Scottsdale-based VistaCare is a paradox.
It’s a money-making health care provider that offers fully covered, first-class service without picking only the profitable patients.
A national hospice company, VistaCare reported revenue of $53.7 million for the quarter that ended March 31, up 28 percent from first quarter 2003. The company’s quarterly earnings of $3.7 million, were 32 percent higher than a year earlier. Earnings per share toted up to 22 cents, a 29 percent increase.
It’s just one more quarter of outstanding growth for the nine-year old company, which launched its initial public stock offering December 2002.
For 2003, VistaCare’s first full year as a public company, patient revenue was $192 million, 44 percent higher than in 2002. Net income for 2003 was $15.2 million, compared with $7.6 million in 2002. The company logged 89 cents earnings per share for 2003. Hospices provide medical, physical, psychological, counseling and other support services to terminally ill patients and their families, typically in the patient’s own home.
“In 2002, more than 885,000 dying Americans were served by hospice,” said Jon Radulovic, spokesman for the National Hospice and Palliative Care Organization, an industry trade group. About 70 percent of U.S. hospice organizations are not-for-profit, Radulovic said, while 3 percent are government owned and 27 percent — like VistaCare — are for-profit.
The Scottsdale company has grown into one of the country’s largest hospice providers in less than a decade from the dream of a trio of hospice nurses, “who thought there was a better way to do things,” said Roseanne Berry, VistaCare chief compliance officer and one of the founders.
Today VistaCare has 41 programs in 14 states, and nearly 2,200 employees, including 717 nurses and 179 physicians. And the company’s growth came despite VistaCare’s Open Access philosophy — that is, the company takes on any eligible patient, regardless of insurance coverage or the cost of care. An eligible patient, Berry said, is a patient who, “according to the clinical judgment of a physician, has only six months or less to live and wants our services.”
Some hospices only take on Medicare-covered patients or those who don’t require such pricey procedures as radiation. Many hospices require that patients agree to stop any last-ditch efforts to find a cure and sign a “Do not resuscitate,” order. Berry said VistaCare doesn’t demand either.
“At VistaCare, the patient drives the care,” she said.
The company can absorb the excess costs for patients who require a lot of medications or expensive treatments and equipment despite the fact that Medicare and most insurance companies pay a flat per diem for hospice coverage because its sheer size generates economies of scale, Berry said.
Christy Whitney, CEO of Hospice and Palliative Care of Western Colorado, who was a consultant for VistaCare when it was getting off the ground, said the founders had enough like-minded investors to fund a first-class operation from the start. That allowed the company time to grow into a money-making business as it expanded.
“They invested in the best technology to streamline the back-office functions, such as accounting, so they didn’t waste money and they could cut operational overhead,” Whitney said. “And they hired the best people.”
The company bought failing hospice systems at fire-sale prices, Whitney said. “And they invested 80-hour work weeks to create new hospice systems out of them,” she said.
Once VistaCare got bigger, it could use the clout of bulk purchases for supplies and services, she said.
“They had an entrepreneurial mindset, without a corporate mindset,” she said.
Berry said the philosophy of investing in employees is still what drives VistaCare’s continued success.
"Patient care is our top priority,” she said. “If we take exceptional care of our employees, they will take exceptional care of our patients and their families.” VistaCare expects to grow by another 12 programs this year, Berry said. That’s about what the company can absorb for the time being without compromising care.
“We put 5,000 patients to bed every evening,” she said. “We take care of one patient at a time, and we need to make sure we do that right.”
As for the longer term, Berry said there is no limit to how big the company can get, “as long as the structure is in place.”
“We are always tweaking it to meet the needs of a growing company,” she said. VistaCare spokesman Mike Fleming said the company already has plenty of growth opportunities within the communities it serves now.
“We take a smart, planned approach to growth,” Fleming said. “If we only serve one-third (of hospice-eligible patients) in the communities we are in now, there are more opportunities there without overtaxing the structure and affecting the quality of care.” Radulovic said with an aging baby boomer population more likely to opt for hospice care than the previous generation, the demand for hospice services should continue to soar.
“There are more than 34 million people over 65, and by 2030, there will be 70 million,” he said. “Baby boomers tend to be good consumers, They like choices. A lot of aging baby boomers will be making decisions about end of life care.”
Competition among hospice providers keeps a public company like VistaCare focused on providing the best possible care, Berry said. “At the end of the day, we have to deliver quality care,” she said. “That’s what differentiates us. And that will help us grow.”