Enhabit, Inc. (EHAB) Earnings Call Transcript & Summary

Good afternoon, everyone. Welcome to day one of Citi Healthcare Conference. I'm Jason Cassorla, I cover health care services here at Citi. We're happy to have Enhabit Home Health and Hospice here with us today. Joining us from the company is CEO of Barb Jacobsmeyer; and CFO, Crissy Carlisle. Thank you both for being here today.

Absolutely.

Maybe we'll just start right off the gate on the home health side. From a volume perspective, you've seen this continued decline in fee-for-service Medicare. You highlighted a 4% percent decline in traditional Medicare beneficiaries in your market outright. There's COVID considerations, but maybe just help frame how you're seeing developments on that front if you have opportunity to perhaps take share in fee-for-service Medicare, given the reimbursement backdrop as your capacity builds and would you expect growth here on a like-for-like basis, just given demographic trends?

Sure. Well, you mentioned with what we've noted is that we've had the 4% decline in fee-for-service in the markets we serve. We've also seen an 11% increase in Medicare Advantage beneficiaries in the markets we serve. So I think really to get back to actually gaining anything on fee for search, it's really going to be about the success on our payer innovation team, because what you need to be able to do is go to your referral sources, and have not a short list, but a long list of what you can care for them for their patients, right? So they don't want someone that just wants their fee-for-service or someone that wants that in one other. They want to see a list. They want to know that you really can be a more full service provider. So I think as we make the achievements on the payer innovation side, that's going to help us even with the fee-for-service.

Got it. Okay. And then maybe just on the Medicare Advantage side, you've clearly seen strong growth there, non-episodic visits were up 25% in '22. You've recently signed 18 new contracts, regional MA contracts, many of them going live this year. So I guess, first, any way to frame how additive these contracts are to the volume picture? And then two, combined with continued penetration in your legacy MA book, how should we think about non-episodic visit mix trending for '23, I guess, compared to where you ended 4Q at 26%?

Sure. So I'll touch on the initial part and I'll let Crissy touch a little bit on the mix part. So when you look at the regional contracts, as you mentioned, we were successful in negotiating 9 in the third quarter, 9 in the fourth quarter, but know that the 9 that are effective today, some of those are from what we negotiated in the third quarter and some from fourth quarter. So there is a quite range of time that it takes for these plans to get us credentialed and become effective. So the timing on that is going to be really important, now 9 are the ones that are effective, 7 are episodic. So we're making nice progress on the regional side of being able to get episodic contracts. Those episodic contracts tend to come at a discount of kind of 0% to 10%. So just again, making nice progress, but that kind of touches then, to your point on the mix piece because that's where it gets a little bit muddy.

Jason, I wish there was a percent that I could just give to everyone, but it's not that simple. It really is a balance between the volume growth and the rate growth. And even when you think about the historic trends in our non-episodic visits, if you look back at 2021, that year, it was about 18% to 19% of our total visits. 2022, it was about 22% to 23%. We exited 2022 at 26%. So you can see how rapidly it can grow, but all of these factors that Barb is talking about, the new MA contract being paid episodically, right? That's going into a different bucket than what we're talking about as well as let's face it, if a national payer steps up, and they're willing to pay us an acceptable cost per visit rate, that's going to impact that number. Again, if they're willing to pay an acceptable cost per visit rate, that's not a bad thing.

Then maybe just a little bit deeper into those new contracts, just so we understand, you said it's basically flat to maybe a 10% discount to episodic. Are those contracts are the index to where fee-for-service Medicare shakes itself out? Or are they just on a pure episode? It's kind of a flattish type of rate with acuity, nuances and things like that. Maybe just give us a flavor in the context of that fee-for-service rates have been coming down, right?

Sure. So when you look at it, you are paid on the PDGM rate, right? So that you're right, as fee-for-service is impacted. So is this, and that's why we're really pleased with that 0% to 10% adjustment because that's still then far better than any of the per visit rates that we have at this point.

Got it. Okay. And then -- and where you are capacity wise, what is the runway for the incremental contracts beyond what you've already signed at this point? Are you looking to do more regionals? Are there big pockets where you're missing, just anything along those lines?

Yes. So what we've done is, we've gone out to our business development teams in the field and said, you reach out to all your large referral sources, whether it's a hospital, surgery center or whoever it is, physician, and you find out from them what would be the top 3 to 4 contracts that would be meaningful for us to come in and say we could serve, and get that to our payer innovation team so that they can start further developing that pipeline. We have about 35 contracts in the pipeline right now that we're actively working, but we're going to continue to add to those as we get feedback from the field.

Got it. And then -- so I think you originally had stated when you first signed the 9, it was about access to another 1 million lives. Is it similar amount for the next 9? I'm not sure if it's -- or the last one, is it 35? Should we [Indiscernible]? Like, is it [indiscernible]

It's hard because you have a mix of state and regional. So like, for example, one of them that is now in fact is actually multistate. So that obviously creates a lot more access for member lives than one that would maybe be just in one state.

Okay. Got it. Maybe just looking at guidance, the MA mix shift for '23, expected to be about a $14 million headwind. It's down from a $22 million headwind in '22. I guess, is just a lower year-over-year headwind just a function of these new contracts coming online at a better rate? And then anything on those lines on just what the year-over-year headwind we can get [indiscernible]

It gets back to that balance, is the volume and the rate working together, is the decrease from the $22 million of 2022 and the $14 million headwind that we talked about between '23. It's a combination of those two items.

And then this basically, I think you noted the MA, right? That, that piece is the variable argument within guidance is the argument, I guess, then depending on the growth in your MA book, are there ways you can kind of control the MA flow through on that argument? So maybe just anything more that you want to kind of give on how should we think about the $14 million headwind, the swing factors there? And how that which could it roll itself over continuing onward into '24 and beyond?

So I mean, you nailed it, Jason, the swing factors for 2023 is labor and Medicare Advantage. So the success of our ability to recruit and retain professionals, and then the success of the payer innovation team and what they're able to achieve with more contracts, as well as getting improved rates on those contracts. It really comes down to those two things.

Okay. Got it. And then maybe just on that context, could you help -- because these are fresh, new they're coming online, help us with earnings cadence for the year in relation to this and the headwind?

No, I'm glad you asked that question, Jason, because we did comment on our Q3 -- or excuse me, Q4 call, in regards to the cadence of the year. And we noted that our financial performance would likely be back half weighted. I think that we may need to be a little bit more clear on the steepness of that ramp. It gets down to Medicare Advantage and the ramp-up of those contracts. Remember, we negotiated 18 contracts in the back half of 2022. And at this point, only 9 of those are effective. Labor, we've talked about the need to continue to increase our clinical capacity in order to meet volume demands. Hospice and the recovery that's been going on there, the use of contract labor, when will that turn? Within the year. And then I think the other thing that may not be quite clearly understood is that the use of the transition services agreement that we have with Encompass Health. I think some people think there's this magical moment of when all of a sudden, costs get really strip down because of it. And let me kind of walk you through an example of the first part of the year that may help. Let's take SEC reporting as an example. So at this point, we've ramped up our SEC reporting team. We have two people. We're in the process of trying to hire and recruit a third person. At the same time, we are receiving support for SEC reporting under the transition services agreement. When we file our 10-K later this month, now that is March, that transition services agreement will end at the end of March for SEC reporting. But for that first quarter, I'm double dipping, right? I've got twice the expenses for SEC reporting that, again, will have a positive impact later in the year. But right now, it's double counted.

Got it. So just from a quarterly progression perspective, obviously, lowest would be first quarter in that context, second, third, fourth. You said -- more than that, any way to kind of give us a bogey around more -- the majority of your earnings in the back half of the year? Is it 60%?

Yes. I don't want to go that far, right? Because then I'm going to start to get into quarterly guidance. We all know what happens then. But I do think it's -- there's an appreciation for the ramp-up that probably needs to be considered.

Got it. Okay. Understood. We'll leave that there. Maybe just on the reimbursement side, Medicare fee-for-service, right? The PDGM behavioral adjustment came in a little bit better than thought just given the 2-year split of the impact. But you have the second half of that right? And plus the potential claw back, right? Looming Med packs out there continuing to press for lower reimbursement in home health arena. Maybe just give us a sense how you're viewing this fee-for-service Medicare reimbursement backdrop? If you think you can improve with legislative fixes or otherwise? And perhaps how you think it would shape the competitive environment that you're in, just given all these pieces?

Sure. Well, I think the timing is good for that discussion because the stakeholder meeting with CMS and the industry has been set for March 29. They then needed to release the data that was used for the behavioral adjustments 30 days prior to that. So that data did come out day before yesterday. So at this point, the industry is reviewing all of that data. I do think that's going to be critical for us to know, well, how did CMS develop their methodology around it? So that, frankly, we really know what kind of conversations then do we need to be having with CMS, with lobbying efforts prior to the proposed rule this year. And so I think that the timing is really going to be important for that because certainly, you could look at and anticipate that we would get the other half of the behavioral adjustment, hopefully, with a market basket that more than offsets it, but I think the big topic is going to be the claw back. Because right now, the $2 billion number that's out there is really 2020 and 2021, doesn't even take into account 2022 and half now of 2023. So I think that's going to become probably as important of a topic.

Got it. And then in your discussions with folks on the [Hill], it seems like just we have to wait for this data day to come through or just kind of see the feedback and all that stuff. Is there a lot of what need to get something done on this front? At this point -- or are we just kind of holding out and efforts will continue onward.

Yes. I think it's really about seeing the data because if you remember, some of the studies that were done previously with the limited data that we had, there was really the impression that the industry had been underpaid, not overpaid. So I think everybody has been very anxious to get the actual data to really see, well, how was that methodology determined?

Okay. Perfect. Got it. We're looking out for that. Maybe let's just talk broadly about your -- the health of your referral sources at this juncture. Any opportunities to increase those as the labor backdrop improves? Just -- how you're seeing the health of your referral sources at this point?

Yes. So maybe I'll touch on home health first and then hospice. On home health, is really about being able to get on more plans, right? Because even in situations in certain markets where we're successful getting on a better plan, some have asked, well, are you going to take those patients in place of the core plans? Well, it depends because if in my market, if that new plan just gives me a list of 4 to bring, well, I probably am going to have to keep those again to be able to really be an answer to our referral sources, and maybe a market though where that is creating a nice longer list, I can start looking at that being in place. So then you're not getting the same growth, but you are getting much better payers in place of those lower payers. So that's kind of where we are from the home health standpoint. On hospice, it's really been about -- it's why you saw the increase in the contract labor used in the fourth quarter is, as we're getting staffing in place, it's now being able to go out and be more aggressive to the referral sources thing. We can take your referrals because for so long, it's been this balancing of we can take it, but not today. Well, that's not how it works for hospice, right? When they have a patient ready to elect hospice, it's how fast can you really get out there and get that patient initiated.

Okay. Got it. Understood. And maybe just you pointed this out a little bit. On the fourth quarter call, you talked about 80 less direct sales folks on a year-over-year basis. But in January, it sounds like you realigned some of that staff, you had 60 more into the field. How are you feeling about the additive sales opportunity just after those changes, anything else to go there? You want to...

Yes. I think what's important to know is the reason that we had the 80 less is last year, if we lost a salesperson -- a direct salesperson in a market where we were struggling with staffing, we made the decision not to replace them, right? Because frankly, one of the reasons they were leaving is because they got tired to happen to say no. So we made the decision not to replace them. So now that staffing is improving, we did look as we were doing this realignment and saying, how can we more quickly get experienced salespeople back in the direct sales, and that's how we move the 60. So that's been great because not only are they 60 people back in direct sales with their experience. They know us, they worked with us for a long time. So that's been good.

Got it. And then we touched about this a little on the labor side. But as we step back home health, '22, you had cost per day up about 7%. You've guided to 4% to 5% in '23, clearly, a deceleration there. You've increased labor capacity. You're anniversarying many of the fleet costs and mileage reimbursements from last year. Maybe just help frame some of the puts and takes in the home health cost per the equation next year, the leverage you're using to optimize cost? And then to this point, how we should think about cadence from a labor perspective, a little bit more...

Yes. So the important thing to remember when you're talking about cost per visit on the home health side, is at 90% of its labor. And so one of the reasons that we -- we felt it was trending in the right way that we could return to a more normal historic merit type increase. When you look at the fourth quarter of 2022 compared to 2021, it increased about 7%, about 300 basis points of that was to group medical claims increase that we talked about during our earnings call. And another 100 basis points of that was the mileage reimbursement that we had talked about that we implemented in March 2022. When you pull those two items out, you're left with 3%. And so we're seeing that now, and we're more comfortable going forward. Now then somebody said, well, why did you go 4% to 5% on your cost per visit guidance information? That's because that 3% to 4% merit is just the merit piece. We also recognize that it's likely there's going to be markets, various sites across the country where we're still seeing some pockets that may need to be adjusted. And so that's where that's coming from.

Got it. Okay. We've gotten some questions on this, but on the home health business [indiscernible] 14.3 in the quarter, certainly down from the high 14s this year and in historical times. It sounds like that was more of an anomaly than anything else. I guess, as you leverage the Medalogix Pulse tool, how should we think about that visit per episode trending moving forward, how you're balancing that, so in a way that it doesn't sacrifice quality?

Yes. So I think the first thing to remember is that Medalogix, whether you're talking about the previous the Care tool or the Pulse tool, is that the target that it gives you for your visits is really about what kind of makeup do you have of your patients, right? So our target changes based on the mix of our patients. So for example, if we do have a lot more of the neuro rehabilitation, stroke-type patients, the visits per episode that are even being recommended are higher because that was patients tend to get PT, OT, speech, nursing. So your mix of your patients does also determine like what Medalogix is recommending. And remember, those patients also come with a higher reimbursement, right? So what we talked to the field about is really looking at that recommendation and being at or below. We do not want to sacrifice quality. It's one of the best value propositions that we have. That's where I think the Pulse tool is going to be helpful. We have that in a couple of our markets today. It will be rolled out to all of our markets by the end of the second quarter. The reason that's going to be helpful is that one is a real-time tool so that if a patient is doing really well, you may be able to bring back a visit and help that create capacity for another patient. If a patient is not training well, then you want to get out there, so you can prevent a readmission. So I do think it's going to be a better tool to help us manage that going forward while keeping an eye on the quality side of it.

Excellent. Okay. Sounds good. Maybe we just switch over to the hospice side of the fence. It's a pretty strong margin business for you, significant underlying growth potential. If we look back over the past year, much of that pressure on revenue margins been on the labor front. You've kind of discussed this already, but you've hired an executive there. You rolled out a new case management model in the fourth quarter. Just maybe to start, help us unpack some of the benefits of this in case management model as it relates to recruiting and filling gaps?

Sure. Well, I think -- first, if you look back, I mean, this is 6, 8 years ago, we only had 20-some-odd hospice locations. Right now, it's over 100. When we historically made acquisitions of hospice, we moved it under the home health management, and we actually managed it like home health, right? So when I got here about 1.5 years ago and started visiting some branches, it's what I heard loud and clear was that that's not how hospice works, right? That nurse needs to be able to manage a case load of patients and use their clinical skills to determine when do I need to go out, when do I need to go out more frequently, less frequently. That's not how the home health productivity model works. So we really did this in response to what we were hearing from our staff. So as you said, we rolled out the case management model by the end of the year, that really meant to each branch, they could do kind of a gap analysis on, well, what do I need to add to be able to function now in this case management model, which means they have triage nurses, on-call nurses. And so now it's really about staffing so that they can run it in this model. The great thing has been not only have we seen improvement in hiring, but we've actually hired nurses that left us. They liked our culture, but they did not like the model that we had. And so we've actually been able to do some rehires, which has really been great.

Perfect. And maybe just related to that, fourth quarter ADC goes up shy of just 1% sequentially. But the argument is that if the labor situation improves, case management comes to term, volume trends sort of bottom out here at these levels? Or would you expect to get admission growth in this year? How should we think about where you're on the labor front, I guess, relative to growing your volumes for the hospice...

So we do still need to add full-time nurses. I mean, one of the things that we've gone -- and this has been on home health and hospice, has gone and said, this is something our team never had to do before. If you think about it historically, we were full-time salaried nurses and therapists, right? The shift to PRN has been a real differentiating thing in the field, and we've had to say to them, no longer can you look at it just by headcount. You have to know what kind of commitment do you have from your staff? So you know how many FTE equivalent you need to have, right? And so we do still have some staffing needs to get us where we need to on the hospice front, but then we also then need to diversify our referral sources. So we're getting a nice blend of those shorter length of stay, longer length of stay patients so you can manage your ADC more effectively, but really be able to answer those referral sources immediately when they need you.

Got it. Okay. Sounds good. Maybe just on the contract labor piece. It sounds like fourth quarter, right, was unusually high for hospice in light of this new higher orientation that you had going on, should we think about that trending back to a more normalized level pretty quickly here in this context? Or is that largely the biggest swing factor in the lower 4% to 5% cost per patient day expectation at '23 versus where you were at 6% for '22?

So for hospice, we did use about a little over 5% of our visits in the fourth quarter was from contract labor. That's up from about 1.5% in the prior year. We did approve that use of contract labor, and we'll continue to approve it when we know we've made the hires, right? So when we know there's an end in sight, someone's going to be coming out of orientation, we need to ramp up our referrals. That's when we approve these of contract labor. We did, however, ready by the end of January, start to see that come down the number of contract labor FTEs and branches that needed to use it. But I will tell you, if we continue to be successful in some of the constrained markets, we'll approve it in some of the newer markets, just to be able to get ready to accept those referrals.

Okay. Got it. Maybe I'll take a quick second here, pause and see if there's any questions from the audience at this point? No? All right. Well, we'll continue onward then. So maybe just on '23, you've elected not to go with the M&A target spend. Note, they will be a bit more selective on that front, maybe just help unpack where you stand on the M&A equation here, just given like what's going on?

Jason, we remain focused on financial flexibility. And at the same time, we're keenly aware of our leverage. And we know what the market -- how that may be impacting some people's willingness to get into the stock, right? We're well within the covenant of 4.75x, but we want to start acknowledging both sides of the equation and take a more balanced approach to the uses of our free cash flow in 2023. We continue to believe that new store growth is a very important part of our long-term strategy. Our development team is still active, and our development team is still diligently doing their diligence on opportunities. We think that it's going to be a very interesting discussion over the course of 2023 as it relates to potential sellers, can we get to bid ask that are appropriate? Especially on the home health side, when you're talking about a significant reimbursement uncertainty that remains today, hopefully get some more clarity on that as the year progresses. You're also talking about the ongoing payer mix shift. That's not an Enhabit issue. That's everybody is seeing that. And so when you're talking to a home health potential seller, they have to acknowledge those items and be willing to accept that in the bid-ask process. On the hospice side, I think we find those opportunities a little more -- we have a preference there. Part of that is the 80-20 split of our current revenue stream and wanting to maybe diversify some of that, again, away from that significant home health reimbursement uncertainty and price taking there. It's even some of the PE firms that own some of those attractive opportunities there. What price did they pay a few years ago and what is the value in the market willing to pay today? So I do think there's some pressures there, as well as just to our ongoing what is the highest and best use of our free cash flow that we're looking at? And then Jason, I'll just close by reminding everyone that part of our long-term strategy for new store growth also includes the De Novos. And they have very attractive economics, and we plan to invest $2 million to $4 million in 10 De Novos in 2023. And that's an important piece. And again, we'll prioritize adding hospice where we already have existing home health locations because we can take advantage of having some infrastructure already in place in that area, so we can co-locate together and then also build off the existing brand and have existing referral sources in that market.

Got it. And then to that point around the De Novo discussion, can you just remind us of the maturity ramp or how that works? And then to the point around how that plays out to a little bit more on the co-location where you're at, where you need to go?

Sure. So the De Novo cost us initially about $250,000 to $350,000 a start-up. And when we say start-up or open one, you're talking really about an investment in people. We're not building anything, we're basically opening up a new location. To do that, you've got to have a branch director, a nurse, a physical therapist, the needs. And oftentimes, you have to have that before you can get licensed before all the things that have to happen. So that's your initial investment. We expect that location when they're fully ramped up to generate $2 million of revenue and about $500,000 of EBITDA annually. Right now, it takes about 24 months to reach that full run rate on average. One of the things that we did in 2022 is we did focus more on the De Novo strategy, was to build a De Novo integration team. And part of that team is challenging to get that process more streamlined. And with a goal of saying that 24 months, we want it to be more like 18 months.

Got it. And then just maybe a little bit more on the colocation strategy. Obviously, a huge focus for you guys. If you think about your footprint today, what inning do you think you're in within that strategy? Maybe help unpack the value prop a little bit more around the colocation involved in the value-based arrangement and upstream partners. So anything more on the colocation strategy.

So on the colocation strategy, from a synergy perspective, what you're really talking about is minimal infrastructure in regard to the physical location. So you can locate, but the way that we run home health and hospice is that you do have two separate teams. Again, Barb's already talked about how it's different. And so we have different branch directors and different teams focused on the specifics to that service line. The real synergy comes from brand recognition and the existing referral sources.

Understood. Maybe we step back and think about the business, obviously, there's a lot going on, right? There's a lot of near-term reimbursement and labor pressures you're contending with, margins for both businesses are down well below kind of pre-pandemic levels. I guess, given the work you've done and the structural benefits of the industry at large, how would you frame where margins can kind of go from here? Can we get back up to pre-pandemic levels? Or is this kind of the new norm that we're looking at? Or how would you think about it from the business kind of going forward, just a way to frame it?

Well, I think, first, we have to acknowledge that we don't know what we're going to get paid in 2024, right? So it's a very difficult question to answer at this point. I tend to think about EBITDA growth versus margin expansion at this point. We are certainly taking a look at all areas of the company. And then, Jason, the other big -- again, the key success factor is payer innovation. If you hear some of that margin concern by getting more contracts at acceptable rates that fall through to the bottom line.

And I think to add to what Crissy said is not only does that fall from a pricing to the bottom line, but as you get on more of these contracts, you can also then create more density in a market where you can get better productivity and optimization out of your staff because you have less windshield time, but you have to be able to be a provider to more payers so that you have a more concentrated group of patients, but it does create some efficiencies on the labor side when you're able to take care of more of those patients.

Got it. And as you build the De Novo, as you're kind of building up the colocation, maybe just talk about the density argument, right? The branding, the benefits there, what they want and need to be as dense makes sense? Maybe just go through some of those...

So the density piece is a critical piece in managing that cost per visit, right? Because when you have the density in a market, you not only can then have your full-time staff be very productive, right? Again, you're not spending 30, 40, 50 minutes behind the windshield, you're actually being able to go patient-to-patient in a very efficient way. But then you also have the density in which then you can have a larger team of RNs and LPNs, right? We don't even add that LPN or that PT assistant today until you can get the RN fully productive. So even though there's visits that an RN is doing that an LN could be doing, you don't add that resource until you get the RN fully productive. So that density helps both of those things.

Got it. In the past, you've highlighted some adjacent service offerings. You'd be interested in potentially entering in down the line, SNF at home, palliative care, hospital home models, private duty, among others. I guess any incremental interest to delve into these adjacent services at this time? Or how would you frame that?

For us, it's really just keeping a pulse on what's happening on the regulatory and the reimbursement front, right? I mean, you mentioned SNF at home, right? There was the legislation that was out there potentially for choose home and creating a whole new Medicare benefit. Certainly, if something like that comes to play or if you have more of the MA that are interested in looking at something like that, that then does create an interest in other things like the private duty piece, right? So it's more keeping a pulse on where is both Medicare and MA as it relates to ideas like that before you really get serious about any sort of adjacent service lines.

Got it. Sounds good. Maybe let's just talk about the -- this was brought in the past. There's been some discussion around regarding the role [indiscernible] within home health. What are your thoughts on the [Indiscernible] convenience as a resource to payers? Do you believe that interventions by convenience have led to interruptions in patient care, compounding issues, anything along those lines are you thinking about that?

Well, the timing is set on that question because I would say that our view has probably changed a little bit over the last maybe 6, 8 months as we've gotten more into it with our payer innovation team. So the conveners, yes, it does create a little bit of a challenge as it relates to like the pre-off and those sorts of things. That creates another layer of resources that you need. However, what we are recognizing through our payer innovation team is that I think the conveners are understanding the value proposition probably even faster than some of the payers directly, right? They're having to take that whole picture approach. And if I'm going to be responsible for that cost of care, then I need to know how to use my resources. So we actually think really engaging more proactively with the conveners and getting on into more agreements with them is probably the way we need to go because they do get it. And I think our ability to negotiate better rates with them may actually be quicker than some of the direct national payers.

And maybe just a segue on that. I think that has been a very hot topic for you guys, right, the legacy large nationals. At this point, any update you want to give on the work you're doing with them on the reimbursement front? Any contract timing that we should be aware of, considerations at this juncture?

I will say that we continue to be pleasantly persistent with the national agreements. I would never give a timing on it because I just realize how slow this goes. But I do think we do have -- we bring a lot of value. We are willing to commit that we will give access if the rates are fair. So again, we just stay persistent with them, but obviously, continue to focus on our regional strategy as well.

And you highlighted earlier that there is the new MA contracts, the regional ones that are coming online, they're a discount, right, the PDGM-related index, right? So does it sound like -- it doesn't sound like necessarily that it's a, we'll wait and see where fee-for-service reimbursement kind of trends out just more of getting them to the table, getting the work done, need to be done and just kind of opening the gates there. Is that a fair way to think about it? Or are there other caveats that we should be mindful of?

Yes, that's definitely a fair way to look at it. And if you think about it, the other reason that we want the episodic rates is because we want them to let us manage those visits, right? Hold us accountable for our quality, but know that there are patients that may need less visits and there are patients that may need more. But if you pay us episodically then you're allowing us to manage based on our clinical expertise and not relying on someone just authorizing so many visits here and there. And so that's the other reason for going that really want episodic rates.

Okay. Sounds good. Maybe as we kind of wrap it up relatively soon here. What I've been asking a lot of companies coming to the conference. What is something that you want to make sure that the audience know things about Enhabit? Anything we didn't highlight today or as you think about the go-forward strategy for the entity, what would be something to kind of flag for that point?

I think, for us, it's I do continue to believe there's a lot of growth potential for care in the home, right? I think that -- I think, for us, 2022 is really getting the right organizational structure in place to really execute on some of these things. And I think -- so I think we're there from a structure perspective and now it's just really executing on what we know is going to work, both from a labor front and a payer innovation front. Anything you want to add?

No, I think -- fine with it.

Okay. All right. I think we're going to wrap it up there at this point.

Thank you.

All right. Thank you very much for joining us. Appreciate it.

Thank you.