Amedisys anticipates bottom line results from under-the-radar connectRN investment
On December 10, connectRN announced that it had raised $76 million to scale its technology-based staffing platform for nurses. The Series F round was led by Suvretta Capital Management and Avidity Partners, with participation from several other groups.
Although its involvement did not garner immediate attention, one of the biggest names in the home health industry was also among the backers of connectRN: Amedisys Inc. (Nasdaq: AMED).
“We must constantly innovate, establish partnerships and seek out tools that can [strengthen] our workforce,” Amedisys Chairman and CEO Paul Kusserow told Home Health Care News. “We started looking and researching how we were going to win. We were there – the workforce challenge – long before COVID.
Amedisys, based in Baton Rouge, Louisiana, offers home health, hospice and personal care services in 529 locations. It also offers high-acuity home care services through its Contessa Health branch.
At its core, Amedisys remains an aging in-place business and care provider, Kusserow said. Increasingly, however, its leaders see opportunities to simultaneously act as an investor in emerging companies of strategic value.
With connectRN, for example, Amedisys was an early supporter of predictive analytics company Medalogix. This investment has been “a very good experience,” with Medalogix’s solutions helping Amedisys improve the quality of its care and service utilization, according to Kusserow.
“By doing so, we can help businesses emerge faster and give them a better perspective,” he added. “You can learn a lot. And together, we can develop a must-have product.
Based in Waltham, Mass., connectRN has raised more than $95 million since its inception in 2014. Overall, the startup’s platform helps nurses and caregivers find work, whether in a health facility or at home.
It specifically gives users access to flexible shift opportunities and career development resources, while also giving them the ability to participate in a social network of professional peers.
“It took a few years – not our connectRN investment, specifically, but just thinking about how Amedisys should combat labor pressures in and around our space,” said Nick Muscato, vice- Chief Financial Officer of the company. HHCN.
Amedisys declined to share the exact size of its connectRN investment.
“The company is on track to deliver 240% year-over-year organic revenue growth in 2021, confirming our hypothesis that nurses and care aides are not just in demand, but are looking for a better path for their careers,” said connectRN CEO Ted Jeanloz. Press release. “Our ability to deliver the right opportunities, on their terms, in a supportive and nurturing environment is what we believe is the future of healthcare.”
Staffing smarter, not harder
The main driver of Amedisys’ investment was the worsening imbalance between supply and demand for home care. Demand for home health care is expected to skyrocket as baby boomers age, but nearly all providers have already faced barriers to growth due to the COVID-19 pandemic and worker burnout. clinicians.
Then, on top of that, the company identified a clear shift in the way clinicians wanted to work.
“We want to be able to meet all the expected growth, which means we need to have the right clinical capacity,” Muscato said. “Along with that and accelerated by the pandemic, we’ve seen this shift to gig-based work.”
The old healthcare staffing companies are still around, he said, but they’re now being joined by more and more “technology-based, gig-based and shift-based models.” job”.
Amedisys will operationalize connectRN in two ways.
In the short term, he plans to use the staffing platform to find available clinicians in areas where they are usually hard to find. Baltimore is a prime example, according to Muscato.
The longer-term goal will be to leverage connectRN to better engage Amedisys’ existing PRN workforce. If the company is able to do this, it can, in turn, offset the costly use of contract labour.
This is where “a lot of the secret sauce will happen,” Muscato said.
“We have 3,000 PRNs on staff today, but a ton of them haven’t visited us in the last three or four weeks,” he said. “If we’re able to get capacity out of this group, it takes a lot of the pressure off the recruiting function by increasing what we’re able to do with the current staff.”
In addition to enabling Amedisys to support more patients, this translates into a significant net gain, as even a small increase in contractor labor utilization can result in millions of extra spending dollars.
Prior to COVID-19, Amedisys used contract labor in approximately 2% of its home healthcare visits, on average. During the worst times of the public health emergency, however, that rate jumped to 5%.
Currently, Amedisys’ contract labor utilization is just over 4%, Kusserow said.
The company believes levels will begin to normalize towards the end of 2022.
“In good markets, we tend not to neglect [the PRN workforce], but we’re not using them as much as we could,” Kusserow said. “And these are people who have our computers, who are accredited, who are trained. We’ve done a lot of research on them over the past two months, and what we’re seeing is that there’s definitely an availability and interest in more work.
The key, Kusserow said, is to “build the system” to unlock greater use of PRN staff.
“We are disruptors”
Amedisys plans to launch a connectRN pilot for its home health segment within weeks, Muscato said. Depending on how it goes, he’ll look to expand the program — or expand it to other parts of his business.
In addition to the aforementioned benefits, Muscato said he’s excited about some of the support capabilities that connectRN brings to the table, which could ultimately help with retention.
“They saw firsthand clinicians on their platform suffering from burnout as they dealt with COVID over the past few years,” he said. “They were able to incentivize and service their clinicians through their platform to keep them more engaged. They provided clinicians with access to Talkspace, for example.”
Those who follow Amedisys should not be surprised if it announces similar investments in the future. At any given time, the company has a list of around 250 non-essential businesses that it monitors.
“Obviously all of these are at different stages of their life cycle,” Muscato said. “We don’t necessarily follow all of them from a pure investment standpoint, but perhaps also from a potential business relationship standpoint.”
Contessa Health — acquired by Amedisys for $250 million in June — was even on that list at one point, Kusserow said.
“We are industry disruptors and innovators,” he said. “The idea is that we pick the places where we think the issues are critical enough that change needs to happen.”