With 16 acquisitions since 2020, New Day is shifting focus from aggressive M&A activity toward tighter operational discipline.
That’s the strategy of Kathy Poland, who stepped in as interim CEO following the death of New Day’s G. Scott Herman in February. She became permanent CEO on June 18, after serving as the firm’s chief operating officer for over four years.
Texas-based New Day provides home health, hospice and personal care services in Texas, Missouri, Kansas, Illinois, New Mexico and Indiana.
Poland spoke with Home Health Care News to discuss her transition into permanent CEO, what difficulties she sees in the forthcoming year, New Day’s growth strategies and what she’s learned as a health care industry veteran for the past 25 years.
Before joining New Day, Poland served in senior vice president roles at the home health care companies Elara Caring and Jordan Health Services.
This conversation has been lightly edited for length and clarity.
After serving as both Chief Operating Officer and interim CEO of New Day, what are your top priorities for the next year as you permanently lead the organization?
I always feel like I need to tell a story before I answer that question.
Scott and I worked together for 14 years. We put New Day together. We actually put this company together at his dining room table. We worked together at Jordan Health Services and at Elara Caring.
When we made the decision to leave and put together New Day with a really defined purpose, Scott and I had always had this yin and yang to us, where Scott was the visionary. He would set the course. And then my job was the one to always say, ‘Okay, here’s how we’re going to get there,’ as a COO, then measure the results. That worked beautifully between Scott and me for all those years.
And he passed away. It’ll be four months this Saturday, the 27th. He’s missed immensely. But what we’re doing here at New Day is we’re carrying on that legacy and that vision.
We grew quickly through a lot of organic growth and buying companies. Tightening things up and getting that discipline around our operations is what our primary focus is right now, but no change in the vision.
Can you describe the strategy for specific home-based care service lines that New Day has?
We have home health, hospice, personal care, private pay; we take care of pediatric children, and we’ve got CDS. So [our strategy is] consumer-driven, and we’re in six different states.
When you look at a patient’s journey, my mom passed away on our hospice services, but she wasn’t always on hospice. She was on home health at one time. And we believe strongly at New Day that a patient has a journey in their health care. As their needs change, we need to be there to hold their hand through that change. In my mom’s situation, she had knee problems first. She needed therapy and home health, and then as her care changed, she actually needed hospice eventually, and she passed away from dementia.
We at New Day have created a company where the strategy is to encompass a patient and make sure we’re there to hold their hands through their care journey.
What are your plans for growth for home-based care service lines in the next two years?
Medicare Advantage, obviously, is a big part of that. A large part of our population is Medicare Advantage. We have lots of contracts with Medicare Advantage payers. When I say lots, it’s in excess of 30, where we are partnered with these managed care payers.
You’ve got to be able to go in and talk to these referral sources, these hospital systems, those acute settings, and say ‘We’re ready to not only take all of your Medicare Advantage payers, we’re here to take care of your traditionals.’
It’s one thing to get the referral, it’s another thing to actually have caregivers, nurses and therapists to actually care for the patients. So the other part of the puzzle is that you’ve got to have a culture and a recruiting system in place where you can attract people and retain people. On our caregiver side, we retain most of our clinicians. We have a very low turnover rate.
What characteristics make an acquisition attractive to New Day, and have those changed over, say, the last three years?
First thing we look at is culture. Is it a good match? Is the company compliant? What do the outcomes look like? Do they hire where the service area is? All those things that you would look at, but is it a good culture match first? And if it’s not, we usually stop. In fact, we had a deal just recently that we walked away from that was linked to a culture mismatch.
So you have got to look at culture. Then the next thing you do is you go deeper on compliance, you go deeper on your financial piece, you understand if they can scale and if you can you tuck it in your operation.
We’ve done 16 acquisitions since 2020. We’ve been pretty busy, but we’ve slowed down a little bit right now. We all were trying to understand the [Centers for Medicare & Medicaid Services] moratorium and trying to understand “What does it mean?”
We have Bill Dombi on our advisory board, and so with his level of expertise, he sat down with us as a group and gave us some advice on what we should be doing on the moratorium, what we can do as far as M&A. Things have slowed down in the M&A world.
How do you expect the CMS’ home health and hospice moratorium to impact your plans for growth?
We don’t expect it will have much impact, except [for] what I just mentioned. What we immediately did was we laid out a plan for each one of our states, and what we would like to do as far as how we can expand or M&A opportunities.
Then we laid that out in front of people smarter than us, and said, “Make sure you read the moratorium, make sure we’re not tripping on ourselves here.” And they gave us that guidance, along with Bill, to make sure that we could do what we were planning on doing in each one of our states.
[It was a] little bit concerning when it first came out. I think we all had to pause, not knowing if it’s going to be six months or if it’s going to be longer. We don’t know just yet. From what we understand and what we’re trying to do strategically, it’s not going to impact us. We’re going to be in a good spot.
What’s on your regulatory wish list this year?
If those that are committing fraud could just be dealt with, and the bad actors are gone, and the good actors — the ones that are doing it for the right reasons — are here and are recognized, and our industry is not harmed.
We provide such an important service in the home that we don’t want our industry to be looked on negatively.
What would you say is a key trend that you’ve seen change in the home-based care operating space in the last five years?
Clearly, what’s happening with fraud. Any organizations that may have not set up their organization in a compliant way, front and center.
Even though that’s more than five years, Medicare Advantage really got a stronghold in the last six years, and Medicare Advantage went from something that was maybe 20% of our population, even lower than that when I started, to well over 50%.
The average length of stay of hospice patients has dropped dramatically. We’re seeing that across all of our states, where patients are coming into the hospice benefit later, they’re getting the benefit later for a variety of reasons.
On the personal care services side, there’s been some pressure with reimbursement budgets in some of our states, where they can’t maybe hold those rates. In some other states, we put in a lot of pressure from the provider side that we need additional help because of the wage pressures that are coming from the caregivers.
As the economy has been under this additional pressure, if you think about gas prices in the last year, that’s flowing through to wage pressures on a caregiver side. When you’re having to pay $4 a gallon for gas, it hurts your business.
Looking into the future, if we were to have this conversation, say a year from now, what accomplishments would make you feel like you’ve had a successful first year as a full-time permanent CEO of New Day?
Step one, that the team remains intact. Scott was a big personality. Scott was a big part of our culture. Scott, if you knew him, he could light up a room. He can make everyone laugh in some crazy ways. He learned how to make people feel really comfortable bringing out the tough stuff, because humor was something he excelled at.
So when you lose someone like Scott, there’s an uneasiness at first. What does this mean? What is new for our company? What does it mean for our team?
That dust has settled. Everybody’s in a good spot. Now, from everything that we have done together, is just building on that momentum. Keeping Scott top of mind, keeping the legacy top of mind, celebrating the wins.
And then overall it’s about, ‘Are we taking good care of patients, do your outcomes remain exceptional, are we taking care of more that need our help, are our caregivers staying here with us and are we performing as expected?’
If all those things happen over the next 12 months, then it’s been a good year.