Morning. Thank you for standing by, and welcome to the Chemed Corporation first quarter 2021 earnings conference call. I would now like to hand the conference over to Sherri Warner with Investor Relations. Please go ahead, ma'am.
Good morning. Our conference call this morning will review the financial results for the first quarter of 2021, ended March 31st, 2021. Before we begin, let me remind you that the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 apply to this conference call. During the course of this call, the company will make various remarks concerning management's expectations, predictions, plans, and prospects that constitute forward-looking statements. Actual results may differ materially from those projected by these forward-looking statements as a result of a variety of factors, including those identified in the company's news release of April 27th and in various other filings with the SEC. You are cautioned that any forward-looking statements reflect management's current view only and that the company undertakes no obligation to revise or update such statements in the future.
In addition, management may also discuss non-GAAP operating performance results during today's call, including earnings before interest, taxes, depreciation, and amortization, or EBITDA and adjusted EBITDA. Our reconciliation of these non-GAAP results is provided in the company's press release dated April 27th, which is available on the company's website at chemed.com. I would now like to introduce our speakers for today: Kevin McNamara, President and Chief Executive Officer of Chemed Corporation; Dave Williams, Executive Vice President and Chief Financial Officer of Chemed; and Nick Westfall, President and Chief Executive Officer of Chemed's VITAS Healthcare Corporation subsidiary. I will now turn the call over to Kevin McNamara.
Thank you, Sherri. Good morning. Welcome to Chemed Corporation's first quarter 2021 conference call. I will begin with highlights for the quarter, and Dave and Nick will follow up with some additional operating detail. I will then open up the call for questions. At the outset, I would like to say, although I am very gratified by the company's results in the first quarter, comparisons to the pandemic year of 2020 are analytically difficult. The pandemic clearly disrupted the hospice industry. The U.S. government stepped in to help with the relaxation of sequestration and several other operational modifications. The net effect of the pandemic and the government's actions was to allow VITAS to report an increase in adjusted net income of 25.7% in 2020. VITAS had a patient base in which median length of stay fell to 11 days.
The most complex issue still facing VITAS is the disruptive impact the pandemic has had on traditional hospice referral sources and low occupancy in senior housing. This disruption continues to impact our admissions and traditional patient census patterns. Fortunately, admissions in hospitals have largely normalized, and some of our senior housing referral sources are beginning to show improvement in occupancy and related referrals. I firmly believe senior housing will recover. Senior housing is in the early stages of recovery, and we do not have enough data points to accurately predict when senior housing referrals will return to pre-pandemic levels. With that said, VITAS is performing in line with our previous guidance. Roto-Rooter operating results continue to be exceptional. Strong residential plumbing and drain cleaning demand has been more than adequate to compensate for the slight weakness we continue to observe with our commercial accounts.
We have now had three consecutive quarters of record demand for our Roto-Rooter residential services. Residential revenue totaled $144 million in the first quarter of 2021, an increase of 32% when compared to the prior year 's quarter and a 7.2% sequential growth when compared to the fourth quarter of 2020. Commercial revenue totaled $46.9 million in the quarter, an 8.4% decline when compared with the first quarter of 2020. Although our commercial demand has not yet normalized to pre-pandemic levels, this decline has shown significant improvement when compared to the commercial unit -per-unit revenue declines of 29.1%, 11.6%, and 9.8% in the second, third, and fourth quarters of 2020, respectively. Aggregating Roto-Rooter activity, which includes branch operations, independent contractors, as well as franchise fees and product sales, Roto-Rooter generated consolidated first -quarter 2020 revenue of $212 million, an increase of 18.9%.
With that, I would like to turn this teleconference over to David.
Thanks, Kevin. Let's turn to the VITAS segment first. VITAS's net revenue was $316 million in the first quarter of 2021, which is a decline of 6.5% when compared to the prior -year period. This revenue decline is comprised primarily of a 7.1% decline in days of care. Our days of care were negatively impacted 111 basis points by the 2020 leap year. Our first quarter 2021 revenue included a geographically weighted average Medicare reimbursement rate increase, including the suspension of sequestration on May 1st of 2020, of approximately 2.8%, offset by an acuity mix shift, which reduced revenue by approximately $9.1 million, or 2.7%, in the quarter when compared to the prior year's revenue and level of care mix. In addition, the combination of a lower Medicare Cap and other contra -revenue changes offset a portion of the revenue decline by approximately 50 basis points.
Our average revenue per patient per day in the first quarter of 2021 was $198.95, which, including acuity mix shift, is basically equal to the prior year period. Reimbursement for routine home care and high -acuity care averaged $170.14 and $991.77, respectively. During the quarter, high -acuity days of care were 3.5% of our total days of care, 71 basis points less than the prior -year quarter. In the first quarter of 2021, VITAS accrued $1.5 million in Medicare Cap billing limitations. This compares to a $2.5 million Medicare Cap billing limitation we recorded in the first quarter of 2020. Of VITAS's 30 Medicare provider numbers, 27 of these provider numbers currently have a Medicare Cap cushion of 10% or greater. One provider number has a cap cushion between 5% and 10%.
One provider number has a cap cushion between 0% and 5%, and one provider number currently has a fiscal 2021 Medicare Cap billing limitation liability. This is based on actual Medicare revenue in admissions in the first six months of the Medicare Cap fiscal year. VITAS' first -quarter 2021 adjusted EBITDA, excluding the Medicare Cap, totaled $58.3 million in the quarter, which is a decrease of 3.3%. Adjusted EBITDA margin in the quarter, excluding Medicare Cap, was 18.4%, which is a 66 basis point improvement when we compare it to the prior -year period. Let's turn to Roto-Rooter. Roto-Rooter generated quarterly revenue of $212 million in the first quarter of 2021, an increase of $33.7 million, or 18.9%, over the prior -year quarter. As Kevin noted earlier, total Roto-Rooter branch commercial revenue totaled $46.9 million in the quarter, a decrease of 8.4% over the prior year.
This aggregate commercial revenue decline consisted of drain cleaning revenue declining 5.8%, plumbing revenue declining 5%, and excavation declining 19.5%. Water restoration for commercial use increased 8.8%. Our total Roto-Rooter branch residential revenue in the quarter totaled $144 million, an increase of 32% over the prior -year period. This aggregate residential revenue growth consisted of drain cleaning increasing 29.5%, plumbing expanding 34.9%, excavation increasing 35.8%, and water restoration increasing 28.7%. We anticipate providing updated 2021 earnings guidance in July of 2021 as part of our second quarter 2021 earnings press release. I'll now turn this call over to Nick Westfall, President and Chief Executive Officer of our VITAS subsidiary.
Thanks, Dave. In the first quarter, our average daily census was 18,050 patients, a decline of 6.1% over the prior year. As Kevin discussed earlier, this decline in average daily census is a direct result of the disruptions across the entire healthcare system that impacted traditional admission patterns in the hospice starting in March of 2020. Our hospital-generated admissions have largely normalized to pre-pandemic levels. However, referrals from senior housing, specifically nursing homes and assisted living facilities, continue to be disrupted. As Kevin mentioned, we have seen stabilization and pockets of improvement in senior housing admissions. However, it remains too early to reasonably project the pace and timeline for senior housing admissions to return to pre-pandemic levels. In the first quarter of 2021, total admissions were 18,135. This is a 2.5% decline when compared to the first quarter of 2020.
However, these 18,135 admissions in the first quarter of 2021 compare favorably to the sequential admissions of 16,822, 17,973, and 17,960 in the second, third, and fourth quarters of 2020. In the first quarter, our home-based pre-admit admissions decreased 1.5%. Hospital-directed admissions expanded 2.4%. Nursing home admissions declined 26.2%, and assisted living facility admissions declined 13.1% when compared to the prior year quarter. Our average length of stay in the quarter was 94.4 days. This compares to 90.7 days in the first quarter of 2020 and 97.2 days in the fourth quarter of 2020. Our median length of stay was 12 days in the quarter, which is two days less than the 14-day median in both the first quarter of 2020 and the fourth quarter of 2020.
Before I turn this call back over to Kevin, I wanted to again thank our VITAS team for their continued commitment and perseverance in providing high quality of care to over 90,000 patients and their families since the start of the pandemic. With that, I'd like to turn this call back over to Kevin.
Thank you, Nick. I will now open this teleconference to questions.
As a reminder, if you would like to ask a question, please press star then one on your telephone keypad. Again, that is star one to ask a question. Our first question will come from the line of Joanna Gajuk with Bank of America.
Thank you. Good morning. Thank you so much for taking the question. I guess I missed this last comment about the admission patterns from these different referral sources. Can you repeat that? I guess, also, can you talk about kind of how this progressed through the quarter? Just thinking about it, because to your point, you're seeing some pockets of improvement when it comes to the referrals from senior housing and I guess normalization in hospitals. Can you talk about kind of how this trended over the quarter, say, January and then February and March? Just thinking about these referral sources.
Joanna, I'm going to turn it over to Nick in a minute here, but I just want to put it in a general context. What we saw during the pandemic was senior housing was particularly affected. I'll focus on Florida for a minute, but in Florida, very specifically, nursing home admissions, that is, people going into nursing homes for obvious reasons, were falling. Activities in nursing homes were curtailed. The access to the nursing homes by family and our caregivers was severely restricted, which also meant that it was impossible to talk to people, to families of people who occupied senior housing, who were generally interested in hospice but had no face-to-face access with VITAS or other hospice providers during that period.
Net effect is that our hospice admissions that we were getting were largely coming, more than normally, from hospital discharge planners, which have a shorter length of stay. Let's say, maybe average length of stay from 30 or less from that type of provider. The net effect is we saw our median length of stay just consistently fall during the period. That's a general context, which I know you understand. I'm going to turn it over to Nick, and he's going to give you the numbers and say we're observing that, but it's out of our hands in many respects. We need all those things to happen. Occupancy in senior housing isn't going to return to pre-pandemic levels until all the activities they have, all the visitation they have, and all the services are available.
I think those are, with the vaccinations, coming in large measure, but the timing of which is outside of our hands, and we don't make any projection of it. Joanna has requested to repeat the numbers, Nick, and go ahead, but I just wanted to put it in that context.
Joanna, in terms of the first quarter, just real fast, the home-based pre-admits were down 1.5%, the hospital was up 2.4%, nursing home was down 26.2%, and assisted living was down 13.1%. Only other additional comment to piggyback on what Kevin was articulating is if you go to the non-nursing home senior housing segments, ALF and other sub-components, throughout the quarter, there was some evidence in certain states and pockets of ongoing improvement; it's very early in those trends, which is why the macro comment of continuing to observe and ensure we're there to support as well as analyze all available information, both internally as well as externally, impacts all our forecasting that we'll come out with and continue to provide further granularity on, as was alluded to in the comments at the end of the second quarter.
Right. I guess I get what you're saying, so of the 13% decline for assisted living, is it fair to say that the exit rate in March was better than that?
Yep. There's progression throughout the course of the quarter, but with the volatility, it's really market -specific. When I say market, it's local, but also on a state level as well. There are a lot of things that impact it, not to state the obvious. Where the state is and have a comfort level with the community for not only safety and all the other social components that Kevin was talking about really influence not only occupancy but also net new lives coming into those settings as opposed to leaving those settings as well. That has consideration towards how many new referrals we get from those settings as opposed to the ability for us to continue to access existing patients in those settings to provide care.
Right. On this last point, is there kind of all clear , or are there still markets where you're not allowed to go in?
At a national federal level, there is an all-clear component. The adoption on a state-by-state level, and particularly on a facility-by-facility level, sometimes, the pandemic has taught us, there's unique adoption. What we've been successful in is really, and it's a macro statement: Providing education, differentiation, and an understanding at every single one of those facilities that VITAS as a provider, shows up with our staff who are committed, as well as with all appropriate PPE and safety protocols to protect not only their staff but all the residents inside of that facility.
There are still restrictions. To answer your question, Joan. It varies; there are different levels of restriction. In Florida, is there any nursing home where we are prohibited from being on-site? The answer to that is no at this point.
Yep.
There are still levels of restrictions.
That's right. In some cases, on specific cases.
Right. I guess it also is related and goes hand in hand with the concept you mentioned before, Kevin, in terms of just how open these communities are for these residents in terms of attracting new residents. I guess it's more relevant for the senior housing in terms of the social aspects of what's going on there. What are you seeing there in the assisted living? Because it sounds to me like your guys thinking that part of the long-term care is going to be the area where the improvement will be occurring faster than nursing homes. Can you talk about, kind of specifically, senior housing and any indications there, and how does this compare with nursing homes in terms of where things are tracking for their occupancy and referrals from them to you?
Not too much outside of a macro level, Joanna. I hesitate on some of the macro commentary because it really is unique on a community-by-community basis, what we're alluding to, which we hear consistently across the country, and everyone hears inside of the earnings calls for the publicly traded companies, is it's not only a safety perspective, it's not only an access perspective, but it also is the evolution back towards the new residents and the attractiveness and comfort level for those residents and their families to place their loved ones in that setting of care to continue their care continuum and meet their care needs on a go-forward basis. That's going to take some time to continue to evolve, and it's something we're looking at and being there in lockstep as a partner to help support on a daily basis.
I think maybe one element of your question is we don't have, and we don't rely on, any information based on our observation of what's going on in senior housing. It's too diffuse. We rely on the kind of things you probably would look at, the industry reporting, and the problem with that is there's a lag in the actual situation to the reported numbers. We're looking at the same numbers you might look at if you're looking at those numbers, and the problem is there's a lag, and we don't have enough data points to suggest that we're really a reliable indicator of something else or a precursor to what's going on.
Directionally, to reinforce Kevin's comment when he opened the call, we feel confident in the rebound. It's a matter of just timing and trajectory.
Right. I agree with that. Also, I guess this is just a portion of your referral sources, and the hospital referral seems like stabilizing there, because obviously, there's activity coming back to the hospitals. Also, can you talk about your strategies around maybe going after new referral sources more, from physicians? I guess if these seniors are not in those institutional settings, they are somewhere else, like the home. Is there a strategy to access and educate these patients where they are?
Yeah. We pivoted that strategy in the middle, the early part of the pandemic last year. We will moderate proactively and reactively where we focus our educational needs based upon where patients are accessing the healthcare system. The piece the pandemic has taught us in quick order is physician offices became the first point of a lot of that access, whereas maybe they went to other avenues in the past. We have doubled and tripled down on our efforts of continuing to support that and bridge and grow those relationships. It's going to be an important factor for us on a go-forward basis that hopefully there's stickiness towards the relationship we establish and the confidence those physician offices now have in VITAS to provide high-quality care to the patients that they're seeing that are appropriate and eligible to receive hospice services.
I guess just to close the loop, in terms of the guidance for the year, you're saying that you don't have enough visibility on the VITAS side to adjust the guidance. Clearly, the sequestration relief extension, and you guys talk about this being like a $6 million per quarter benefit. Is that the right way to think about it for like three quarters this year, right?
Yes, that would be correct. Also, we anticipate a lower cap than we have originally anticipated. Again, the keys can also be the trend line of recovery of senior housing. We really do need three more months of data points to be able to give an accurate projection for the second half of 2021.
As a company policy, we give guidance, we report earnings for the previous year, and we just kind of go dark on guidance till the end of the second quarter. Unless something dramatic has happened. That's just our company policy. Trying to avoid the situation of reporting quarterly guidance.
Right. Because that's my last question, sorry. In terms of Roto-Rooter then. That segment did much better than we were modeling, and it sounds like also better than what you were expecting, and the revenue growth, I guess, is much greater than the prior guidance for the year. Can you kind of explain to us the drivers for that and how sustainable that strength in Q1 was? Thank you.
Yeah. Joanna, I do appreciate the question; we really, at this point, will address guidance on a go-forward basis. Certainly, we saw strong momentum in Q1, as well as across the board in residential in all four critical areas. We're talking plumbing, drain cleaning, water restoration, and excavation. We will update the guidance in July. Without a doubt, momentum seems to have even strengthened from the fourth quarter of 2020. We'll talk about this more in detail in July after we release the second quarter earnings.
I guess you're saying the kind of unusual weather in some of the parts of the country in March wasn't a big part of it?
Yeah, I don't think it was. Yeah. Sometimes we run into a polar vortex or something, and it causes huge problems. I think that, absent something like some of the Texas markets where they had crazy weather, snow, and freezing temperatures for an extended period of time, there were fewer weather-related things this year than maybe a typical winter period. It was just strong. We've been asked this many questions, is the fact that the pandemic has people at home more, do they have it focusing more on getting things fixed at their home faster and more completely? Maybe. We just know that the phone is ringing off the hook. Really, when we talk in terms of sequential growth for Roto-Rooter, sequential growth is a given.
We say that our advertising reach through Google and the internet is such that we have a competitive advantage, the phone is going to be ringing. The sequential growth is going to depend on adding more skilled manpower, which is a constant battle. The success in the quarter is an indication that Roto-Rooter was able to do that. Sequential growth will tie to continued success in that regard. It's hard to say. I can't really give a clear description of why it's happening other than the phone is ringing, and our job is to get an ever-expanding workforce out to answer those calls.
All right. I guess I'll go back to the queue. Thank you.
Our next question will come from Frank Morgan with RBC Capital Markets.
Good morning. I hopped on late, so I apologize if this one was already asked. As I looked at your results, it looked like cost management was really extraordinary and nice margin expansion. I'm just curious: how much room is really left in terms of productivity management or anything else you're doing on the cost side? From here, is it really more just a function of seeing a recovery in the top-line growth again? My second question, and I'll hop, is obviously: Is Humana announcing that they're pulling in the Kindred at Home piece and spinning off Hospice as a separate company? Any commentary about what you think that means for the industry, and how often do you see them in the marketplace, and do you think anything changes as a result of that? Thanks.
The first one, Frank, this is Nick; I'll take it. The answer is sort of the same as it has always been. It's always going to be a combination, right, of not only managing growth from an admits, but also ongoing expansion of median length of stay and days of care that comes with that, and continuing prudent cost control measures. The two actually go hand in hand, meaning as we continue to bring on more patients and find available staff, we look for not only efficiencies but really full utilization of all of our clinical disciplines to provide that care. Like every hospice organization, there are always opportunities for continued growth there and evolution of that, as well as leveraging to complement, but not replace, some of the relaxation that the government has appropriately put in that really elevates care, like telehealth provisions.
That's really an opportunity for us to really further elevate our engagement with the families as well as the patients and balance out the physical needs as well as the remote or quick question needs that we've figured out how to navigate throughout the course of the pandemic. It really is the ongoing combination of growth while staying on top of it; it's not cost control, but it's prudent utilization of all the dollars for which we receive reimbursement .
Would you say, Nick, there was some productivity improvement as well as you had scarce labor, you got more efficient throughout the pandemic, and you anticipate keeping those procedures in place?
That's right. That's what we're honed in on.
Your other question on Humana is an interesting one, Frank. If you think about the hospice business that they effectively acquired, that was largely the Odyssey and VistaCare acquisition that kind of worked its way through multiple acquisitions up the food chain.
Yeah.
Right. Odyssey acquired VistaCare, which was all hospice. Gentiva acquired Odyssey VistaCare, then Kindred, and then went to Humana. It is our understanding those were still kept relatively separate. Getting a little dangerous now —I'm speculating on the total integration strategy. I think it was an easier play for them to focus on home health. Beyond that, it's hard to really discern what their logic was on just taking in the home health and leaving the hospice piece where it sat with the co-ownership.
Frank, this is Kevin. Just really to show you, this is pure speculation, but there's something in there that you have to remember : hospice patients coming from a hospital setting are much more likely to be short -stay patients. Much tougher to make a profit on, as far as the care and service of them, if when you're talking about a full -service hospice. It doesn't shock me too much that a hospital system sees those elements or of a hospice within their control. It's kind of what I expect. It's certainly what Nick expected to see happen.
Yeah.
The rumors. It's consistent with everything we thought was going to happen over the last six months, probably.
Yeah. Frank, the last comment, this is Nick. To not get fear too far out from a speculation perspective, but it is something that gets discussed in dialogue, whether it's VBID with CMMI and the demonstration model. What it further helps to go illustrate when you have a capitated full risk model like Medicare Advantage is from an insurance plan perspective, and you couple it and try to think about how it's going to operate with the hospice benefit, which effectively was the first full capitated at-risk model. There's clinical care considerations and everything else that goes into that. Both are efficient ways to deliver care to the population.
You have all the care delivery implications that get wrapped around that as it relates specifically to hospice , as home health may migrate more and more towards that, but it's still as much a fee -for-service, volume -driven component as well, even with PDGM to a certain degree.
Thank you.
Our next question is a follow-up from Joanna Gajuk with Bank of America.
Yes. Thank you. Just a couple follow-ups. On admissions, right, you mentioned that the year-over-year comp was difficult, but quarterly numbers have been improving the last couple of quarters. Can you also similarly talk about any progression through the quarter in terms of admission trends?
Joanna, you're alluding to the sequential quarterly growth.
Yes
I alluded to in my comments and how that would have played out on a month-to-month basis inside of the quarter of March.
Right. Yep.
The only thing I would say is the median length of stay actually showed a steady increase from January and February to March, going from 11 - 13 days, averaging 12.
The other point we'd also like to make is a 2.5% growth in admissions from hospitals in Q1 of 2021, in my opinion, is incredibly impressive because, remember, last year in the first quarter of 2020, the last two months of March, hospitals largely flushed their patients, and we had an abnormally huge influx of hospitalized pre-admission locations for hospice patients. The fact that we grew 2.5% actually was exceptionally positive for the quarter.
Joanna, the reason we don't really get into the monthly component of it is because it can become very scientific related to how many days, which days of the week, what the concentration was, Monday through Friday. Every setting has historical patterns around when we typically receive referrals that are coincidental with that business model. It's best to spread it and look at it over the course of the quarter so we don't get into an interplay of how many Fridays there were in a month as opposed to that type of thing.
I would make one other comment. In this milieu, we always know that admissions aren't equal, but in a normal situation, we just say, Well, this is what we expect, and it'll all come out in the wash. Right now, we're hypervigilant on admissions from various sources and less concerned with hospital admissions that are more likely to be short stays. We've now, from our perspective, we're looking at it in pieces of what we normally report for admission. We're less concerned. For instance, I'll give you an example. If our admissions from the senior housing market were to be strong for a month and hospital admissions were to contract a bit, we wouldn't be concerned. We'd say, That would be fine. Number one, we have a big cap cushion in Florida.
We'd be using our focus, our sales focus, on the senior housing opportunity. It's over the next six months or so; the admissions number is going to be less important than it normally is, at least from our perspective. It's where we're getting the admissions, which is going to be more significant.
Right. Just to follow up on something you mentioned about the leaner labor force. The labor force was scarce, and that creates productivity. Can you flesh it out for us in terms of what's happening there and kind of what implication it has for going forward in terms of any changes you anticipate as this pandemic go beyond that, where we are now?
The flush -out on the go forward by nature will be incorporated into any guidance as we're anticipating that. Absent spending another two hours going through the dynamics of how we think about the operating model with it, there are things that we've learned through the pandemic that we'll continue to memorialize that not only make us more efficient but also drive the quality of care for the patient and family up, as I was alluding to. Secondarily, and I don't want to discount this, there are pockets and needs as we continue to not only retain our existing staff, which we've done a good job of throughout the pandemic, but also bring on, at the appropriate time, new clinical disciplines as we continue to grow and get back towards a growth trajectory of the business.
The difficulty and the competitive nature of identifying and being able to bring in those resources is something we're also honed in on as other healthcare providers and systems are all competing for that same resource at this time, many of whom exited the healthcare system for a variety of reasons through the point of the pandemic. Everyone will be, I'm sure, speaking about and focused in on that for the foreseeable future.
Joanna, there are a lot of granular changes. Nick, how many hospice teams do you currently have in place?
Over 317.
317 hospice teams. It's a lot of granular changes that individually aren't much that accumulate up to what we would consider, on a go-forward basis, a material productivity impact. We really do need to wait to get to the other side of the pandemic to truly measure it.
Yep.
Okay. I understand. There are, yeah, there are few changes that will kind of aggravate, because I guess that was also to Frank's question about the margin that was so strong in the quarter. I'm just thinking about what it means for the future. I guess—
It's a high margin. There's no question about it. I look at Roto-Rooter's margin; it's almost 27%. If you'd asked me a couple of years ago whether that was even possible, I would've said no. It's proven difficult for us to predict margin just because everybody thinks they're doing as well as they can, and just seemingly, both companies have had big improvements almost quarter over quarter.
Really, to close on a high note, and we've seen this on multiple crises, whether it's the Great Recession, actually, whether it was 9/11 or now with the great pandemic, and both Roto-Rooter and VITAS have; every time there's a crisis, we actually emerge better positioned and stronger post that crisis than when we entered into it. Frankly, we're exceptionally satisfied with the way our operating management team, right down to the field level, has reacted to these and has figured out a way to make changes to make us more productive without sacrificing quality of care or quality of the customer experience at the Roto-Rooter level. We think we'll emerge from this as well, much stronger than we went into the pandemic in terms of operating practices.
Yeah, clearly the margin's very impressive. Just the last note in terms of the hospice, the proposed regulation from CMS includes a new quality measure, the Hospice Care Index, and also the Hospice Star ratings, I guess, similar to what home health has. How do you see VITAS positioned then in general, any high level comment there from you about this? Thank you.
Joanna, we've always been hesitant to comment on proposed rules until they get finalized in August. I think the macro comment is the ongoing recognition of the value of the hospice benefits baked into the proposed 2.3% price increase related to it. We're encouraged to continue to see the stability there. As it relates to the evolution of how quality will continue to be defined and shared on a public level, there are a lot of detailed nuances inside of it, but all in all, of course, we are an advocate for the ongoing transparency and the desire to really figure out both qualitatively and quantitatively how hospice and quality and value to the overall system is going to be defined and reported on a go-forward basis. It's a non-unanticipated, continued step in the right direction.
We'll respond accordingly like we always do to the proposed comments.
Great. Thank you so much for all the color.
Thank you. I would now like to turn the call over to Kevin McNamara for his closing comments.
Well, I just want to thank everyone for their attention and their questions. We were, as I mentioned earlier, gratified with the results in the first quarter. Still difficult conditions, and I thank everyone for listening. We're back at the end of the current quarter. Thank you.
Once again, we'd like to thank you for participating in today's Chemed Corporation first quarter 2021 earnings conference call. You may now disconnect.