Home care and hospice provider Enhabit said it plans to close or consolidate eight to 10 of its branches as a result of financial challenges caused in part by a recent home health rule from the Centers for Medicare and Medicaid Services.
The company, which is lowering its guidance for full-year 2024 net service revenue, said its primary focus now is to grow cash flow and pay down debt. Enhabit also said it will try to consolidate facilities rather than close them, but will evaluate each of its branches based on their performance.
Related: Medicare Advantage rates stressing out home health providers
CMS recently announced three final rules, one of which will increase payments for home health and dialysis providers. The agency's initial proposal in June sought to lower reimbursement payments for home health providers.
But the company contends the rates aren't keeping up with costs.
"This is the third straight year where the CMS home health rule establishes rates that fail to keep up with inflation and instead present a significant headwind to revenue growth," President and CEO Barb Jacobsmeyer said during an earnings call with financial analysts Thursday. "Our current review has indicated that we should take steps to consolidate or close [some] underperforming branches by early 2025. For branches that we do not close, that are not performing as well as we expect, we will further remediate their underperformance with additional corrective actions."
