This all makes sense, but doesn't the investment thesis need to consider, or at least discuss, birth rates (or, more precisely, predictions of the numbers of children needing this care) or is that too long range to consider? Also won't the unemployment rates in this wage/sector strata and the mass deportations of health care workers affect the spreads?
Not really, there is plenty of demand on the child side to be filled.
For example in PA, 27% of AUTHORIZED hours were left unfilled.
Fertility is a 2040s terminal-value question.
So demand isn't the binding constraint.
And on the workforce side, deportation exposure concentrates in unlicensed aides, where a big share of the workforce is foreign-born. Aveanna's core hours are licensed RNs and LPNs, and you can't hold a license without work authorization, so the existing skilled workforce isn't deportable at scale.
This is brilliant research that I skimmed for the last half due to time constraint today, so sorry if you covered this. Quick question…
With the trajectory of births per woman globally and especially stateside going lower, and happening later in life (creating a possible youth shortage/demographic crisis), does that not cut into any growth projections other than rate and spread pricing power?? The labor cost will have to go up I believe….
This leaves me thinking there’s a hard plateau somewhere on revenue and margin.
You can only bill for so many hours, and if there’s only so many kids.
Great research Sam, an interesting find. I thought you'd keep the yearly rate the same until launch but getting too expensive for me to afford now. Looking forward to the last free articles!
Well, that DARK article title certainly delivered!
The pick and the content did have me scratching my head, though. I'm a home health PT and fully agree that home based care can save millions of dollars, but they just don't want to spend it. Granted, I work mostly with adults of Medicare age and home health agencies deal almost exclusively with Medicare A and the Advantage Plans (I refer to them as DIS-advantage plans, but I digress). We do see some Medicaid, but skilled home care agencies generally try to not take them. The problem is the reimbursement rates - the math just doesn't add up which is why those referrals are generally avoided. Additionally, Medicaid (at least here in GA) has a yearly cap on the number of visits that can be made by ALL DISCIPLINES. If the Medicaid patient requires nursing, PT, and OT, we all have to count and coordinate as well as prioritize care so the patient doesn't run out of visits. This is especially tough if a complicated patient is referred to home health care early in the year as you have to account for the fact that they made need care again later in the year.
I've looked it up and it does appear to be different for pediatrics, so maybe there is some profit to be made in CAID, which I would have never imagined. The wage rates in the articles for nursing appear to be for LPN visits. RN visits would likely be higher in my experience and opinion. I am curious as to the supervision schedule in pediatric Medicaid: how often does the RN have to go out to do a supervisory visit for the LPN and perform the care for that visit?
If CAID ever cut the kids to match the adult model, the whole thesis would fall apart quickly.
So way to go, Sam.....you done schooled me on one of my payors.
This all makes sense, but doesn't the investment thesis need to consider, or at least discuss, birth rates (or, more precisely, predictions of the numbers of children needing this care) or is that too long range to consider? Also won't the unemployment rates in this wage/sector strata and the mass deportations of health care workers affect the spreads?
Not really, there is plenty of demand on the child side to be filled.
For example in PA, 27% of AUTHORIZED hours were left unfilled.
Fertility is a 2040s terminal-value question.
So demand isn't the binding constraint.
And on the workforce side, deportation exposure concentrates in unlicensed aides, where a big share of the workforce is foreign-born. Aveanna's core hours are licensed RNs and LPNs, and you can't hold a license without work authorization, so the existing skilled workforce isn't deportable at scale.
This is brilliant research that I skimmed for the last half due to time constraint today, so sorry if you covered this. Quick question…
With the trajectory of births per woman globally and especially stateside going lower, and happening later in life (creating a possible youth shortage/demographic crisis), does that not cut into any growth projections other than rate and spread pricing power?? The labor cost will have to go up I believe….
This leaves me thinking there’s a hard plateau somewhere on revenue and margin.
You can only bill for so many hours, and if there’s only so many kids.
Sorry if you covered this in the article.
Thanks Sam
Great research Sam, an interesting find. I thought you'd keep the yearly rate the same until launch but getting too expensive for me to afford now. Looking forward to the last free articles!
Well, that DARK article title certainly delivered!
The pick and the content did have me scratching my head, though. I'm a home health PT and fully agree that home based care can save millions of dollars, but they just don't want to spend it. Granted, I work mostly with adults of Medicare age and home health agencies deal almost exclusively with Medicare A and the Advantage Plans (I refer to them as DIS-advantage plans, but I digress). We do see some Medicaid, but skilled home care agencies generally try to not take them. The problem is the reimbursement rates - the math just doesn't add up which is why those referrals are generally avoided. Additionally, Medicaid (at least here in GA) has a yearly cap on the number of visits that can be made by ALL DISCIPLINES. If the Medicaid patient requires nursing, PT, and OT, we all have to count and coordinate as well as prioritize care so the patient doesn't run out of visits. This is especially tough if a complicated patient is referred to home health care early in the year as you have to account for the fact that they made need care again later in the year.
I've looked it up and it does appear to be different for pediatrics, so maybe there is some profit to be made in CAID, which I would have never imagined. The wage rates in the articles for nursing appear to be for LPN visits. RN visits would likely be higher in my experience and opinion. I am curious as to the supervision schedule in pediatric Medicaid: how often does the RN have to go out to do a supervisory visit for the LPN and perform the care for that visit?
If CAID ever cut the kids to match the adult model, the whole thesis would fall apart quickly.
So way to go, Sam.....you done schooled me on one of my payors.