Enhabit Relies On Regional Contracts For More Favorable Rates

As an organization, Enhabit Inc. (NYSE: EHAB) didn’t always have the strongest rates from payers. Enhabit’s strategy of zeroing-in on regional payer contracts has helped drive the company forward.

Earlier this week, Enhabit CEO Barb Jacobsmeyer shed some light on the company’s strategy at the Home Care 100 conference which took place in Florida.

“The majority of our contracts are regional contracts,” Jacobsmeyer said. “There’s a lot of value that can be created at that local level with those regional payers.”

Dallas-based Enhabit has 256 home health locations and 112 hospice locations across 34 states.

Enhabit has long been vocal about walking away from larger contracts that were unfavorable to the company. Most notably, the company terminated its contract with UnitedHealth Group’s (NYSE: UNH) UnitedHealthcare back in August.

Last month, Enhabit formed a new home health agreement with the insurer.

Jacobsmeyer said she believes that getting signatures is only one piece of the puzzle when it comes to locking down contracts.

“It’s really about talking locally with all of our leaders and helping them understand that we recognize participation on the other side of this,” she said. “We need their help, as local leaders, to make those really tough decisions. We need them to make sure they’re only giving up that clinical capacity for those that are willing to pay us for the value that they receive.”

As part of Enhabit’s journey to increase favorable contracts, emphasizing the company’s ability to address payers pain points has been paramount.

“Some of them do understand the bigger value proposition that I can save them from emergency room visits and hospitalizations, and when they understand that it’s a much easier conversation,” Jacobsmeyer said.

Ultimately, having the right team in place has been one of the keys to Enhabit’s success with payer contract negotiations.

“It does take the entire team,” Jacobsmeyer said. “It takes the team on the front-end really being able to negotiate these better contracts. Then it does take your leaders in the field to understand that we need their help to make sure that we’re always making those wise decisions.”

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