Saturday, May 10, 2014

Impact of Gentiva's Fewer Same Stores


Gentiva held their first quarter earnings call on Wednesday morning.  Wall Street analysts struggled with how to interpret revenue from existing locations, a term known as "same store sales."  CEO Tony Strange said, "I realize that we need to provide you guys with some information that help you understand what do we look like on a same-store basis."  Here's that help:

And why we can't quantify that, here's the way I'm looking. But I think in my prepared remarks, I think I've -- I'll use Home Health as an example. I said that in -- I think our episodic admissions grew 9% year-over-year, which included Harden. I think I also said that I would expect that number to go to double digits in Q2, primarily because we would eliminate the impact of the weather. So think of the combined growth as a low-single-digit growth. When we anniversary the Harden transaction in Q4, I would expect that low double-digit growth to drop back to a low single-digit growth. So in terms of using a benchmark, if you were to hear me say in Q2 or Q3 that admissions were 8% or 9%, that's going to mean more than likely on a same-store basis, they were down. If you hear that number being in the low double-digit, that's going to imply that we're experiencing low single-digit growth inside the business on a same-store, somewhat of a pro forma type basis. Is that helpful?
It's not only tangential but obtuse.  Nevertheless, I'll give it a go.  Since hospice was only up 5% on a combined basis (up 69 hospice sites before falling to only up 20 hospice sites) it was down.

Later a Wall Street analyst asked about Gentiva's culture at ground level:

Sheryl R. Skolnick - CRT Capital Group LLC, Research Division
But what's been the reaction of people on the ground (to OneGentiva)? Are you getting a lot of push back? Is this something -- or are the rank-and-file clinicians, I hate to use that word, but are they embracing it as it’s about time guys, what have you been waiting for? What's happening to the culture of Gentiva at the main street level? 

Tony Strange - Chief Executive Officer, President and Director
Well, it's insightful that it -- because, first of all, you recognize that this is a major change culturally in the field. And so I don't want to minimize that impact. We have finished the implementation of the organizational structure, which in my mind is the skeleton, the backbone of One Gentiva. We've changed the incentive plans so to -- in an effort to remove any disincentive of people to doing the right thing for the patient. But once you get all of that out and I think your question was at the patient's bedside, what is the reaction to the people who were providing these services? And I think the answer is right where you were leading the question, is I think folks are glad that they can do the right thing for the patient. 

Our site had a different first quarter.  A number of staff removed "any disincentive for doing the right thing for the patient" by leaving and going to competitor hospices.  Company turnover statistics apparently missed our mass exodus.  I wonder if incentives exist for low turnover.  That might explain our highly distorted numbers.  Or lying about employment could be a cultural norm.  Gentiva has 75 fewer locations and the exact same number of employees, 47,000.

Whether lying is a part of OneGentiva now, it will soon be fully integrated.

The organizational structure has been fully implemented and the last phase of rolling out the combined incentive structure, which will further solidify the joint accountability was finalized last week

As if Gentiva's abysmal management haven't distorted enough.  Pressing the accelerator on incentives will cause people to focus on their pay instead of serving others.  Incentives distort, whether it be the C-suite, school systems or the Veterans Administration.  Fear does as well.  They are but two sides of the same coin.


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