Genesis HealthCare explains business plan amid losses
Since returning to the ranks of publicly traded companies a year ago through its merger with Skilled Healthcare Group Inc., Kennett Square's Genesis HealthCare Inc. has had a rough ride.
Since returning to the ranks of publicly traded companies a year ago through its merger with Skilled Healthcare Group Inc., Kennett Square's Genesis HealthCare Inc. has had a rough ride.
The price of its shares has plummeted to $1.80 from $8.77 Feb. 2, 2015, the day the merger was completed, and the company this week reported a net loss of $426 million on revenue of $5.6 billion in 2015, up from $254 million in 2014, when Genesis had $4.8 billion in revenue.
Genesis' chief executive, George V. Hager Jr., assured analysts Tuesday on a conference call to discuss the earnings report that the company was in good shape for the long haul, despite near-term turbulence in the nursing-home industry.
"Our focus on reducing avoidable hospital readmissions, managing down length of stay, and voluntarily participating in value-based programs do in fact challenge our near-term top line, but they are absolutely vital to our long-term success," Hager said.
Chris Rigg, an analyst with Susquehanna Financial Group, said on the conference call that it appeared the widespread shift in health care to paying for results rather than for a particular quantity of services was bad for the nursing-home industry, based on stock-market performance.
Hager acknowledged that some operators were trying to eliminate nursing homes from the continuum of care to meet financial targets in so-called shared-savings programs or bundled-payment arrangements.
Under bundled payments, one provider - say, a hospital or a specialist group - receives a single payment from an insurer that is supposed to cover all services needed for a particular episode of care.
One example of this is the increasing tendency of some orthopedic practices to send patients straight home after knee replacement, skipping a short-term stay in a nursing home for physical therapy.
Genesis' strategy, Hager said, is to be a significant provider of short-term services for people who can't go home immediately after surgery, while other operators remain with the traditional long-term-care model for nursing homes.
"Ultimately if you can replace a $3,000 acute-care day with a $500 sub-acute day and achieve the same outcomes, you will be successful in a value-based world," he said.
215-854-4651
@InqBrubaker