PDPM Layoffs Could Send Some Therapists to Home Health, But Former SNF Workers Not Targets

Both the skilled nursing and home health spaces are in the midst of shifts to new Medicare payment models, and despite widespread reports of therapy layoffs at nursing homes, a leading player in the home care space says it isn’t necessarily targeting the cohort of available therapists.

Encompass Health Corporation (NYSE: EHC) has been monitoring the reductions in staffing and therapy hours in the skilled nursing space, according to CEO for home health and hospice April Anthony, but aside from bringing a few new therapists into the fold, the company doesn’t see much upside from Patient-Driven Payment Model (PDPM) upheaval.

“I don’t really anticipate that we’ll see much benefit from that other than possibly just a little better improvement in net new hires for that discipline — perhaps slightly less expenses than in the past,” Anthony said Friday on the Birmingham, Ala.-based company’s fourth quarter earnings call.


Anthony’s comments came in response to an analyst question about Encompass’s anticipated 3.5% increase in wage expenses for 2020: If PDPM-related challenges led to a glut of therapists looking for more stable hours or full-time work, perhaps the company could see some upside on labor costs.

But Anthony quickly pushed back and noted that Encompass had not laid off any therapists and had no plans to reduce wages, additionally pointing to the company’s single-digit employee turnover rate.

“It may be that in the future the rates for that sub-sector begin to moderate because of a supply/demand imbalance,” she said. “I would say we’re not seeing that yet.”


Barb Jacobsmeyer, president of Encompass’s inpatient rehabilitation hospital business line, emphasized that the company hasn’t historically recruited therapists from the skilled nursing setting.

“We’ve never tried to be competitive with the rates that are paid to a therapist in the skilled facilities. The settings are very different,” Jacobsmeyer said. “Even though we do hire therapists at a competitive rate, we’ve never tried to compete with the skilled rate, so it doesn’t really create an opportunity from a rate perspective for us.”

PDPM shifts skilled nursing facilities’ incentives away from the number of therapy minutes provided, and toward accurately capturing and treating resident conditions. Soon after the model took effect on October 1, some providers in the space laid off therapists or shifted staffers to part-time status in a bid to reduce expenses; Genesis HealthCare (NYSE: GEN) cut about 6% of its total therapy workforce, while an SNN poll revealed that 43% of operators in the space made some amount of therapy layoffs.

The skilled nursing industry has had more time than home health operators with its new payment structure: The Patient-Driven Groupings Model (PDGM) kicked in on New Year’s Day, while SNFs have already begun to see the firm effects of PDPM after a full quarter under the model.

But while there isn’t a direct connection between the models, several industry voices last week told SNN that SNF operators can ignore the PDGM change at their own risk — particularly as the government continues to mull an eventual shift toward a site-agnostic payment model.

“That sort of blinders-on way of looking at the post-acute care continuum is dangerous, because the regulators and the payers are not looking at it that way,” Aegis Therapies lead consultant Bill Goulding told SNN. “They’re clearly moving towards a setting-agnostic payment system. And the patients don’t experience it that way either. It is part of the continuum.”

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