Amedisys is a giant within the home care industry and their recent reports indicate that the home health care company is strong. For investors, it remains an attractive investment for a wide range of reasons.
Most significantly is the supply and demand factors of these services. As more people reach retirement age, thanks to the Baby Boomer generation, it means there are more people requiring home care services of some kind of another. More people are also preferring to remain home instead of choosing other care options, which could include assisted or independent living or nursing home care.
That explosion of demand, which is expected to continue at least through 2030, is driving home care companies and other providers, of which Amedisys is one of the largest.
While many stock analysts are confident in trading with companies like this, there continues to be some concern about the future, especially with regard to reimbursements being cut at the state and federal level for these services.
As noted by Zacks Equity Research, in the blog, Amedisys Stock Up on Solid Earnings, Reimbursement Woes Stay, published March 3, 2017:
“However, on the flip side, we are concerned about Amedisys’ intensifying competition from local privately and publicly-owned and hospital-owned health care providers. Since the market for home health and hospice is fragmented with a number of small local providers, there are only a few barriers to entry in this market. The competition is based on the availability of personnel, the quality of services, expertise of visiting staff and the price of services.
Also CMS’ recent proposed rule for Home Health in 2017 includes a shift toward a budget neutral plan for reimbursement which may affect the company’s growth adversely.”
More and more politicians agree that nursing home and other similar levels of care are costlier than home care, they continue to cut Medicaid reimbursement for in home health care services year after year. This is placing more pressure on home care companies and agencies to find more effective solutions to not just offer these services, but help keep their business models strong.
While Amedisys and other home care giants are certainly flourishing and make attractive investments, the future will still have to prove their strength over time. It all depends on a company’s reliance on Medicaid clients, but as more people need these services, more may be relying on Medicaid to help pay for them.
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