Okay, we're going to get started with our next panel. I'm Scott Fidel. I'm the Healthcare Services Analyst with Stephens. We're thrilled to have the Pennant Group back with us once again at our conference. Pennant is a leading operator in two business lines, in home health and hospice, and then in senior living as well. We've got a full group from the company here today. We've got, to my right, Brent Guerisoli, the CEO, John Gochnour, who's President and Chief Operating Officer, Lynette Walbom, who is Chief Financial Officer, and then also Andy Rider is joining us as well. Andy is the President of the Pinnacle Business Line for the Pennant Group. First of all, it's great to see you all and have you back here again today.
Brent, I think, like we do each year, I'd like to just sort of start maybe with, if you want to give us a State of the Union on The Pennant Group, maybe for investors that aren't as familiar with the company, sort of just give a quick summary of what differentiates The Pennant Group. It's been a really active year for the company in terms of the growth agenda. So maybe we'll just sort of start out with your sort of quick elevator pitch, I guess, on The Pennant Group, and then we can take it from there.
Yeah, well, thank you, Scott. We're excited to spend some time together today talking through a few questions and sharing about the Pennant story. So we fundamentally believe that healthcare is a local business, and the best way to operate in this space is to operate at the local level. And so as an organization, we see ourselves as a leadership company first and foremost, and secondarily, that we offer healthcare services.
And through that, we believe that as a leading leadership company, we can create these life-changing opportunities for our local leaders to build businesses in their own communities. And that's really the secret sauce to our success. The other thing is our operating model is such that it's really pure accountability through what we call clusters. And that allows us to share best practices across the various markets and geographies that we're in.
It allows local decision-making for these leaders within their operations to provide the best care possible for the patients and the residents and the clients that we see, again, at the local level. This is fundamentally important because as we grow our business, we are aligned with the goals of the organization, and the goals of those local leaders are perfectly aligned. We create incentives for the operators to create value. As they create value, they participate in the upside. Not only that, we focus on kind of four key areas.
First and foremost, as a healthcare company, we are clinically based, so we have to have strong quality care. Second, it's the culture. Those local teams are building strong cultures to really recruit high-level talent, but also to be an important solution in their markets. Third, community, the ability to grow their businesses locally.
And then, lastly, financially. As they're strong financially, they're able to reward the people that work there, but also they're able to have a strong return, create value, and participate in the upside. So overall, again, that idea, that fundamental principle, we are a leadership company, and healthcare is a local business.
All right, perfect. Wanted to, sort of staying at the high level, sort of ask. I have a bit of a discussion here given the timing with each of the companies around the elections and be able to get your perspectives on what you're focused on as you think will be maybe the key from a tactics, from a strategy perspective, sort of considerations that you're taking into account.
Clearly, there's been a lot of sort of focus for already the market around some of the home health dynamics, which investors understand well in terms of the reimbursement backdrop that we've had, which has been difficult, certainly, in the Medicare Fee-For-Service side under the Biden administration and potential for that to evolve. Also, though, interested on the senior living side too, what you experienced maybe during the first Trump administration relative to the Biden administration.
So maybe sort of starting with sort of that initial sort of jumping-off point just around sort of how you see the elections potentially affecting each of the key business lines. And then I'm going to have a follow-up question around this.
Yeah, I'll start on sort of the election element. I might let John talk a little bit more specific to some of the impacts regulatorily and from a reimbursement standpoint. But first and foremost, we're agnostic when it comes to which parties in power or, but there are certainly elements of the way that what we've experienced over the last, and we've been doing this for 13, 14 years. So we've seen both Republican and Democratic leadership in place. And so there have been some trends. I think the first one and probably something that we're excited about, in general, the enforcement environment under Republican control tends to be lighter in the sense that it's that regulatory burden, the oversight. We've seen a significant increase in the number of third-party audits, for example, that could come through.
Of course, we feel confident in our compliance and our ability to navigate those, but it still takes time and resources and money to really respond to those sorts of things. So we think as the regulatory environment loosens up, that it should help us from an operational standpoint to be able to just operate on a regular basis and do what we do well. I think there's also a lot of question around things like the inflation and the labor environment. We have seen a lessening of some of the inflationary pressures, but we've still experienced about 5% labor inflation this past year. That's down from 11%, which was a high a couple of years ago. We're optimistic that that will continue to transition lower and lower to pre-COVID levels.
Hopefully, I know it's a goal of this upcoming administration to continue to drive those inflationary pressures down. There is, we've seen tax breaks in the past, and if there are continued corporate tax breaks, that just would allow for us to have better bottom-line performance from a net income standpoint. We're optimistic that perhaps we might get some of those as well. Lastly, from a reimbursement perspective, what we've typically seen is reimbursement, at least under the previous Trump administration, actually improved, especially on the home health side. That may or may not happen. We don't exactly know what CMS is going to do, and it's not necessarily driven by the party that's in charge.
But we do expect that after several years of rate adjustments on the negative side for home health, that we ought to see some relief in the coming years. I think there's going to be another year of sort of flat reimbursement. But going forward, I think we're optimistic that we'll continue to see, or we'll see improved reimbursement rates across our businesses.
I'll just respond, Scott, I think, to your question about the home health reimbursement, and then maybe just a touch on a little bit on senior living. I think what we saw in the culmination of the final rule is what we have seen the last couple of years, which is an initial proposed cut that would be extraordinary, extraordinarily painful in a period of rising labor inflation, and then a government sort of recognition that trying to put all of these behavioral adjustments into one year doesn't make sense and has the potential impact of reducing access to care, so what we saw CMS do is, again, what they've done the last two years.
They've cut that behavioral adjustment in half, yielding a net, essentially flat reimbursement update, which is still very difficult in the environment that we're in, but it gives us hope.
We've got one more year probably of the behavioral adjustment that we can get back into a normal cadence where reimbursement updates reflect the impact of inflation and, more importantly, the value that home health services are adding to the continuum of care. And I think that's the sense of optimism that I feel right now about where, with the new administration in place and the fact that there will be a focus on overall what is going to drive value to the healthcare continuum. It's getting people the right care in the right place at the right time. And what we feel like we're well positioned to do is deliver that care in the lowest cost setting, in the home, in assisted living.
These are the settings where, because of changes in technology and the capacity our nurses have shown to deliver ever higher acuity in the home and deliver great clinical outcomes, we have the potential to serve more patients, more vol, and meet the needs of this Silver Wave that's coming in the home. To do that, we've got to have our government partners recognize that this is the place where value exists. And we need to make sure that we fund home health and hospice, both of which show demonstrated impact on total cost of care in the right ways, and so we're optimistic. Again, like Brent said, we're agnostic.
This isn't a political conversation, but we're optimistic that in this new administration, as they focus on what's going to create value for the taxpayer, they're going to recognize that providing cost in the lowest cost setting with an emphasis on the value we can provide is going to drive more volume to home health, hospice, home care. And on the senior living side, I think we believe that we are well positioned to benefit from a trend towards senior living needing to serve a more acute patient. We are a healthcare provider at heart, and so we're well positioned to sort of take advantage of that trend as well.
Yeah. I get everything you're saying. What gives you confidence that this administration is going to see that? Because everything you've just said has been true for 10 years.
Yeah, it's a very fair question. And this isn't sort of a, it's more speculation than it is anything. What I think is what this administration is talking about is how do we use taxpayer dollars more efficiently? And I think if you look at the efficiency that's driven when care is delivered in the home versus in the acute setting, in the SNF, there is an efficiency that's driven in our setting, and we believe we're well positioned to benefit from that. What they're actually going to do, it would be speculation for me to comment on.
Yeah, and I guess one point that you mentioned, John, would just be thinking about the behavioral adjustments on the home health side, which have clearly been in flight for the last several years. I'm trying to think back to the prior Trump administration. I don't know if that's that level of sort of detail in the operational choices. I mean, it feels like CMS under the Trump administration also was doing BH adjustments in some areas.
So it's not like that necessarily goes away. But I think the way you framed it may be as a result of maybe sort of having an opportunity to reset around the overall value proposition and then where the trends are going to be able to drive more efficiency and value in the overall sort of channels is how you think about sort of layering in that the BH.
That's our hope. That's our hope is that we do a better job as an industry of portraying the value that we deliver overall to the system. The truth is, I don't think we see, I think next year we see another flat adjustment, the sort of absorption of that last behavioral adjustment offset by a market basket update that reflects the ongoing labor inflation that we're facing. But I do feel optimistic beyond that that we've got a chance to reframe the conversation and hopefully position home health in particular. Hospice has been steady, and I think appropriately so. There's a recognition that hospice adds value to the continuum of care, but we've really got an opportunity as an industry in home health.
Yeah, and I did want to follow up on the hospice side too. And for that exact reason, whenever things have been steady for a while, I don't knock on wood, I don't want to create anything, but it always seems like in healthcare services, once we all get comfortable and then like a shoe drops somewhere, not necessarily saying that's happening. But with that said, maybe can you sort of update us on the backdrop for hospice right now in terms of what you may be focused on as you look at sort of the regulatory environment? Obviously, the reimbursement environment on the Medicare side has been very consistent throughout the prior administration.
We have heard some sort of chatter around the channels just around, let's sort of say, the level of intensity just around sort of the audit cycle has maybe picked up, and that's been something that's been focused on around the M&A environment and ensuring sort of quality of assets is something important. And so definitely curious as a company that is obviously focused on it from the organic side, but also from the M&A side, how much of that particular theme is something that you guys are focused on and also building into your, I guess, criteria in evaluating hospice acquisitions?
Yeah, we see hospice as a critical part of the continuum of care and of delivering on sort of this promise to the Silver Wave of being able to provide quality care at a reasonable cost. And I think what you've seen is you've seen a willingness to acknowledge that in the reimbursement updates that we've seen. We've also seen a gradual increase in, okay, how do we measure the value that hospice provides? What quality indicators show the value that a particular hospice provider delivers? And this is a really important thing because you've seen in the industry, whether it was in California where there was that article released or the John Oliver special, these things where there's fraud in the industry. And that's unfortunate because this is the critical point in a person's life.
And we owe it as providers to deliver the highest quality care when we're dealing with a hospice patient in every circumstance. And so I think what we're seeing is that gradual desire to, how do we measure it? How do we measure the acuity? Because not every hospice patient is the same. Some require significantly more care. And so I think as we develop better quality metrics, then there is the potential at some point for the reimbursement model to shift from a per-day reimbursement structure to a more acuity-based reimbursement structure. That's been talked about for the last decade. We've not seen real substantial movement towards it. We're not afraid of it because we do believe that any disruption like that gives opportunities for our unique operating model to respond in the face of change.
With regard to the regulatory environment and the enforcement environment, I think what you're seeing right now is a very intense focus, particularly in those PPEO states that have sort of much more mandated enforcement around changes of ownership and transitions in ownership, where there's just an unnecessary burden being placed on providers where they're reviewing 100% of our claims, reviewing them pre-payment, and that's just totally unnecessary, and I think that's our hope is with the new administration,
obviously there's legislation in the form of the CARES Act that require some level of scrutiny, and we're fine with that, but we do feel like the burden, particularly on well-established providers with great track records of compliance, great quality outcomes, it's an unnecessary burden that we're hoping regulators will take a look at and say, what are we doing? We're using tremendous man hours from CMS.
We're burdening these providers, and that's taking away from their ability to invest in high-quality care, and so that's where I think Brent mentioned earlier that we hope there's an adjustment in thinking about the regulatory and enforcement environment, but I think we remain very optimistic about hospice. We think it's a critical part of the continuum of care. We think it adds tremendous value to the system, and we think we do it as well as anyone, and so we're excited to continue to grow.
We're really, I don't want to say agnostic about capital deployment, but we have been doing this long enough to see the cycles, to see home health reimbursement struggle from 2010 to 2015, to see home health reimbursement be strong from 2016 to 2018, and then to go back into a post-PDGM sort of adjustment phase.
And so we're going to continue to deploy capital across all three of our service lines where we have great leaders who are ready to jump in and operate those businesses well, where we feel like we have strong operations that can absorb them, help them integrate into the Pennant model and deliver and implement best practices to deliver great operational results. And then ultimately, where we see attractive pricing that allows us to purchase those businesses and get that five-year return that we feel like is a critical part of our growth engine.
I guess on the point of the regulatory overreach in hospice, Elon Musk right now is submitting suggestions for his new DOGE group.
There's our opportunity.
Regulatory overreach and efficiencies. So maybe somebody will put something in around the hospice reviewing 100% of claims right now as a good area there. Okay, great. Well, appreciate that. Let me just pause here and see if there's any questions while we're cruising along here. All right, please raise your hand if you do. Why don't we sort of sticking on, and maybe we could sort of segue into it just staying on hospice, but wanted to talk about just from the organic perspective, sort of where we are in that, let's call it that post-COVID recovery process. And particularly for hospice and senior living, I would say those are the two areas where we've still been gauging it from that type of perspective.
Home health has just gotten very difficult to do that because of, again, all of the regulatory pressures around reimbursement, affecting supply and muddling up sort of what would a normal sort of recovery trajectory would be. So, maybe can we sort of start with that? And as you think about executing on sort of getting both the hospice and the senior living businesses back to sort of peak sort of optimal pre-pandemic performance plus, because obviously you've been implementing a lot of lessons learned initiatives since then as well, maybe sort of bring us up to speed on where we are right now in that pathway and sort of how much, I guess, sort of additional continued tailwind does this represent into 2025?
Yeah, I would start by saying, first of all, I mean, there was disruption through COVID, but at the same time, we actually performed really well. Home health and hospice, we got hit the biggest on the senior living side. We saw a dramatic decrease in our occupancy. But for the most part, we've kind of outperformed on, especially the hospice side. We've just continued to grow both organically and inorganically.
And so where we saw the biggest impact was really on the length of stay. And that happened for a number of different reasons, partially just because of some of those referrals coming from our SNF and ALF partners, the length of stay reduced there. But for the most part, we've continued the growth on the hospice side. So other than a little bit of a blip in the early stages of COVID, we've had strong success there.
From a length of stay standpoint, we've kind of stabilized in the high 90s. We were just over 100 pre-COVID. There's a number of different factors for that. Sometimes geography is involved in that. Sometimes the types of referrals that you're getting is involved. So I think we're pretty much stabilized from a hospice recovery standpoint. We've, like I said, consistently performed and grown. A lot of that's driven by what we talked about before, our local leadership model. You've got teams in each of their markets going out and trying to produce referrals and bring on patients and things like that. They understand the needs of the markets. So they're able to provide in a clinical quality sort of way, but also really building those relationships with their community partners.
So I would say from a hospice standpoint, we're essentially fully recovered and we feel positive about the direction we're going. And secondly, on the senior living front, our occupancy was around 81% pre-COVID. We've just touched right around 80%. So we're almost fully recovered there. But there's a lot that has gone into that. One was almost a complete rebuild from a leadership standpoint in our senior living segment. We've invested a significant amount of time and energy in getting the right leaders in place so that they can run their operations.
At the end of the day, occupancy and just the quality of the experience for residents and for the employees, it's directly tied to leadership. It's why we're a leadership company first. If we can get the right leaders in place in each of those facilities, we're going to find success.
And so that's why we've had such a strong focus on investing in and developing talented local leaders to run those businesses. The other thing that we've done is we've made significant investments on the sales front, on understanding how to capture residents and reach out to families and local communities. And I'll let Andy talk a little bit more about some of those details. But in general, we feel good about the progress. There's still a ton of opportunity. And we think we're about back to pre-COVID levels, but based on our level of sophistication and investment, we think we can, over the next several years, surpass where we were even pre-COVID.
Yeah, I'll just add that on the leadership front. I think we're really pleased with, like Brent said, the progress in kind of rebuilding that foundational element. That gives us what we need to continue the momentum into next year and the years beyond. Occupancy, he addressed. We're seeing progress there. We're also seeing a lot of progress on our RevPOR in the quality of our revenue. I think we've been performing really well there. Obviously, the effects of that are somewhat dampened by the labor inflation environment and some of the challenges that we are still experiencing there.
And so that puts pressure on the margin where I think we have the greatest opportunity to continue to recover from a pre-COVID standpoint in the senior living space with the investment in kind of the foundational leadership element and the continued drive to improve our revenue quality and census. I think the path to recovery is pretty clear. It's a matter of executing and hopefully continuing to see some of the tailwinds really bear out in terms of on the occupancy front and on the revenue growth. So I think we're feeling very positive about the rebuild, the continued progress. And ultimately, it's, like I said, a matter of executing, a little bit of a matter of time.
On the census front, both in terms of revenue quality on the RevPOR and on the census from an occupancy standpoint, we're becoming more and more sophisticated, dialing in kind of our digital marketing efforts and really figuring out how to, on the direct-to-consumer front, capture those opportunities and drive our customer acquisition costs down. We're seeing progress there, which allows us to increase our investment as we find more efficient ways to attract an individual to our community.
That means more dollars can or those dollars can go further. And so, yeah, I think we're very optimistic about the path forward, and on that front, it's also heavily influenced by the leadership in the community. And as we have strong local leaders who are creating a special culture and environment, we're able to draw top-tier sales talent. And so those things are bearing out. It just takes time.
I want to follow up, and since we have you with us, and something that I talk a lot always with John and Brent and Lynette just around on the SL side, really the opportunity to really layer in and then actually generate the appropriate economic value for the clinical services that you're providing. I think you guys sort of build it up, refer to it as the care charges, essentially. From the operator's perspective and someone that's sort of executing on this, maybe if you can walk us through sort of where you stand with that, sort of as we look at the 2025, maybe try to frame how much opportunity that initiative can manifest in terms of on the financials for the senior living business.
Yeah, fantastic. Fantastic question. So I would kind of address it in two parts. You really have two elements in relation to CARES. You have about 75% of our revenue is a private pay base. And so individuals that are paying for care out of their own pockets. And so it's critical to address two components in that arena. Number one, the way you communicate with families, the way you assess a resident and capture the services that you're providing and then actually transition that into dollars from a revenue standpoint. We haven't been great necessarily at that in the past.
Improving our systems processes from the initial assessment, the ongoing assessment, the capture of all the cares being provided, and the communication then to our business office teams and our leaders that are actually communicating with families and at the end of the day, implementing those rate increases, whether it's on a point or minute basis or whatever, we're actually utilizing the tools and the technology that we have available to much more effectively capture those cares. That's reflected in part in our revenue growth, our strong RevPOR performance as we continue to focus on our ability to capture those care charges. The other 25% of our revenue is in the senior living spaces, government programs through Medicaid or waiver-type reimbursement programs. Every state is different and kind of administers those programs differently.
And so as we deepen our experience and knowledge state by state in the areas and regions that we provide services in, we're getting better and better at understanding how to accurately portray the care that we're providing and receive reimbursement for those services. So I think we're becoming more sophisticated on that front. The systems and processes that we're implementing are more rigorous and more consistent than they have been in the past. We're deepening our experience level with the states that we operate in and are capturing more there.
From a leadership standpoint, just to kind of tie it back to kind of Brent's initial point, as we continue to invest in strong leadership on the clinical standpoint, on the clinical front, those leaders better understand the services that residents need and are able to articulate those service needs to the families that are ultimately covering those costs. That's a big part of our margin recovery plan and represents significant opportunity for us in 2025 and beyond.
Great. And maybe is there a way to sort of translate that and as you think about the growth algorithm for the senior living business, and whether it's from a pricing yield perspective or revenue growth, and if we think about sort of, let's say we sort of resettle into like a 3%-5% type room and board inflationary environment, what incremental kicker you could think about seeing from the CARES initiatives in terms of is it one or two points of incremental revenue growth and then how that translates to margin? Very curious. And as we think about maybe sort of into an algorithm over more like a three- to five-year type of framework.
Yeah, I'll give a thought and then anything anybody wants to add, you can. But right now, our overall CARES portion, when you kind of strip out and break down some of the government reimbursement into care and kind of a room and board portion, even if they're paid holistically, it represents maybe somewhere in the neighborhood of 15%-20% of that revenue.
And so as you think about the overall impact that continued growth on that front has in supporting that margin, I think, yeah, I think you're accurate in thinking about 1%-2% kind of kicker. And I think also I would just point to as we go further down this path of drawing acuity into senior living, the better and more sophisticated that we as an operator can be in capturing that part of our business. John said we're a healthcare business at heart.
And so it positions us in comparison to some that are maybe a little more hospitality-based or come from those types of roots. As acuity continues to be driven into the senior living space, I think that represents even more opportunity on that front.
And I'm going to keep you for more while we have you here. And from the M&A perspective on the senior living side, and it's perfect timing to sort of talk to you about this since most recently you did just get back into the M&A game and senior living with the three acquisitions that you did in Wisconsin. And I'm curious from the perspective, I mean, obviously your strategy, the Pennant Group strategy around M&A is very driven by sort of leadership capacity. And when you have operators, leaders sort of ready to take on that type of responsibility and opportunity, we know that on the senior living side, there's been more of sort of this rebuild of the leadership depth on SL.
So I'm curious from your perspective, as you think about now capacity to start doing more M&A in senior living and where maybe that leadership rebuild had been a gating factor for a period of time, where do you think you sit at this point in terms of being ready to do more deals from the leadership perspective?
I feel like you're really putting me through the wringer. I was told I would only have to answer one question. I'm just kidding. I'm just kidding. I'm just teasing. No, I think we're really excited about the M&A landscape in senior living. The leadership absolutely has been a gating factor. And that's shown in kind of every phase of the rebuild that we weren't yet positioned really well to grow. We did one deal in 2022. We did two in 2023. And we've completed six in 2024. And so as that ramp starts to build, it's reflective primarily of kind of the outline around our acquisition thesis that was already described. Strong leaders. So first two, then what? Our strong leadership capacity and pipeline. That has to be humming, and we have to have leaders ready to go.
Secondly, strength in our local communities and clusters, which allow us to effectively transition and capture the value that is available. And then well-priced opportunities, which we're seeing a lot of. So while there's continued maybe challenges in handfuls of our markets, others are really strong on the senior living front and are ready for that growth, have robust pipelines of leaders. We've brought into our CIT program in senior living alone. I think we'll probably end the year about 35 leaders in our CIT program. So as that ramp really starts to increase, those leaders need opportunities. And luckily right now, the environment is such that we have well-priced opportunities that we can enter in. And I'll kind of remind the group that we have multiple strategies around how we can enter a senior living opportunity.
We can do so through our real estate opportunities where we can actually acquire, using our balance sheet, the real estate asset and the operation. We can enter through triple-net lease opportunities that are favorable to us that give us a lot of value creation and upside. We can enter through those lease opportunities that have purchase options down the road that allow us to create value and then execute on a transaction like that. We're not currently in any, but management agreement opportunities that we're kind of circling and looking at, so there are many strategies, some that require upfront capital, some that don't, which allow us to be good partners overall and balance with our cornerstone business that is a little more capital intensive to grow on the front end.
And so there's balance there, but it allows us to get to yes on a lot of deals with sellers in many different ways, which allows us to get deals done as well. So excited about the leadership pipeline, excited about the growth engine starting to really turn. And the future of senior living is hopefully bright here as we continue to execute on the fundamentals.
Well, we'll give you a spell now. Thank you. So I wanted to shift over and talk about the home care umbrella and then how it sort of manifests itself on the P&L. I was glad that we asked you guys about this on the three Q call where we definitely saw a meaningful lift in the revenue growth experience for that line in the Q1. There's definitely a few different inputs into that. But in particular, one, it did sort of shed a spotlight on the Hartford management service arrangement and sort of that starting to show up.
Would love to sort of talk about that relationship and then the pipeline for potentially doing other similar types of transactions. And then again, some of the management services type initiatives that the company has that we're starting to see sort of blossom, I guess, a little bit on the P&L.
Yeah, happy to address that, Scott. And I think it's important to recognize that our fundamental strategy and approach remains the same. Acquiring mid-size providers with single owners who have built what they can build and are ready to retire or step back, and we can put a leader in place and just add a ton of value through our best practices, through the power of that leader and through our cluster model and our operating model.
That being said, five years ago, we entered the Scripps JV, a joint venture with Scripps Health, one of the largest nonprofit healthcare systems in San Diego. That's gone extraordinarily well. We've added tremendous value clinically. That operation is running at five stars and has really improved from a rehospitalization standpoint. We've added a tremendous amount of value financially where a business that was really struggling is now thriving.
And the same thing from a growth standpoint, they've grown tremendously. And so that opened the door for the opportunity that we entered at the beginning of this year with the John Muir Health in the Bay Area. And in a similar vein, we've been able to step in. In both of those constructs, we are a direct owner of the business. The hospital retains a portion of the ownership, and we own a portion of the business. Hartford is a little bit different. So Hartford HealthCare is the largest nonprofit healthcare system in Connecticut. They have the largest home health and hospice business in the state. And that business had historically struggled.
They seen what we had done in San Diego and in the Bay Area. They said, "Would you consider coming and managing this business for a period of time?" Our response was, "Of course we would." There's a number of patients, thousands of patients where we have the opportunity to impact their lives. We have the opportunity to implement our operating model in a much larger transition. We've been through several phases of that. We've implemented our sort of technology suite. We're just finishing up the Homec are Homebased implementation, so we're excited about where we stand there. We've been able to work on a new Epic to HCHB integration that is a game changer, not just for this relationship, but we believe can be a game changer for other joint venture relationships.
All of that is sort of proceeding as we would hope it would be. The question just remains. This has given us the opportunity to build a service center out there in Connecticut that can support growth throughout the Eastern Seaboard. We're very excited about it. We feel like there is the potential that this would be an avenue that we grew. It would take a very unique circumstance. Hartford's a very special opportunity. I think for the most part, we will look to joint venture relationships with integrated health systems in the model that we've done with Scripps and John Muir. This has certainly been beneficial to them and to us. We've had the opportunity to impact a lot of lives in Connecticut and will have that opportunity going forward.
Great. Well, we've got around five minutes left, so I want to pause and see if there's any questions?
So all these businesses put together. And I guess from our perspective, where we could buy companies that kind of specialize in one area and put all the focus there, why is it better to invest in one that has kind of more diffuse focus versus those others?
Yeah, I think the way to think about us, and if you're familiar with the Ensign Group, which is the company we spun off from, we view ourselves as a leadership company, like Brent described. And so our focus is taking principles of leadership and an operating model and infusing them into these areas of healthcare that we support to build robust continuums of care that meet patients where they're at and deliver the right care in the right setting at the right time. And I think what's unique about the Pennant Group is we have home health and hospice. We have senior living. These are the lower-cost settings, like I was describing earlier. There's a ton of strategy in how they work together.
When a patient is at a senior living community, they're able to remain in that setting if they get the right skilled care at the right time. And where we can thrive is as we deliver that care through our existing home health and hospice partnerships. In the same vein, we have thousands and thousands of home health and hospice patients who are in different stages of their illness and disease process. At certain points, those individuals, it becomes too much for their family. They're in a position where they need senior living care. And so there's opportunities where people are having a good experience with us on both sides of our business to get them to the right setting at the right time.
And so I think as you think about what differentiates us, it's this focus on our operating model, on local leadership, on aligned incentives that allow entrepreneurial leaders to create value and share in the value that they create. And we've added, we've got those core businesses, but we've also added elements of the continuum of care, geriatric primary care, palliative care, non-skilled home care, PCS. These are businesses that meet patients where they're at and provide solutions that are necessary in the communities we serve. And so we're very excited about the combination of businesses we have.
We think that it reflects the changing nature of healthcare delivery. And we feel like it positions us well in these lowest-cost settings to really grow as this silver wave ages. The number of patients that are sort of in that core demographic that need our services increases exponentially over the next 15-20 years.
There's not an aligned reimbursement system, right? All those are reimbursed in different ways by different people. So managing all that from our perspective, it's just tough to figure out who's going to screw us next. Because I feel like maybe it'll be different on the Republican administration, but it felt like every time you get to March or July, it's like, well, where's the haymaker going to come from from left field? And so for you guys, we have to deal with three or four different reimbursement structures, or can you kind of work at the state level to get a uniform reimbursement structure where you guys kind of navigate that?
A couple of points. The other alternative way to view that is we have a diversity of payer source. Our home health business is about 50% Medicare, about 50% alternate payers, including Medicaid and private payers. Our hospice business is predominantly Medicare, and our senior living business is predominantly private pay. You benefit from the fact that those give you sort of a diversity of payer source. That's kind of how we view it, is that there's a diversity of payer source opportunity there. With regard to sort of lobbying and trying to influence policy related to reimbursement, we have kind of a focus on Washington because of the CMS implications of the Medicare business. We also operate at the state level.
And those Medicaid adjustments affect senior living, they affect home care, and they affect the Medicaid portion of both home health and hospice. And so I view it more as a positive because you have this diversity of reimbursement opportunity.
I would just add one thing, and this is a really important element of our model. You've got local leaders making decisions. And so because there's so many different sources of revenue, they're an entrepreneur. They're managing their own P&L. They have focus on their bottom line performance because it impacts their compensation. And so what you have is each and every operation has a leader that's trying to drive revenue growth and bottom line growth. And so even if reimbursement changes, that's why we've continued to perform both top line and bottom line because you've got leaders that are making decisions based on this changing dynamic. So if there's a shift in Medicare reimbursement, maybe there's a way to get a better, higher quality program on the managed care side.
If there's more opportunity on the hospital front versus home health, there's an opportunity to maybe invest more on the hospice business, and so what you've got is local entrepreneurs that are making real-time decisions, so it's a very dynamic environment where we can adjust quickly to whatever comes our way, and even though it does seem like there's constant reimbursement change, in the end, there are plenty of levers that we can pull at any one time, and those local leaders can pull at any one time to create value in the businesses they operate.
Believe it or not, I only got through one third of my questions, but we are out of time. We're going to wrap it there. Thanks again to The Pennant Group for joining us again today. Thanks.
Okay. Thank you.