Addus HomeCare Corporation (ADUS) Earnings Call Transcript & Summary

Good afternoon, everyone. Thanks for joining us for the second day of Home Care -- of Bank of America Home Care Conference. And it's my pleasure now to host this session with Addus. And today, from the team, we have Dirk Allison, the Chairman of the Board and the CEO; also, Brad Bickham President and CEO; and Brian Poff, who's Executive Vice President and CFO. And very nice to see you again, gentlemen. Thanks for joining us for this event. And so they agreed to go right into Q&A. [Operator Instructions]

So we'll go right into the most common topic through this conference, but also the last few months really in healthcare service around labor. Obviously, labor shortages. We talked about it before the pandemic, but now things got much more intense, so to speak. And Q3 was pretty rough for many operators. So can you frame to us in terms of how do you view those pressures in terms of how much is temporary? How much is the long term?

Yes, I'll start. I think you have to look at it, in our case, by segment. So if you look at our largest segment, personal care, which is 80% of -- roughly 80% of our revenue. We're not seeing quite the pressures that we do on the clinical side on the personal care side. We've always had a challenging hiring environment. So if you look pre-pandemic on the personal care side, record low unemployment, particularly in some of the key demographics where we source caregivers from. So we're kind of used to a challenging hiring environment. So really, the pandemic hasn't exacerbated. It's just kind of the same but different, if you will, on the personal care front. We actually had record hiring in September this year, actually our best hiring month on the personal care side in 2 years. I think a lot of that was probably due to some of the enhanced unemployment benefits phasing out early September. Our hiring numbers in October were solid, not quite September number, but very solid. And November numbers as compared to the previous year were actually pretty good hiring numbers. So if you look at personal care, it's always been challenging. We still have opportunities to grow our business if we could kind of ramp up our hiring even more. But that was true pre-pandemic as well. We're kind of fortunate to be in a space that trying to find your next client or referral is not a problem. It's really being able to find the labor to staff that. When you go to the clinical side, we have seen, similar to our peers, challenges, particularly on the nursing side in recruiting and retaining staff. A lot of competition out there for those individuals. We've had to be proactive in making some compensation or salary adjustments to retain individuals. We're also paying a little bit more for those that we recruit in. But I think our primary focus is we're trying to minimize or limit our exposure to having to go to external staffing agencies. So we've been able to largely be successful in that respect. So I haven't seen having to pay that premium dollars. We'd frankly rather retain staff, and we need to throw a little more money at them to retain staff and avoid having the staffing piece is our preference. But certainly, a challenging market on the clinical side. And I would view it as somewhat temporary. Now it's temporary 6 months, 12 months, I mean, I think it's going to be a challenging 2022 on the staffing front for clinical services.

So when you kind of think about the outlook for wage, so you mentioned here, you have to respond to the market situation by raising wages. So how do you think about the wage growth outlook? And how does this compare to prior years?

Yes. I mean, it's probably -- I mean, I think we -- previous years, we're kind of more in that 2% to 3%. We're probably, on the clinical side, more in that 3% to 5% wage growth at least in the near term. I don't know if you...

Yes, for us, realizing that most of our wage pressure on the personal care side comes from the minimum wage increases that have been going on for a number of years in various states. And the interesting thing is when we viewed this 5 years ago, it was probably the #1 thing we talked about, right? Maybe at the time kind of the Illinois state budget. What we've seen over the last few years is that as states have raised their minimum wage, they've been very understanding of the need to also compensate providers such that we can not only pass along the minimum wage rate increase that year, but also maintain our margin. And so on the personal care side, the majority of our coverage has been in those states and has done -- quite frankly, been really a benefit for us. Now we're starting to get to some of the end of those, and we'll continue then to have the normal increases. But on the personal care side, as opposed to the clinical side, the rating environment has been pretty strong in the last few years.

And you mentioned Illinois. And a lot of these states had access to, I guess, more funding. So I guess maybe first on -- and I noticed that you had said before the state requested approval to accelerate the rate increase to offer this minimal wage increase. So did it actually take place? Did the approval took place? And I guess, is it effective November -- what that effective November 1?

Hasn't been finally approved by CMS yet. We were still waiting for that final confirmation. So it had been initially accepted but they had some follow-up questions that the state has to respond to. So they're awaiting for CMS response. But our understanding is that when it is approved, it will be retroactive to November 1. So that's still our expectation.

Okay. I see. Okay. That makes sense, I guess because if it's delayed because of just the approval for us it makes sense to have it retroactive. And in terms of just a bigger picture, right, across your various states, how many states really increased rates in response to this 10% higher Aetna matching? And also, there's been other support right for state budget broadly speaking. So can you just explain for us how many states that should see higher rate increases?

Yes. So when you look at the 10% FMAP and the higher rate increases, all of our states put in plans with CMS or submitted plans to CMS to utilize the 10% FMAP. We're still waiting on the majority of our states to give us kind of feedback on what those plans specifically will entail. The ones that we have seen have been Illinois is a good example where they actually pulled forward or anticipating pulling forward a minimum wage increase that was slated for January 1 to November 1. What we've seen in other markets is kind of a combination of either some sort of retention bonuses, recruitment type bonuses or a rate increases with the intention that a lot of those or a good portion of those dollars flow through to the caregivers. So we're seeing a little bit of everything across the plans that have been approved. But that's, I think, a nice tailwind for us going into 2022 is seeing those plans be approved and get the details behind them.

So overall, how would you think about the rate -- overall rate increases for your -- I guess, for your personal care business, but as the whole, on average, how does it is shaping up let's say, next year or going forward? How does it compare to what is prior to those higher rating increases?

I mean I think Illinois being the prime example. That's where we've seen probably more of the lift in the last few years. So with this rate increase coming into November, that will flow into next year, pretty consistent. I think we've got a pending rate increase from New Mexico, which is a large market for us as well. So I think for 2022, I think we see that reimbursement landscape being very similar. We've seen in the last couple of years, but we've been continually kind of getting increases in those key markets. I think if you know our business well enough, personal care, we don't have annual kind of CPI increases going to build into those contracts. It's really more specific to each state's budget process each year. So where we see rising pressure from wages will lobby for reimbursement increases. I think most of the larger markets that we're in today, they have already kind of gotten up to that $15-plus range on minimum wage. So not expecting to see as much pressure from that end over the next couple of years. I mean, obviously, we've seen in the last couple. But as Dirk indicated, we've been funded for those with our margins. So it actually has worked out just fine for us.

Great. And pending, I guess, proposal that build back better includes some incremental additional funding for home and community based services, right? Almost $150 billion. So there's pretty significant money still. So how would you expect your business to benefit from this additional funding? Obviously, assuming that it's passive. And how will this translate into potentially higher volumes or ability to break though to take on higher volumes over time?

Yes. I think the bill might better. And again, remember, it's still being discussed, whether it's going -- how is that money going to get out to providers of the home? Is it going to be matching Medicaid funds similar to the 10% that we got an additional FMAP through the stimulus plan. If there are permanent from standpoint of the thinking some states are thinking maybe there'll be a permanent increase in match. And if that happens, that's going to open the ability for the states to do a number of things. One, as opposed to temporary funding from the stimulus plan, if it's more permanent in nature, it allows them to consider higher rate increases with the understanding that companies like Addus pass along a great deal of that rate increase to our caregivers, which is important because, again, the further along we can get our caregivers up to scale of hourly wages, the easier it is for us to hire caregivers in the future. So certainly, we would think that may be a way we could get them. There are some states that maybe have somewhat of a backlog. Maybe they need to put some resources into the departments that are approving care. One of the things that we have seen is we've got more referrals today that we can deal with, but there are still states that if the department that was actually doing the assessments, if they were better organized and were available to approve more individuals, then there are folks out there that are waiting to get this type care that we offer. So from our standpoint, there's 2 or 3 ways the money from this potential bill could get to us. Even if it doesn't happen, and we've talked about this as a management team, as a company. It does still indicate that the federal government today takes a fairly positive view towards home-based care. And in that home-based care are the personal care assets or personal care patients and companies like Addus that are able to keep those people in their home and keep them out the nursing home. So we think it bodes well regardless of what the final outcome of the bill is.

I agree. I mean that money obviously -- the money does indicates that there's a lot of hope, which is quite positive, right, because it's relatively new in terms of just everybody is talking about the need for care being right at home and where patients want to be, and the wageless and all these other things. So it's definitely good to see that. Also one other topic, a little bit separate, but I guess related to labor situation more so maybe in terms of the mandates, work commission mandates for health care workers. And obviously, now we're kind of in this wait-and-see period in terms of the legal challenges and what not. But I guess some states already had these requirements put in place. So can you kind of talk about your experience so far? And then how do you expect this to play out? Is there indeed a federally-mandated vaccination requirement? And also remind us with the status of your workers pool in terms of percentage of vaccinated.

Yes. So on the vaccine mandate side, as you point out, there's a couple of the national mandates, the CMS that would impact our home health and hospice service lines. And then the OSHA mandate that would pull in our personal care service line. Those are out there. Right now, they've been enjoying. So we're kind of in that wait-and-see mode, as you pointed out. We are continuing to push our staff and encourage our staff to get vaccinated. One of the big challenges we had on the personal care side, just by the nature of the decentralized workforce, hard time, primarily trying to just ascertain what their vaccination status is. So that's really been a big focus of ours is just trying to understand where people stand on the vaccine. If you had your first shot, are you fully vaccinated? Do you have plans to get vaccinated? Or do you kind of -- right now, don't currently have any plans? So we've been spending a lot of time, energy and effort just to get prepared for those mandates and ascertain that status. What I can tell you is right now, home health, we're 90% plus vaccinated. Hospice, we're over 80% vaccinated. Personal care, we're probably sitting around 65% vaccinated. Where we have experienced mandates, New York is a good example that actually applies to our personal care service line. We had a lot of scrambling to work towards compliance with the mandate. But we actually got to about 95% vaccinated on the personal care side. So we had a favorable experience there. Now whether New York is going to be the same as Downstate Illinois or Rural, Ohio. We'll wait and see. But in any event, I think a lot of people who were hold out initially when the mandate as you get closer and closer to the date, tend to decide to get -- take the step to get vaccinated. And we certainly have been an early adopter in promoting the vaccine. When they first became available, we put a siphon out there for our employees that they could obtain if they got vaccinated. We've got a lottery going now that's focused on our field service employees that are personal care, even nurses, CNAs out there to, again, promote getting vaccinated. We've had a comprehensive communication campaign out there since the early days of the pandemic, and the availability of the virus -- of vaccinations just to push and encourage people to get vaccinated. So it's something that we've dealt with in a couple of markets. Philadelphia is another example of a market that was impacted our personal care side. Now what we did see in New York and in Philadelphia is that they actually carved out family caregivers or in the New York instance, consumer-directed employees. So that's something that we're waiting on more information from OSHA to see if that is going to be carved out as well as employees. And just to kind of frame that, that's about 35% of our personal care workforce or family members. And what we have seen in states that have implemented is they generally have carved out that population. It doesn't make a lot of sense to force a mandate on a niece who may be taking care of their grandmother may actually live in the home. And to try to push a mandate for that one-on-one care. So we're optimistic that if the OSHA mandate does come down the pike and is deemed to be constitutional that when we get further details that we may have some allowances there. That will be helpful.

Right. That's going to be able to hit 35%, that's a meaningful number there. And I guess, as we talk about labor, but I guess you mentioned before, demand very strong across the board. So can you kind of talk about and frame for us how we should think about this business growing organically the top line in terms of maybe in the more the near term? In terms of next year impact from the labor shortages, but then how does it kind of translate over time into the kind of more longer-term growth? I guess in the past, you talked about, I think, 3% to 5%. So just want to kind of reflect on that number and how much of the current situation would impact that number?

Yes, I think on the growth side, Brian will start and I'll...

Okay. Yes. I think from our -- on the personal care, it's a little different by segment. But personal care, we have said 3% to 5% kind of our expectation. I think over the last few years, a larger portion of that has come from rate rather than volume just because of the L&R rate specifically. I think as we kind of look into 2022 and beyond, I think we still feel 3% to 5% is a good number for us. I think the labor constraints might keep us from getting maybe the top end or above the top end. We've actually been above that 5% a few times over the last 12 to 18 months. So the L&R increase coming out late this year and next year will be helpful. I think we see more of that growth coming from volume. And really, that's going to come from a couple of different places. As Brad mentioned, we have a lot of demand. So referrals on an inbound basis are pretty strong. So labor is a definite key there. But I think to what we've seen in the pandemic is our fill rate, which is kind of that difference between the number of authorized hours and hours that we service for our clients because of COVID-related impacts and quarantines, et cetera, we've seen that fill rate drop a little bit. So we see that as an opportunity. If we can get that fill rate kind of back up to our historical levels, and that's really just serving more hours to our existing clients, not having to go out and find and onboard new clients. We see some opportunity there on the volume side. So I think that kind of frames up our thoughts on personal care and then on skilled home health and hospice. Typically our expectation is those have been a very strong demand for both of those services as well. I think in a normal world without a COVID impact or anything kind of unknown, we still would expect to see that organic growth being more of the mid- to single upper digits.

Yes.

Great. This is helpful. I was also thinking to ask the same question about the Hong Kong office. And I guess on that side, obviously, hospice industry has been impacted by the lower occupancy in some of the referral sources like the nursing homes and senior housing. So can you kind of walk us through what you've seen most recently in terms of the length of stay? I mean, I guess you mentioned previously that you think you've gotten some time earlier in the year, but how has it trended so far? And any kind of updates more recently in October, November in terms of what you're seeing in the hospice business?

Yes. When you look at the hospice, we did kind of bottom out our immediate length of stay, bottomed out in January at about 15 days. And to give you an idea, we're usually kind of pre-pandemic, we're more in the mid-20s, mid- to upper 20s. We're currently -- and what we've seen since January is just a nice, steady increase month-over-month in our length of stay, our median length of stay. We're probably running about 22 days now. So we're not quite back to where we were pre-pandemic, but we're steadily seeing that -- those numbers improve. And I think some of that is due to a couple of -- that's due to a couple of things. One is we are seeing facility occupancy seems to be improving. We've seen referrals from facilities with SNFs and ALFs improved, and we saw that in Q3. We anticipate seeing that improve through Q4 and into next year. With that is typically a longer length of stay patient. So that's 1 driver. The other driver and I think is what really, to me, impacted us in January most significantly is people weren't talking about death and dying. I mean there wasn't -- patients weren't going to see their physician on a regular basis. Family members weren't seeing their loved ones, particularly if they were in facilities on a regular basis. And so I think it just kind of pushed off some of the decisions around hospice. And I think we're starting to return to a more normalized cadence with the kind of reopening of -- people are seeing, going out and seeing their doctors now they weren't earlier this year. Families are getting together. And I think that's probably facilitating some of the discussions around hospice and end-of-life care.

Okay. So it sounds like you're seeing some encouraging trends there in terms of the occupancy you were building on. Can you remind us your exposure to these studies? And also because of this occupancy being so depressed, are you actively pursuing other referral sources?

Yes. I mean, we actually -- when we saw the occupancy levels reduce, and plus the fact that one of our primary markets, and we experienced in other markets, too, I mean, you didn't have access to the facilities. I mean New Mexico shut down pretty early and state shutdown until probably mid-summer of this year as far as access to a lot of those facilities, getting our community liaisons in there to meet with nursing staff at those facilities. So when we saw that reopen, we certainly saw an uptick in referrals. But outside of that, I mean, we were having to essentially go broaden our referral base. And so we certainly saw a pickup in referrals from areas that -- outside of the facility setting. So we're not quite back to where we were from a mix standpoint of facility versus non-facility, admissions and census, but we've certainly seen improvements on that front. So still some work to be done there, but we certainly did pick up a lot of new referral sources as we've broadened our outreach.

And as we're talking about hospice because it's clearly the area where you've been very acquisitive. So can you talk about your ability, I guess, to integrate these assets and I guess, execute on the strategies with some of these challenges on the hospice side, right, in terms of the census but also labor, right? As this labor situation kind of makes things easier in terms of integrating the asset.

Yes. I mean I think when you look at some of our integration, we acquired Queen City, which is a large hospice provider in Ohio. That's been I guess about a year ago now. So it wasn't kind of the height of the pandemic. And really, when you think about November and December and some of the challenges there where we really saw a spike in COVID cases, actually went surprisingly well. That acquisition has continued to grow. And we made it through the process. It was a little different than what we typically like to see. I mean, we weren't able to be boots on the ground as much as we would have preferred or get the staff in. Kind of reluctant to get everybody in to have discussions that we normally would have for an acquisition and working through the transition and the integration challenges. So not how we'd like to do it, but it actually turned out actually pretty well from that perspective in spite of COVID.

Right. And any, I guess, more kind of near term or the most recent activity because obviously, some people start to worry about the new variant and the implication for the health care services provider. So any commentary there in terms of are you seeing any impact? Or you're preparing for anything because of that?

Yes. I mean we're starting to see a little bit of a -- kind of -- in fact, if you look at this time last year, we saw probably our biggest impact from the virus. It was very widespread geographically. And so we saw a significant uptick in quarantine numbers peaked in kind of like mid-December, early January time frame. We've seen a couple of different waves since then. The most recent one was actually in kind of September of this year. We saw our quarantine numbers increase, but it's much more regionalized. And what we've seen since then, we saw actually those numbers starting to come down late September into October and early November. I will say most recently, we've seen a slight uptick in activity of quarantines on the caregiver side. So we're certainly starting to see a little bit, but it's much more regionalized than it was that last year at this time, and hopefully, it stays that way.

No, exactly. That's the hope. And I guess we just saw that New York state announced that some of these hospitals will be holding their or postponing the elective procedures where they are running out of capacity or preparing for more ones coming their way. So it's definitely very regionalized, but thanks for the color there. And in terms of -- I'm talking about integration, but just in terms of the consolidation in the industry, obviously, you've been very active there. So first, do you expect to see more or less consolidation? And also, do you expect to kind of change your targets, whether going more after home health or hospice is the primary kind of target? And also, I guess, third part of the question, in terms of M&A, because I guess in the past, you talked about acquiring about $100 million rate of revenue per year. I guess, this year came below the target. But are you still kind of thinking in the same magnitude of things going forward?

Yes. I think we have said the same thing. I think we all continue to expect consolidation to continue. I think there's obviously a very fragmented industry still out there in all 3 segments, to be honest. It's been very competitive this year. I think there's been a lot of interest in the space, not just from strategics, but also private equity backed firms are looking to get into the space. There's a lot of tailwinds. I think a lot of appreciation for home care in general. So I think it brings a lot of people into play. I think this year, in particular, for us, our target or -- I guess our opportunity set has been $100-plus million in revenues. We've been involved in several processes this year. I think some of those got to know pricing place that we were not comfortable with. It was a little surprising to us to see what some of the valuations were particularly for some hospice assets earlier this year, especially coming out of what we saw from the softness in that sector at the end of last year. But I think when we got to the end of this year, we still have projects that we're working on and still expect to continue to be aggressive. Obviously, we're very well capitalized. I think we're in a great position to continue to execute on that strategy. We've got a few projects that we're working on going into next year, particularly focused, I think, where we could add skilled home health into -- or hospice if we don't have it in markets where we have strong personal care preference. There's a lot of opportunity, we believe, for us there. But we'll always continue to look for additional personal care assets as well as those have been very accretive for us in the past. We continue to see those multiples being obviously, a lower than skill development in hospice. But we can find assets there that fill in geographically where we don't have strength today or continue to push us toward #1, #2 market position in states that we operate in, we would definitely like to continue to do that as well.

So you point about the comment around multiples. So are you seeing any change there? I guess hospice is very competitive. Some of these transactions were done at very high multiples. So any let up there? Or do you expect any change? Or do you think it's just going to stay at this level?

I think we're interested to see what we'll see early in 2022. I think this year, multiples have been fairly high, particularly in hospice. I think we've seen the market be a little quieter towards the back half of this year. I think with potential for sequester holiday to end of this year, because that start to put some of the smaller players under pressure. They've gotten some benefit from that in stimulus money that may run out. Does that bring a higher volume of those folks into market and that maybe helps to bring multiples down. So I guess we'll wait and see how that translates into '22. I think our expectation is we're still targeting assets that have multiples that we think make sense for us, which is for skilled home, health or hospice is still looking for that lower double-digit range, not looking to pay 18 to 20x. But I think we've also indicated that for the right deal, if it's very strategic for us, we would be willing to tick it up a little bit from that and pay what we consider to be a premium. So I think the last 2 larger hospice deals that we've been, HPA a couple of years ago and then Queen City last year. At the time, we're probably a little higher multiple than we typically had entertained. I think in this market, those actually look pretty attractive to us hindsight 2020. But I think that's going to be our approach going into next year. So we'll see how the market shapes up in early '22.

Yes. And when you think about co-locating, right? Because you said you want to focus on these assets where you already have strong personal care presence. So how quickly do you achieve that kind of coordination? Or is it just kind of leveraging their sources or just having access to these patients. So kind of how quickly you really see the benefits of owning 2 different assets or different types of providers in 1 market?

Yes. I mean I think if you look at our New Mexico experience, we actually share quite a few clients or patients across service lines. So someone can be receiving personal care services and also be on hospice or can also be on home health. We have good transition from home health to our hospice program. We also have the ability to enter into some unique contractual arrangements in the New Mexico market where we can actually leverage some of our skilled services, particularly on the home health side to kind of bolster the value-based proposition that we bring to the table on the personal care side. So it takes -- it does take a little while to build those synergies with the teams. And just kind of working through the processes of coordination of potential cross referrals and also where we can even coordinate staffing in some cases or some instances. So it's not something that happens overnight. But in New Mexico, we certainly see the benefits of having all 3 service lines in a market, and we're starting to see it in some of our markets where we currently overlap, particularly with personal care and hospice.

Health care, home base and...

Yes. I mean one of the things as Dirk just mentioned, I guess we had announced probably, I guess, it's been about 9 months, I guess, 6, 9 months ago, in partnership with the Homecare Homebase, excuse me, to develop a personal care platform. Right now, our skilled business, the home health and hospice are currently utilizing Homecare Homebase. We'd like to have all 3 service lines on 1 EMR, if you will. And I think that would help facilitate or further facilitate the potential synergies between the service lines.

Right. Definitely. I guess having access to the data in one place and see these patients in one, that I say would definitely help. So that's very interesting there. And I guess another topic here that we try to ask every participant of the conference. So one is obviously the pandemic maybe accelerate or rather amplify the shortage issue, but I guess there's some other things that could be more positive here for the industry. So do you think that the pandemic really changed the perceived value of home care?

Yes. I mean I think when you look at the -- there was a push pre-pandemic of moving care more and more to a home setting. And I think preference of patients is to be -- are to be treated in a home environment. The pandemic has certainly, I think, accelerated that proposition. And I mean, generally speaking, it's the cheaper setting. It is also the safer setting. And certainly, the pandemic has highlighted that. So I think from -- if you look at kind of a tailwind for the industry is certainly that further move to a home-based care setting, and I don't see that changing.

All right. And I guess this ties to my other topic here because you mentioned briefly the increased kind of perceived value of home care. And I guess we talk about personal care, and it's mostly being risked by the state. But can you kind of frame for us the opportunity to work with the Medicare Advantage plans? Obviously, they were allowed to start to add some of these supplemental benefits into their plans a couple of years ago. But we haven't really seen a major pickup in terms of contracting. So can you kind of talk about where you are as a company and where the industry is in terms of contracting with the Medicare Advantage plans and offering these additional personal care type services to their members?

Yes. I think if you think of Medicare Advantage, when they were -- to tell they could add personal care as a supplemental benefit, they've received no additional funding for that. And so from their standpoint, they had to try to figure out, okay, we can use that to help market and bring additional members on, but at what cost? And so I think most of them really limited the benefit so far that we've seen, and we're working with a number of them where we can provide care. But it's more what we would say is a very limited benefit, more like a respite care. If you think of our normal patient on Medicaid personal care, we give about 700 hours of care a year. If you look at the programs that are being offered currently by Medicare Advantage plans, most of them limited to 100 or less hours. And what you're seeing, at least in our history is that utilization of those hours is quite low. What we think long term benefits the Medicare Advantage plans is if we can, as a partner with them from the perch player side, if we can show them that we can help bend the cost curve on these high-cost patients. Our patients average 75-plus years of age, most of them are dual-eligibles. These are the patients that cost the health care system a lot of money at their stage in their life. We have now begun a couple of pilots out in New Mexico. One has been in almost a year, specifically geared towards trying to identify ways we can help with patient care, whether that's gap coverage. Making sure they go to the doctor, making sure other things are done. Or whether it's actually trying to help interact with care planners so that we keep people out of emergency rooms. We keep our people that we're serving personal care on from readmitting to the hospital, let's say, after a knee surgery. If we can keep them out for 60, 90 days, currently, the way those things are structured into pilot. We get our normal fees plus an upside for showing them that we can help reduce the cost of care. And so we're hopeful that these pilots over the next couple of years give us the information that we can then go to the Medicare Advantage plan across the table and say, "look, for the past 2 years, we've had these number of patients on this service. Here's how we structured the service. And here is the outcome and how we've been able to help in that cost of care." So that's really long term, where we feel it makes a lot of sense to work with the Medicare Advantage providers.

Right. So it seems like there's still some time before you really get where it should be really, right? To your point, it's all about money. It will always come down to who's going to pay for this incremental service, but that's going to be the idea of offering more services to the senior mix makes sense. And I guess we have, I guess, a minute left. So I guess the last question here kind of to summarize the disease and discussion around the home care base is that how would you describe in 1 word or maybe a couple of words the future of home care?

Future of home care? Yes, it's hard to do that in 1 or 2 words, but I'll try to be brief. We believe it's where health care starts in the home. Our patients, a lot of them don't yet need home health or hospice. But they do need help with just the standard activities of daily living, and we believe that's why personal care is where it is today and why it's getting more attention in the government.

Exactly. And I guess like we discussed, the build back better in some other efforts at the state level, right, all indicated this creating more support. So yes, I think this is the time we had for this discussion. So appreciate everyone joining us, and thanks to the Addus team for spending the time to discuss what's been happening with the company and industry. And hope everyone enjoys the rest of the day and I guess happy holidays.

Thanks, Joanna. Appreciate it.

Appreciate it.