients, while its LTACs serve patients who no longer need intensive care but still require complex care in a hospital setting.
LHC also operates a handful of rehabilitation, disease management, and other specialty health facilities. Its Telehealth Services segment delivers medical care remotely via telephone, Web-based applications, and e-mail. The use of telehealth expands access to care to more patients and rural locations, as well as provides for better monitoring of patients with chronic health problems.
The company gets the majority of its revenue from its home-based health services, located primarily in the Southeast and Midwest regions of the country. Medicare payments account for the bulk of its service income. Given that such a significant portion of the company's revenue is derived from federal payments, LHC is vulnerable to changes in reimbursement levels to Medicare.
LHC also partners with not-for-profit hospitals because such joint ventures tend to provide a more attractive return on investment for the company. It has such agreements with Baptist Health System (Alabama), West Tennessee Healthcare, Southeast Alabama Medical Center, East Alabama Medical Center, Three Rivers Community Hospital (Oregon), Woods Memorial Hospital (Tennessee), the continuing care arm of CHRISTUS Health (northeast Texas), Texas Health Resources, and Methodist Health System (Texas). In total, it has more than 100 joint venture locations in close to 20 states across its home nursing, hospice, and LTAC agencies, although most are in collaboration with hospitals.
The company saw flat revenues in 2011 due to an increase in the number of people covered, an increase in admissions, and the additions of 2010 acquisitions, offset by the effect of a government rule for 2011 that reduced home health Medicare rates by 5.2%.
LHC's net income dropped by 127% in 2011 due to a payment made to the US government pursuant to a settlement agreement involving Medicare reimbursement for home health services for 2006 to 2008, and an increase in the provision for bad debts due to the rise in commercial receivables.
The company pursues a strategy of expanding into new markets through organic development or acquisitions. In 2012 ,in partnership with Texas Health Resources and Methodist Health System, it acquired Huguley Home Health Agency from Huguley Memorial Medical Center in Burleson, Texas. In 2011 it bought hospice locations in Alabama and Louisiana and entered into a home health joint venture in Kentucky.
The Patient Protection and Affordable Care Act first enacted in 2010 calls for a number of changes to the way Medicare is paid out. For example, the Affordable Care Act bases certain reimbursements for hospice providers on productivity and efficiency levels, meaning hospice providers will have to make the necessary adjustments to ensure they are complying with the new rules, which are being enacted between 2010 and 2015, in order to receive payments.
Unlike its Medicare funded activities, demand for services is an area that LHC is not expected to have problems with. Home health care, long-term care, and nursing services are expected to see a surge in demand with the aging US population.
Chairman and CEO Keith Myers, who cofounded LHC Group in 1994, owns nearly 13% of the company. – less