Monday, May 18, 2009

Hospice and the Stock Market

NASDAQ in Times Square, New York City.Image via Wikipedia

We don't cover the quarterly reports of hospice companies here, and to date have only blogged about the stock market happenings of these companies once before. But recently two of the publicly traded hospice companies have run into some speed bumps with the stock market. I follow the news feeds for the three well known companies (VITAS, Odyssey and Gentiva) to see if they have broader insights into how hospice is faring nationally. For example, the recent rollback of the wage index cut made all these stocks rise quite nicely. "Buy! Buy!" The market is listening to hospice providers apparently. They care what we do!

VITAS is the nation's largest hospice provider
and is one of two operating business of the Chemed corporation (the other business being Roto-Rooter). Last week the hospice portion of Chemed had a subpoena from the Department of Justice which requested patient records and administrative files back to 2003. With this news the shares of ChemMed dropped 10% so the market obviously think this is a big deal. I am not writing this to speculate about the meanings of the inquiry which will obviously be revealed in time. And to their credit, VITAS has stated a confident claim of being in compliance with Medicare rules. But I believe it is important to recognize the manner in which this inquiry is handled by the DOJ, VITAS and the media may have broader implications for the hospice field:
  • Does this affect reimbursement lobbying efforts?
  • Does this affect hospice cap legislative discussions?
  • To what degree do government inquiries have the potential to change the public's highly positive view of hospice?
  • How do hospice agencies support each other and the field when they may also be competing in local markets?
In addition to the DOJ investigation, ChemMed has been in the stock market news because of a challenge from some stock holders to elect new members to the Chemed board of directors. This motion has arisen because of a hedgefund feels splitting the hospice operations from Roto-Rooter would 'unlock value' for each.

Gentiva also was in the stock market news because it was recently de-listed from the NASDAQ stock exchange for not having the proper board structure. It looks like they will be able to rectify this and be re-listed, so this is not a big deal, but interesting that it came right around the time of the DOJ announcement.

We'll see how these issues play out over the next few years since I doubt review of records going back to 2003 is going to happen very quickly. Here's hoping for a quiet peaceful resolution.
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