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AMEDISYS Inc  (NASDAQ:AMED)
Q2 2019 Earnings Call
Aug. 01, 2019, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings, and welcome to the Amedisys Incorporated Second Quarter 2019 Earnings Conference Call. [Operator Instructions]

I will now turn the conference over to your host, Nick Muscato, Vice President of Strategic Finance. Mr. Muscato, you may begin.

Nick Muscato -- Vice President of Strategic Finance

Thank you, operator. And welcome to the Amedisys investor conference call to discuss the results of the second quarter ended June 30, 2019. A copy of our press release, supplemental slides and related Form 8-K filing with the SEC are available on the Investor Relations page of our website.

Speaking on today's call from Amedisys will be Paul Kusserow, President and Chief Executive Officer; and Scott Ginn, Chief Financial Officer. Also joining us is Chris Gerard, Chief Operating Officer; and Dave Kemmerly, General Counsel and Senior Vice President of Government Affairs.

Before we get started with our call today, I would like to remind everyone that statements made on this conference call today may constitute forward-looking statements and are protected under the safe harbor of Private Securities Litigation Reform Act. These forward-looking statements are based on information available to Amedisys today. The Company assumes no obligation to update information provided on this call to reflect subsequent events other than as required under applicable securities laws.

These forward-looking statements may involve a number of risks and uncertainties, which may cause the Company's results or actual outcomes to differ materially from such statements. These risks and uncertainties include factors detailed in our SEC filings, including our Form 10-K, 10-Q and 8-K. In addition, as required by SEC Regulation G, a reconciliation of any non-GAAP measures mentioned during our call today to the most comparable GAAP measures will also be available in our Form 8-K.

Thank you. And now I'll turn the call over to Amedisys' CEO, Paul Kusserow.

Paul Kusserow -- President and Chief Executive Officer

Thanks, Nick. And welcome to the Amedisys 2019 second quarter earnings call. I'm very proud of our performance this quarter, as we have once again generated very strong financial results, while continuing to deliver on our four strategic pillars. Our performance has allowed us to increase our EBITDA guidance range, which will increase from $205 million to $210 million to $213 million to $216 million, the details of which Scott will cover in his remarks. None of these results would be possible without our over 21,000 employees' unwavering commitment to providing outstanding care to our patients in their homes. I want to thank every one of you for helping to deliver such a strong clinical, operational and financial results. Again, it all begins with our patients.

With that, let's dive right into the progress we have made within our four strategic areas of focus, beginning with clinical distinction. For the October 2019 preview, our quality of care Star QPC score was 4.25, and we had 47 care centers at 5 stars, while 92% of our care centers were over 4 stars. As you will recall, CMS has introduced a new measure to the calculation of the QPC and removed a measure previously used to calculate Star scores.

The new calculation includes improvement in management of oral meds and no longer includes drug education, a measure in which we performed extremely well. We continue to work hard at improving our performance in this new measure, and expect that we will return to our quality scores prior to the calculation change. Providing quality care to our patients is what we are here for. It's why we do what we do, and we will improve our already impressive results.

For our hospice business, the hospice compare August 2019 preview of quality metrics shows Amedisys once again has outperformed the national average in all measurement categories. We are very pleased with these results and expect our clinical quality to continue to improve in hospice. These quality metrics are extremely important to us, especially as we continue to invest in and grow our hospice footprint.

Moving on to employer of choice. Turnover has been a key metric and a major focus area for us as retention of our people drives quality, operational efficiency and growth. As of the end of the second quarter, our total voluntary turnover was approximately 17%. We continue working diligently on turnover to better understand why people leave, so that we can counterbalance turnover with more and more reasons to stay. Much like our quality scores, we are proud of the work we have done here, but we'll not be satisfied until we lower this number even more.

Now, let's discuss operational efficiency. In order to maximize our operational efficiency, we must deploy clinicians with the appropriate training and skills to provide the care needed by our patients. Therefore, one of our priority 2019 operational initiatives is improving our RN to LPN utilization ratio. One factor that has a significant impact on our ability to move this number is having pay practices that encourage clinicians to conduct visits in which they provide care commensurate with their qualifications, or as we say, it allows them to practice at the top of their licenses. As such, we have undertaken a redesign of our clinical pay practices that should be fully implemented in Q4. We value all our clinicians as they are our most important asset, and are the drivers of our incredible patient care and outcomes. This shift to utilization of more LPNs and PTAs for routine visits, where appropriate for the patient, will not be disruptive to our operations or affect our quality. This initiative presents us with a great efficiency opportunity in the coming quarters to drive great care at less cost. Finally, driving growth.

In of our home health division, we had another strong quarter in all our key metrics. Total volume was 6%, total admissions were 7%, and Medicare fee for service growth was 4%, which is our strongest quarter of fee for service growth since the second quarter of 2016. In hospice, same-store admissions were up 7%, and ADC was up 5%, both impressive numbers given the very strong year-over-year comps our hospice business faces every quarter. Compassionate Care is integrating nicely and should kick in during Q4 to drive our growth rates higher.

In personal care, total hours per quarter grew approximately 6%, impressive in a tough labor market. Last week, we announced an innovative partnership with ClearCare, the personal care industry's leading software platform, representing 4,000 personal care agencies in every ZIP code in the United States. Our agreement with ClearCare creates an opportunity to establish a network partnership between Amedisys and personal care agencies using ClearCare in order to better coordinate patient care. Long term, this allows us to build a nationwide network of personal care agencies, and furthers our efforts to provide patients with a true care continuum in the home.

This relationship will also help us as we continue to have innovative payment conversations with Medicare Advantage plans whom have begun to recognize the value that combined home health, hospice and personal care services brings to their members and care delivery infrastructure. We will continue to update you all as our relationship develops. There is lots of work to do, but we're very excited about the numerous opportunities this presents us with. Thus far, early results are extraordinary with 268 personal care agencies, representing 29,000 caregivers in 38 states having already signed up to participate in the partnership with Amedisys.

Turning to M&A, Tuesday, we announced we have signed a definitive agreement to acquire regulatory assets that will allow us to conduct home health operations in more counties in New York, specifically, Westchester, Bronx and New York counties. This deal expands our footprint from King and Queen's counties, and allows us to build additional de novo locations, expanding our footprint to even more patients to -- in desirable locations in New York. Lastly, we have a very active pipeline and anticipate more activity in the second half of 2019 and 2020.

Now, moving to our favorite topic, the constantly evolving regulatory and legislative scene. On Wednesday, July 11, CMS released the 2020 home health prospective payment system rate update. First, as expected, the rule -- the proposed rule included as mandated by Congress in the Bipartisan Budget Act of 2018, a plus 1.5% market basket update. Second, CMS chose to increase the behavioral adjustments from 6.42% to 8.01%. As we expected, the remainder of the PDGM portion of the proposed rule was largely unchanged from the previous PDGM proposal released by CMS in late 2018. As such, we are rigorously continuing to prepare our business for continued success under PDGM.

Lastly, CMS chose to phase out the RAP, Request for Anticipated Payments during 2020. Behavioral assumptions, along with the phase out of RAP payments could pose significant financial and operational hurdles for many small to mid-sized home health agencies. In fact, one very reputable third-party consultant has modeled that if PDGM is implemented in full, as proposed, potentially over 30% of our home health industry competitors will have negative margins, presenting us with ample opportunity to expand our market share. Let me be clear. The message here is either way should PDGM be implemented as is, or if a bill prohibiting behavioral assumptions passes, we will be successful under the new payment model.

On the legislative front, our main focus continues to be on Congress, and securing additional bipartisan support for both of the industry supported Senate and House bills. As you will recall, this legislation would prohibit CMS from making rate adjustments based on behavioral assumptions, and allow only for adjustments based on observed evidence of a change in provider behavior. We have made impressive progress, and I'm pleased to announce that now we have 16 bipartisan cosponsors for the Senate bill, and 29 bipartisan cosponsors for the House bill. We think increased behavioral assumptions could enhance our bipartisan support for both bills.

In closing, on the regulatory and legislative issues, specifically PDGM, I want to emphasize that our preparation, scale, financial resources and clinical and operational expertise position us to successfully transition to the new payment. To summarize, whether a bill passes or PDGM is implemented as is, Amedisys will not only survive, but thrive. To quote Yogi Berra, when you come to a fork in the road, take it.

As you see, we had another great quarter and have continued our roaring start in 2019. Again, thank you to all the Amedisys employees for all you've done to drive this success. You continued to prove that no matter what the circumstances, focusing on our patients drives outstanding results.

With that, I'll turn it over to Scott, who will take us through a more detailed review of our financial performance for the quarter. Scott?

Scott G. Ginn -- Chief Financial Officer

Thanks, Paul. I am very pleased to report on another impressive quarter results. We had an excellent financial performance across all three segments, and we continued to deliver on our inorganic growth strategy. We closed and integrated RoseRock hospice on April 1, CCH integration and planned synergies are on target, and we currently have six open de novos.

For the second quarter of 2019, on a GAAP basis, we delivered net income of $1.02 per diluted share, an increase of $0.04 on $493 million in revenue, an increase of $81 million, or 20% compared to 2018. For the quarter, our GAAP results were impacted by income or expense items that we have characterized as non-core, temporary or one-time in nature. Slide 14 of our supplemental slides provides detail regarding these items in the income statement line items each adjustment impacts.

For the quarter, on an adjusted basis, our results were as follows. Revenue grew $85 million, or 21% to $499 million, EBITDA increased $12 million, or 24% to $61 million, EBITDA as a percentage of revenue increased 30 basis points, and EPS increased $0.21, or 21% to $1.21 per share.

Turning to our second quarter adjusted segment performance. In home health, revenue was $319 million, up $25 million, or 9% compared to prior year, driven by a 6% increase in same-store total volumes. On a same-store basis, Medicare admissions were up 4%, episodic admissions were up 6%, and total admissions were up 7%. Medicare revenue per episode was up 2.7%, visiting clinician cost per visit increased to $1.90 compared to prior year, driven mostly by planned salary increase. Overall, cost per visit was up $1.79 compared to prior year on a 4% increase in total visits.

Gross margin improvement was driven by volume and rate increases across all payers, as well as a 1.2% decline in utilization. Segment EBITDA was $57 million, up over $8 million with an adjusted EBITDA margin of nearly 18%, representing a 130 basis point improvement. This marks the fifth straight quarter of significant year-over-year improvement in EBITDA margin. Other items impacting the second quarter results of our home health segment include our Medicare recertification rate was 36.4%, a 160 basis points lower than prior year. Non-Medicare revenue per visit increased 2.8%, and G&A as a percentage of revenue was 28% for the quarter, which is flat compared to 2018.

Now, turning to our hospice segment results, which include our Compassionate Care Hospice and RoseRock acquisitions. For the second quarter, revenue was $159 million, up $57 million over prior year, an increase of 57%. Same-store average daily census was up 5%, and same-store admissions were up 7%. Segment EBITDA was $37 million, up nearly $8 million over prior year, an increase of 26%. Same-store net revenue per day was up $1.70 to $151.10, and same-store cost of service per day was $76.81, up $2.21.

For the quarter, the CCH acquisition added $46 million in revenue and $6 million in EBITDA to our hospice segment. The acquisition added $2.2 million in corporate costs, which resulted in a net $3.8 million in consolidated EBITDA contribution. The segment EBITDA margin was impacted by the inclusion of the CCH acquisition in our second quarter 2019 results. Excluding the impact of the CCH acquisition, our hospice segment EBITDA margin was 27.6% for the quarter.

We're extremely pleased with CCH's performance since we closed the acquisition earlier this year. As Paul mentioned, we have made substantial progress in our integration of the asset, and on a target to achieve $10 million in synergies. Currently, 70% of the Compassionate Care Hospice care centers, representing 86% of patient census is on our Homecare Homebase platform with the last wave of care centers going live today.

Our personal care segment generated approximately $21 million in revenue in the second quarter, and grew billable hours by 6%. Our results are not compared to prior year as they're inclusive of the acquisitions. We are pleased with our continued progress and our EBITDA margin for the segment improved 630 basis points over prior year.

Turning to our general and administrative expenses. On an adjusted basis, total G&A was $148 million, or 29.6% of total revenue. Total G&A was flat as a percentage of revenue compared to both prior year and sequentially. Our total G&A expense for the quarter includes approximately $13 million related to the CCH acquisition, which is comprised of $2 million in corporate and $11 million in our hospice segment. The remaining increase in G&A is driven by planned head count increases in sales and administrative support, and planned wage increases.

We generated $59 million in cash flow from operations for the quarter, which puts us at $79 million year-to-date. We're on track to deliver in the range of $180 million for the full year 2019. DSO was 41.1 days, flat over last year and sequentially, and was impacted by the CCH acquisition. Excluding the CCH acquisition, our DSO was 38.7 days, which is down 2.4 days from prior year.

At the end of the second quarter, our leverage ratio was approximately 1.3 times, and we have access to nearly $430 million of liquidity. On the de novo front, we are very pleased with our progress to-date and currently have six de novo care centers; two opened late in 2018, and four additional were opened as of the end of the second quarter. We are targeting opening additional four to six during the remainder of the year.

Finally, as you can see on Page 16 of our supplemental slide deck, we're increasing our 2019 guidance ranges as follows. Adjusted EBITDA of $213 million to $216 million, and adjusted EPS of $4.05 to $4.12. First half 2019 performance benefited from strong cost controls, gains on fleet vehicle sales and prior year workers' comp reserve pickups. Besides normal seasonality related to wage increases in health, the larger portion of investments identified in our full year 2019 guidance occurred in the second half of the year. And we've increased our raise pool, which will also impact the back half of 2019.

We had an excellent first half of 2019, and are poised to have a strong close to the year. Areas of focus that will ensure this performance and potentially lead to outperformance are as follows, continuing improvement in Medicare admit and volume growth trends, hospice ADC growth, and minimizing CCH disruption.

This will conclude our prepared remarks. Operator, please open the line for questions.

Questions and Answers:

Operator

At this time, we'll be conducting a question-and-answer session. [Operator Instructions] Our first question comes from Brian Tanquilut, Jefferies. Please proceed with your question.

Brian Tanquilut -- Jefferies & Company, Inc. -- Analyst

Hey, good morning, guys. Congratulations on a good quarter. Scott, you hit on the guidance, let me just ask the question. So you had two very good quarters, Q1, Q2. You're raising guidance by a much smaller amount than the bit, and I don't know your internal numbers are obviously different from The Street's. But as I look at last year's progression on weighing first half versus back half earnings, it was a little bit more front end loaded, or first half loaded, but close to 50-50. So is there anything this year that will be different, or are you seeing anything that we should think about in terms of deceleration in the back half? Or is this just really just conservatism and a little more CCH disruption in your expectations?

Scott G. Ginn -- Chief Financial Officer

Yes. Thanks, Brian. I'll give a little bit more color. I think as you heard in my prepared comments, I alluded to a couple of things, and I'll walk back through them. I think just to start with, I think from our normal progression, Q2 is generally our strongest quarter. Going back, I think we've averaged a Q1 to Q2 sequential change of about $6 million going back in the last three years, and if you look at last year, we were up $8 million. I think The Street numbers, I think there was a little struggles in there as we went from Q4 to Q1, Q1 to Q2. We did $55 million in Q1. Consensus had at -- had us at $51 million in Q2, we're up $6.5 million. So I think that -- that's kind of pulling us down from Q1 to Q2, really one against our normal seasonality and our strong performance into Q2. So I think that started off some of the problems and created some of the gap in while Q -- first half and second half looked a little different.

Looking at what else is going on, I mean, you alluded to last year, you're right, we dropped about $2.2 million first half versus second half last year. And some more specifics about the items I'm calling out, in our first half, we had fleet and workers' comp. We turned over our fleet vehicles. That was a good opportunity for us to kind of get some new units in and get some gains off of that. And we had some workers' comp pickups. Those combined were about $4 million.

We also look for the investments we called out during our guidance. When we talked about guidance earlier in the year, we talked about, about $7 million of investments. We've got another $4 million, we'll spend over what we spent in the first half. And then as I talked about on our call, we have about a raise pool of about $2 million increase; we increased the percentages from there. We typically see about a 20% increase in costs related to the seasonality in first half, second half. And if you take these other items I'm calling out, that's about $10 million, which kind of gets you a little bit closer to what we're talking about. Plus, I think the consensus numbers were really too conservative going from Q1 to Q2.

Brian Tanquilut -- Jefferies & Company, Inc. -- Analyst

Got it. And then Paul, as it relates to PDGM, with the rule out now or the proposed rule, how is that different from the final rule? At least from your interpretation, from the final rule that was issued back in November, I know there's something about RAP and a few other things, but if you don't mind, just giving us some thoughts on the rule itself.

Paul Kusserow -- President and Chief Executive Officer

Yes. I think the rule -- well, I think that what a lot of people are paying attention to Brian is the increase from 6.42% to 8.01%. And so that was an increase on the behavioral assumptions piece. Again, we're doing -- we're feeling very confident that, that's something that we can work through or overcome through a variety of things, utilization, coding and labor costs. So we think that we -- and we've been practicing on this for quite a while, so we -- and have been testing it out in a bunch of our care centers, and have been getting good results back, so we're feeling very confident there.

I think the interesting thing though is the fact that they are eliminating a RAP payments, which fundamentally was the way that CMS basically prefunded people who needed to make payroll. And so up to -- between 12 and 15 days, you could get between 50% and 60% of the payment for the episode paid and that this year is going to be reduced down to 20%, so the 50% -- 20% of 50% is 10%.

When you look at the folks that don't have the resources to -- the borrowing resources to sustain this, which is a lot of the industry, I think there's going to be a tremendous amount of shakeout. I think the -- particularly, in some of the rural states, we're looking at some of the statistics and we see that there -- the prediction of those people that are going to go below 0% is up in the 60s, 70s, 80s, in certain cases, in one case 90% of these agencies will be under -- and this is according to MedPAC data, which is we know slight -- is not particularly accurate, so it could be worse. So we think this is going to -- there will obviously, be some backlash that will come to this. It won't affect us or we anticipate our other big competitors, but it is going to affect a lot of this industry. This will give us an opportunity to consolidate, and we're preparing for that. And it will give us an opportunity to grow share.

We also think this is going to cause a more urgency on the legislative front that the folks who are going to be threatened here will be pushing harder to Congress. As of today, as of actually just now, we got a note and we're actually -- the numbers are actually better in terms of the Congress folks who've signed up. We now have 40 representatives in Congress and 20 senators. So those are fresh off the press. Those are the latest that we have signing on for the legislation. We anticipate it'll be a much easier to sign people up. So we're sad for what is this is doing for the industry, but we think it puts the larger players like us in a much better situation should this thing pass through in full. But we also think it's going to increase the intensity with which people in the overall industry are going to push Congress to get something passed.

Brian Tanquilut -- Jefferies & Company, Inc. -- Analyst

Hey, Paul, kind of -- I guess, follow-up to that. As I think about the growth rate, right, I mean, we've already seen some improvement in your admissions growth, inorganic admissions and the volumes firming up. So where do you see that going with PDGM kicking in? I mean -- or what do you think the potential is or the upper limit is for organic growth? And then I guess, I can throw that same question for hospice, where there's a little bit of a disconnect, let's say from -- between ADC and admissions this past quarter.

Paul Kusserow -- President and Chief Executive Officer

Yes. I'm going to turn that over to Chris because I -- he's been tracking it. But I think obviously, the growth rate on the top-line will be considerable if this -- if PDGM goes through in full because I do think we will be very active. We're already working on cleaning up our balance sheet to -- in anticipation of this. So I think we will grow considerably in home health. And then on hospice, what we're doing is, we're -- our pipeline is very full. So if you combine organic growth, which we feel very good about and then add the inorganic pieces and what we have in the pipe plus and de novos, we think we're going to continue to push that in the high single, low double digits. So Chris?

Christopher T. Gerard -- Chief Operating Officer

Yes. Hi, Brian. With regards to the home health side, even prior to PDGM, I have to say that we're really pleased with our growth trajectory on the Medicare fee for service. We put a lot of effort in it, starting to see the results pull through, and we expect to see the trajectory continue throughout the year. And then, when we get into PDGM and we're starting to look at 2020, and a lot of that is going to really dependent on kind of the shakeout in the industry and the results from if the PDGM is implemented as written today, and kind of if history repeats itself like it did when we went into PPS in 2000, there will be some attrition in the market that can create some nice opportunity for growth. We haven't really kind of put a number to it, but we do know that it will create some opportunities. And now we're trying to figure out exactly where we think that, that's going to open up into 2020. So regardless of PDGM, we already see that we're on track of a nice consistent Medicare growth rate trajectory increasing from where it is today and into 2020, just from our fundamentals.

And on the hospice side, so you mentioned kind of the disconnect between admits and ADC on the legacy business. And we had a little bit of a dip in our average length of stay, and historically, we've seen our ADC increase at a faster pace than our year-over-year admits. The inverse kind of happened in Q2, which was really a function of a decline in our average length of stay. We think that will level out to where our admits, and average length of stay will kind of -- in ADC will actually grow at the same pace.

And as a reminder, we've gone really deep in our legacy markets, the same 80 markets for the last several years that we've almost doubled in census. So we think that now that we -- the industry is expanding about 4% per year, we think we still have our opportunity to take market share in those markets. But I would say the mid to high -- mid-single digits is really realistic for our legacy locations, but we have some really good opportunity around our CCH and our acquisition of de novo locations to really have double-digit growth for the next couple years. So blended, we still see a nice growth trajectory for our hospice business as well.

Brian Tanquilut -- Jefferies & Company, Inc. -- Analyst

Awesome. Thank you guys.

Paul Kusserow -- President and Chief Executive Officer

Thanks, Brian, appreciate it.

Operator

Our next question is from Matt Larew, William Blair. Please proceed with your question.

Paul Kusserow -- President and Chief Executive Officer

Hi, Matt.

Matt Larew -- William Blair -- Analyst

Hi. Good morning. Thanks for taking the question. First, I wanted to ask about ClearCare, and just how it fits into the broader strategy long-term into partnering with payers and some of the other predictive analytics capabilities you're working through with Medalogix, so that -- it's kind of across the continuum of care. And then also whether there is opportunity given how quickly some of the agencies have come onboard for any sort of near-term contribution?

Paul Kusserow -- President and Chief Executive Officer

Yes. Actually, a nice question, so we appreciate it. Just -- we just got some results and again, just hot off the press. So we're now up to 308 agencies, representing 32,000 caregivers in 39 states, so if people want to correct that. The key is now we've been doing this for five days, and we've got incredible sign up. With access -- with the geographic access, we didn't think it would be this successful, but we're delighted it is. It shows that there's demand. It shows that the partnership is working. We're still going to be working in the next couple of months building those numbers.

The strategy behind this really occurred -- goes back to when we -- some of us were at Humana. We saw that personal care combined with clinical care, combined with palliative and hospice is the care continuum you need to allow people to age in place. As we got into the business and started to do four acquisitions, and then looked at the amount of acquisitions we have to do to cover our footprint in both home health and hospice, we thought it would take too long, and we thought these assets were very difficult to roll up and very difficult to hold together if the turnover rates on some of these companies can be up between 60%-plus and 100%-plus. [Phonetic]

So we believe that these companies are -- that there's good players out there producing very good quality, so we looked for something that would unify all these players. And in our process and also we're comfortable, if you can't buy it, you should partner and network. And so our belief is that, by building networks and integrating those networks in through technology, which we're in the process of doing now, that we can actually make these offers, so we can combine personal care, home health, hospice altogether, which is what the managed care players have told us and what our experience has been at Humana, that if you have all these assets together, you can have a wonderful continuum of care tech -- take care of things like activities of daily living plus clinical needs, and you can drive extraordinary results.

And so this is very exciting to us. It's obviously a very different approach, but we believe it's going to be optimized, and we couldn't be happier with how this is launched. But that's our plan is to continue to build the network to build these relationships to make sure they're beneficial to those folks out there, to ClearCare, and then integrate them into an overall care continuum that we think it will be very hard for anybody else to duplicate.

Christopher T. Gerard -- Chief Operating Officer

Hey, Matt, this is, Chris. I'll just add to that on your question regarding near-term opportunities. As Paul mentioned, 308 agencies, 32,000 caregivers that all have patients that they're assigned to today in overlap markets with our home health, average age is 82; many of them got multiple comorbidities or got multiple conditions. And these patients will be needing to access the home health benefit in the future, as well as we're discharging 400,000 patients a year from our home health that have ongoing personal care needs. So with this preferred provider relationship and us starting to utilize the continuum across the care settings, we see real near-term opportunity.

And then the data that we're going to be able to share between the two and utilize functions like Medalogix to get really deep and more predictive on what's going on with these individuals in the home, so that we can get more precise in predicting potential hospitalizations and things like, so that the patient is actually going to have a better outcome as well. So we see near-term opportunity and we see a tremendous response from the ClearCare franchisee organizations reaching out to us with the 308 signups. And then we see really kind of the endgame, us being able to meet the real demand for the Medicare Advantage plans to be able to have a full continuum of care in the home.

Matt Larew -- William Blair -- Analyst

Okay, great. Thanks for all that detail. And then, Scott, I wanted to ask on CCH, I think it came into the full with a little more ADC than you expected, the degradation maybe held up a little more than you expected. So just wanted to get a sense with Homecare Homebase, the final wave moving over starting today, whether you still feel comfortable with the 2020 and 2021 targets you had laid out in terms of EBITDA contribution from CCH?

Scott G. Ginn -- Chief Financial Officer

Thanks, Matt. Yes, I feel very comfortable. We're very excited about what's going on within that from our integration teams as well as the CCH employees that came onboard, everybody has done a tremendous job. As you mentioned, we went live with wave four today, so as of right now, that entire company is on our Homecare Homebase platform, which is tremendous considering we closed that on February 1, so we're excited about that. And we think the opportunity is really strong and we'll standby our ability to getting that $50 million range when we get into 2021. So I think, pleasantly surprised with where we are. A lot of planning and work went into to get us here, but very happy and as optimistic as we were when we talked about that in Q1.

Paul Kusserow -- President and Chief Executive Officer

Yes. I think, Matt, it shows what happens when you buy a quality organization with quality people. They've just been wonderful all along the way. And then you -- and then clearly, we're adding resources to them. So we think with the careful addition of resources -- clinical resources, but mostly business development resources, that we think that we'll get to these numbers pretty comfortably.

Matt Larew -- William Blair -- Analyst

Okay. Thanks. And then just real quickly, just an accounting question, Scott. In terms of the G&A [Phonetic] that stepped up sequentially in year-on-year, is that just related to some of the intangible assets acquired with CCH, and should we expect G&A to continue kind of in line with the level of Q2? Or how should we think about modeling that moving forward?

Scott G. Ginn -- Chief Financial Officer

Yes, you're right, it's exactly to do with CCH. We'll be in that price, slightly below that range, probably in the $4.5 million to $5 million is what you'll be looking at for the remainder of the -- well, for each of the following Q3 and Q4.

Matt Larew -- William Blair -- Analyst

Okay. Thanks for the question, guys.

Paul Kusserow -- President and Chief Executive Officer

Thanks, Matt.

Operator

Our next question comes from Matthew Gillmor, Robert Baird. Please proceed with your question.

Matthew Gillmor -- Robert W. Baird & Co. -- Analyst

Hey, thanks for the question. Hi, guys. I wanted to ask about some of the home health volume metrics, and I think, Chris, mentioned the acceleration to 4% growth from the fee for service side. So maybe just give us a sense for what's driving that? Is that the BD hires and their relationships maturing? And then, if you could hit on the research thing a little bit softer, what drove that and what's the outlook there?

Christopher T. Gerard -- Chief Operating Officer

Yes. Hi. Thanks, Matt. Yes. So on the acceleration of the growth, it's a function of yes, we've been doing a better job of maintaining our BD feet on the street, we got up over 800. As you remember, a couple years ago, we were down in the low-700s. And really kind of equipping them and they're getting kind of into that tenured stage where they start to gain some momentum, and that's starting to pull through at our location level. We still see some opportunity there to continue to accelerate it. We haven't really changed our strategy much. And it seems to be -- it's working out pretty well. There's just pockets now for us to go deeper. And we also still have new reps coming on all the time that are starting to ramp up. So this is a machine that we're going to keep working for now. And we see that it'll continue to pay dividends, a lot of stabilization there.

And on the research side, we've been looking at that as well. We had a softening we had in the last quarter, two quarters on the research, and we started looking into. It really wasn't anything that we could put our finger on. It didn't seem like there was any change in the acuity of patients; could be somewhat associated with some of the actual admission growth and utilization of our nurses in that respect. We expect to see that normalize and return to the normal pattern. We're not far off, but it did soften a little bit. But we just don't see that there's really anything underlying that's driving that.

Matthew Gillmor -- Robert W. Baird & Co. -- Analyst

Got it. That's helpful. And then Paul, if I could, there's been some sort of indifferent commentary from different companies about sort of the approach to PDGM and some of the strategies that you could employ to help sort of offset some of the rate pressure, especially on the behavioral side. So could you just sort of remind us how Amedisys is looking at this, and what are some of the opportunities you see under PDGM for 2020 in terms of your ability to offset some of the pressure?

Paul Kusserow -- President and Chief Executive Officer

Sure. I think there is three bundles, basically three buckets what we call, and I think there's appropriate coding on the behavioral assumptions. And we have been -- we have centralized coding and 250 folks that have been working on this. But we've been working on the -- on this set to make sure that we're doing it properly. But we believe there will be some opportunities there in the various areas that CMS has highlighted, so we believe there's going to be some there.

We also have been working largely with Medalogix, but also on our own in terms of what's the appropriate level of utilization, so that we can do utilization management on a -- on an episodic basis. So we believe there are some opportunities there, particularly as we're able to take individuals and then really optimize what things individually versus by category. So rather than having Paul has just congestive heart, let's put him on what we do for congestive heart patients everywhere. We'll say specifically, Paul has this level. He needs this specific care. We found as we parse that out, there are opportunities, so that we can maximize the utilization, still get the same results.

The other thing from a labor perspective, we believe that this is kind of the last thing we had on our list as we all came in and started here four and a half years ago that we needed to work on our labor mix, particularly with nursing and particularly with physical therapy. So we're moving that dial pretty aggressively, so that we can optimize and have everybody practice at the top of our license, we believe that there's going to be a lot of opportunities on the routine visits, utilizing LPNs, and we also believe that there's other places where we can use PTAs instead of PTs.

So I'd say those are the levers. When we put it all together, we believe that it gets us easily to where we need to. I think the question that everybody should be asking is, how soon can you get there. I think from a coding perspective, we can get there quickly. I think from the utilization, we're going to work through that relatively quickly, but we've already been doing it now. And the longest little piece of this will be the labor force optimization. I don't know, Chris, Scott, if you have any -- anything to add on that?

Christopher T. Gerard -- Chief Operating Officer

I don't think so. Yes.

Scott G. Ginn -- Chief Financial Officer

Paul, [Phonetic] you covered it well. I think as we've talked about -- a lot about this, I mean, the levers that Paul just talked about, we've been working hard on this, making sure we're ready to go. Nothing new in the rule has changed that for us and we're very confident that we'll do a great job on this.

Christopher T. Gerard -- Chief Operating Officer

Yes. So we've been -- the good thing that CMS did on this -- the one good thing is they talked about this early. So we've been practicing on this for over nine months, so we feel very good. And we've got a very large team on this who's devoted to this, so we take this very seriously. So we believe worst case scenario, we'll still come out front.

Matthew Gillmor -- Robert W. Baird & Co. -- Analyst

Got it. Thank you.

Paul Kusserow -- President and Chief Executive Officer

Appreciate it. Thanks, Matt.

Operator

Our next question is from John Ransom, Raymond James. Please proceed with your question.

John W. Ransom -- Raymond James & Associates, Inc. -- Analyst

Hey, sorry for this noisy airport. Just to drill down a little bit more into that last question. You guys have talked, I think, about taking one full visit out per episode with your pilot project. So do the math on that, that's about $89. If we think about cost per episode in 2020 versus 2019, considering inflation and timing and whatnot, what is a good guardrail to think about how much you can get that -- how much you can get done next year from a -- just a straight out cost per episode basis?

Scott G. Ginn -- Chief Financial Officer

Well, I think we -- certainly what you've talked about and we'll go back through, I think from that visit perspective, I think you can see a combination of between one and two probably is what you'd be looking at there. So you're talking from an episode basis anywhere using your $90 from that $90 to roughly $135. And then if you look from a -- looking at the mix of clinicians, that number is about $20 differential.

John W. Ransom -- Raymond James & Associates, Inc. -- Analyst

Okay.

Scott G. Ginn -- Chief Financial Officer

So if that shift to $2 is probably another $40, so between those two, you're looking at roughly up top at the end $175.

John W. Ransom -- Raymond James & Associates, Inc. -- Analyst

Okay. That's a lot more than what we modeled. And then as you guys know, April that Encompass talked about -- gave some granularity in terms of OK, here's the three buckets of behavioral, and two of the pieces are easier, the pure coding piece, maybe we can get to 50%, and maybe we can get to -- I'll make up a number 75% on the other two. So if you look at an 8%, maybe you're mitigating 5% or something like that. How should we think about that for Amedisys in terms of just the pure -- as we're modeling revenue per episode, what's the walking around number for just pure mitigation of the behavioral through those three buckets?

Scott G. Ginn -- Chief Financial Officer

Yes. John, that's a little tougher one that we're working through that right now. I mean, I think historically, where we think and have talked conservatively 2%, 3%, I mean, I'm not comfortable using that for modeling perspective; we're still working through patient by patient.

John W. Ransom -- Raymond James & Associates, Inc. -- Analyst

Okay.

Scott G. Ginn -- Chief Financial Officer

But historically, behavioral change has been around 2%. I think you can think through that.

John W. Ransom -- Raymond James & Associates, Inc. -- Analyst

Yes.

Scott G. Ginn -- Chief Financial Officer

But we'll work toward probably as we get closer to the end of year having a better view around that. But we're going through each patient, spent a lot of energy around making sure from a diagnosis perspective, we've got it right.

John W. Ransom -- Raymond James & Associates, Inc. -- Analyst

Okay. That's all I have. Thanks, guys.

Paul Kusserow -- President and Chief Executive Officer

Okay. Thanks, John, appreciate it.

John W. Ransom -- Raymond James & Associates, Inc. -- Analyst

Yes, sir.

Operator

Our next question comes from Kevin Ellich, Craig-Hallum. Please proceed with your question.

Paul Kusserow -- President and Chief Executive Officer

Hey, Kevin.

Kevin Ellich -- Craig Hallum Capital Group LLC -- Analyst

Hey, guys. Lot's been talked about with PDGM, but Paul, wanted to go back to your comment about the RAP payment. You gave some great color, especially to Brian's question. But when you think about the impact on the industry, what's that going to do to your pipeline and market share if indeed this does go through as is?

Paul Kusserow -- President and Chief Executive Officer

I think, I'm going to have Chris -- after I talk generalities, I'll have Chris talk specifically what this is going to mean because I think it's important for the world to really understand what this impact is going to be, so he's going to give you some real world examples. I think in certain states, we've got -- we have some information that the partnership and NOC has come out with -- on it and we've extrapolated on a state-by-state basis. So we think we know, on a state-by-state basis, what percentage of home health agencies are going to be below zero margin.

And maybe some of these folks will be able to work their way through it. But there are some really severe states that get up to the 40%, 50%, 60% zero margin world. Now the question is, if these are mom and pops or small agencies, what are they going to do? If they miss payroll, they're going to have to hand off their patients and find a place for their employees. So that for us would be an ideal situation because we wouldn't have to do an acquisition. Other folks, potentially, we might have to do acquisitions. Our thought is based on and Chris has been through this before, our thought is that the first scenario is much, much better for us from a market growth.

And we're one of the larger players out there, but I think we're 3.5% of the industry. So for us, long term, I think people should be -- if this does go through, I think people should look at this as the glass half full versus the glass half empty because we will use this opportunity, and I think we should be judged on this opportunity, how we do do this, is to really push to gain market share. And I think also that's something that CMS seems to always be -- one of the underlying themes here that's out there seems to be CMS wants more consolidation in the industry.

So we think we should really grow market share at that point. We also think there's a -- it's a pendulum effect, so we think that there'll be enough noise out there. So we believe that if this goes through in full, that there'll probably be a period where they will stop cutting away at this industry, which they've been doing for the last 10 years. I don't know, Chris, you want to?

Christopher T. Gerard -- Chief Operating Officer

Yes. Just real quickly I'll walk through the mechanics a little bit. If you just step back first and think about the typical size of a home health agency, I mean, the vast majority of them are small to medium sized agencies. They have very limited cash reserves and they have limited to no kind of borrowing capacity. So really, funding payroll becomes an exercise that you have to turn revenue into cash as quickly as possible. So under today's environment, if you admit a typical patient that's going to be a $3,000 episode, Medicare essentially loans you $1,500 to $1,800 on that patient at -- by around day 15. So 15 days into care, you've got $1,500 to $1,800 to really kind of cover your payroll expense.

Under PDGM, if you took that same patient, you're really going to be and take the 20% RAP, that's really only going to be around $300 on day 15 versus $1,500 to $1,800. And that's because you're only getting 20% of half of the 60 day episode, and then you're not even seeing another payment until close to day 45, which is another $300. So you're at day 45 and you've only collected $600 versus under today's environment, $1,500 to $1,800 in the first 15 days.

So as you can imagine, this is going to be something that's very difficult for these agencies to be able to navigate through. It's unfortunate we really don't like to see it that way, but in the event that, that does happen. What happened in the early 2000s was it wasn't uncommon for the bigger providers to get a phone call from somebody saying, I've got these patients, I've got these clinicians, I can't really make payroll, can you hire quickly and can you help us transition these patients. And that's a very likely scenario under PDGM.

Kevin Ellich -- Craig Hallum Capital Group LLC -- Analyst

So -- OK.

Paul Kusserow -- President and Chief Executive Officer

You want to -- Scott, do you want to talk briefly for -- about what's the potential impact of this if the RAP goes through sort of a 1 time perspective?

Scott G. Ginn -- Chief Financial Officer

Yes. So for us, of course, it was -- we're positioned well, 1.3 times levered, plenty of capacity. But it would be a disruption to us. You're probably in the 20-ish days, maybe a little higher, we're looking at how we would exactly -- what we can do to be more efficient. But it's a significant one-time number for us. If you think about revenue kind of on a per day basis, you're looking at maybe $3 million for every day for Medicare. So it's something we're paying attention to. It won't be really overly disruptive to our plans long term, but as Chris and Paul have talked about, I think the smaller players certainly will have to deal with some issues around that.

Kevin Ellich -- Craig Hallum Capital Group LLC -- Analyst

Sure. Just wanted to go back to Chris' example. So in the event that the smaller guys have to hand off patients and you guys maybe take on more clinicians, do your clinicians now have the existing capacity to take on more patients, or do you think you would just have to add additional to -- add to the workforce?

Christopher T. Gerard -- Chief Operating Officer

So that's a great question. And for us, I think that when we talked about our pay practice change that we're implementing in Q4, when we get through that, that will significantly open up clinician RN capacity for the admissions for us. So we already have some internally built-in capacity that we're not optimizing today, pay practice will open that up. But also, there could be a wave -- significant enough wave of patients and potential employees that it could create an opportunity for us to incrementally add additional good clinicians, which will be ideal. But we're already building our capacity from things we are doing internally right now.

Paul Kusserow -- President and Chief Executive Officer

That's a good question. [Speech Overlap] Yes.

Kevin Ellich -- Craig Hallum Capital Group LLC -- Analyst

Thanks, Paul. And then just wanted to go back to the other acquisition you guys announced, the -- I guess, expansion in New York premier home healthcare services. There wasn't a lot of detail on the press release. Just wanted to see if you could give any detail behind it in terms of how big it is, and is there any numbers you could put around it to help us out?

Christopher T. Gerard -- Chief Operating Officer

Yes. It's actually we just got the CONs in those those counties. We did not purchase the provider numbers, so we don't have any kind of exposure to legacy liability on the provider numbers. So what this is doing is just giving us an opportunity to do de novos in those three counties, and that's part of our expansion plan. So came with no assets other than the CON, no business, but it'll be good opportunity for us to go expand our New York operations.

Kevin Ellich -- Craig Hallum Capital Group LLC -- Analyst

Got it. [Speech Overlap]

Christopher T. Gerard -- Chief Operating Officer

Go ahead.

Scott G. Ginn -- Chief Financial Officer

Kevin just as we talked about our inorganic growth strategy, this is kind of a part of what we said we do from a de novo perspective if there is opportunities in CONs, we'd certainly buy into those markets. What you have to do to get started anyway, but we would look for those opportunities if we like the territory so.

Paul Kusserow -- President and Chief Executive Officer

And we like it this way, Kevin. We don't like the tail that we get when we buy provider numbers in certain areas. So this for us was an optimal purchase because we can get into an area with high demand, which we're relatively familiar with, but we don't have the liability issues that we would get if we bought the provider numbers.

Kevin Ellich -- Craig Hallum Capital Group LLC -- Analyst

Got you. That makes sense, Paul. And then lastly, you guys -- you talked previously about the voluntary turnover, and I guess, what you're trying to do to combat that. I guess what are you -- can you talk about some of the things you're doing? And what are the main reasons why people leave?

Paul Kusserow -- President and Chief Executive Officer

Sure. Well, I think we're close to the lowest in the industry, if not the lowest, when you look at it. But we're very -- we believe we're a human capital asset management company. We're very similar to staffing companies in a way. We have to -- the more -- the longer people stay, the more productive they are, the better they know our methodologies, the better they -- better care they deliver to our patients. So for us, it's important to keep people around -- good people around and make sure that they're being as productive as possible, delivering great care.

So when somebody leaves, we look at this every week, so when somebody leaves, we want to understand why. We think some of it is kind of the natural, particularly in the area of clinicians, particularly nurses. A lot it is nurses move around a lot and what we're trying to do is where we're spending our time. We're actually doing a lot of very interesting work now, so we can start to predict when somebody is potentially going to leave and then what we can do proactively to make sure they don't. So we're working with IBM on that, and we're doing some really interesting work to be able to build predictive models.

We think that will be good. We also think that it's very, very important, we've seen this over-and-over and we're fixing it, is that when someone joins you, particularly someone who is not a home health clinician, they need to be oriented very carefully. And we -- we've seen that we have an opportunity to improve there. But our goal is to get below 15%. It's the Holy Grail for us and we're spending a lot of time and effort on it. And we think we can do it.

Kevin Ellich -- Craig Hallum Capital Group LLC -- Analyst

Thanks, Paul. Thanks for all the help.

Paul Kusserow -- President and Chief Executive Officer

Okay. No, appreciate it. Thanks, Kevin.

Operator

Our next question is from Joanna Gajuk, Bank of America. Please proceed with your question.

Paul Kusserow -- President and Chief Executive Officer

Hi, Joanna.

Joanna Gajuk -- Bank of America Merrill Lynch -- Analyst

Thank you. So -- hi. Thanks for squeezing me in here. So couple of I guess, follow ups. So first on the -- commentary on the guidance, just to clarify how you guys are thinking about it. So I guess, what you were trying to say is that Q2 was actually in line with your internal expectations and The Street models were off. So you're essentially raising it for I guess, a better performance versus your model in first half, right? Is that is the way to think about it?

Scott G. Ginn -- Chief Financial Officer

I would say that we're certainly happy with Q2, and it did actually outperform our internal models to some extent. So we still had some good performance there. My comments have been more relative to first half, second half. Those -- some of those elements I've talked around those $4 million related to workers' comp and fleet vehicles were in both. You did have a little bit more in Q1, so that certainly helped Q1. But yes, that's kind of how I've talked about it.

Joanna Gajuk -- Bank of America Merrill Lynch -- Analyst

All right. And then in terms of the commentary on PDGM, and I guess, I understand you don't want to put a hard number in terms of how much of the 8% behavioral assumptions you are able to offset. But did I hear it right that you're kind of saying that especially on the bigger piece of the 8%, which is related to coding or providers choosing the higher paying code essentially, that will be something that you can adjust quickly? Is that the way to think about it? And then you start talking about labor and other kind of cost offsets, but in terms of the behavioral assumption, like there's been -- my understanding is that the big portion of that 8% is something that's relatively straightforward in terms of what CMS is thinking providers will be doing?

Scott G. Ginn -- Chief Financial Officer

Yes. I think -- so I wouldn't say just quickly because we've been working on this for a long time. I mean that's the good news about CMS coming out as early as they did on this new rule. So we've been working on it a long time. Our commentary around that is relative to I think when you kick over to 1/1, [Phonetic] I think we'll be more prepared and ready to roll out that piece of it.

The cost piece of it as we kind of look to move to clinicians, getting the utilization appropriate, that's the elements we're talking about that we're going to have to make sure and that may be a little bit more hard to hit the mark right on 1/1, but I think we'll move pretty quickly to get there. So that's kind of what our commentary has been around that.

Chris, I don't if you have any more thoughts?

Christopher T. Gerard -- Chief Operating Officer

I think maybe this will help. I mean, I think in terms of the behavioral adjustments, which are coding, comorbidities, and kind of loop of management that CMS has laid it out, I think we will have all that work done by 1/1. We've been working on it for some time. I think the big question out there that's happening is that how much of that coding opportunity that CMS has put out is real. And we don't believe a 100% of it is real as I think a lot of other providers feel the same way, but there is opportunity there. But we've already either have done the work or are well down the path that I think when 1/1 comes, the behavioral judgment or work around the three areas, the three buckets that CMS have laid out, we will be essentially done on 1/1.

I think the episode management and labor management will phase in over the course of 2020, but relatively early on. The next one will be actually kind of the business per episode and optimizing Medalogix. We feel like we'll be ready to go at the beginning of the year for that. And then the labor mix from RNs to LPNs and PTs, PTAs, that will happen over the course of 2020.

Joanna Gajuk -- Bank of America Merrill Lynch -- Analyst

So I guess just to wrap that up, so when you think organically, just outside of what you've been discussing on this call throughout in terms of gaining market share and then potential inorganic opportunities that might come with PDGM, how would you think about home health EBITDA year-over-year, 2020 versus 2019, in terms of the impact of PDGM? Should we think that it's enough in terms of what you're talking about these offsets, and then actions that you think you could grow organically home health EBITDA?

Scott G. Ginn -- Chief Financial Officer

That's what we'll be working over that over the next few months to put a number on that. Certainly, we think we'll grow organically as well that will help offset any of that. I think when we probably get to the fourth quarter, back half of the year, we think we're basically flattish to positive with growth, so we think we can overcome any impact of this. But we'll talk to that as we formulate our thoughts on 2020. But we feel good that we'll be able to offset the impact of this, and we'll still have some opportunity if we continue to grow the business like we really hit into the Q2.

Paul Kusserow -- President and Chief Executive Officer

Yes. We think there is -- we think are ranges, Joanna, based on what our practice results have been with our centralized coders. The good thing is we have centralized coding. It's very sophisticated operation and we've been looking at various scenarios in doing, and then looking at how those scenarios sort out. So -- but there are opportunities there on the coding side, so -- and we're just trying to -- we don't think though as Chris said it's 100%. So I think for CMS to say this is truly budget neutral from this coding side I think is not correct. It is not budget neutral. Anybody I think who assumes it is and codes 100% on 8%, I wish them luck, but that won't be us. But there will be some good opportunities out there.

Joanna Gajuk -- Bank of America Merrill Lynch -- Analyst

That's helpful. Thank you. I guess [Indecipherable] hour, so I'll hop off. Thanks.

Paul Kusserow -- President and Chief Executive Officer

Okay. Thanks, Joanna.

Operator

Our next question is from Bill Sutherland, The Benchmark Company. Please proceed with your question.

Paul Kusserow -- President and Chief Executive Officer

Hey, Bill.

William Sutherland -- The Benchmark Company, LLC -- Analyst

Hey, sorry to keep everyone from lunch. A real quick. Exciting here, this ClearCare relationship, Paul. And I know you've got experience with setting up and running a network like this. How do you think about the management on the -- in terms of the quality of care delivery that you're not going to be able to directly control? I mean how do you kind of maintain the quality levels that you demand, when you're basically subcontracting out the care? Thanks.

Paul Kusserow -- President and Chief Executive Officer

Sure. I'm going to let Chris do that. But it's largely through the ClearCare software where we can monitor the quality, delivery and that's -- and then we have some navigators, but I'll let Chris.

Christopher T. Gerard -- Chief Operating Officer

Yes. Hey, Bill. So like when Paul talked about the 308 agencies that have signed up already, we've already created some service level requirements that these operators have to commit to when they join up with this, we'll be able to measure against it. It'll be timely initiation of care, timeliness of communicate with the patient. It's going to be patient satisfaction, where you've got some other factors in there as well.

So it's not a function of you can just say, I want to be in part of this network and start receiving patients. You actually have to deliver on certain quality metrics and in the event that they fail to do that. The good news is, is that many of these agencies overlap with each other, so it gives us opportunities to have kind of a tiered relationship in some of these markets if those that provide the better care, the higher quality, are going to be the ones that are going to be at the first in list when we're starting to kind of transition patients back and forth.

William Sutherland -- The Benchmark Company, LLC -- Analyst

That makes sense. I assume you're signing up agencies where you guys have footprint?

Christopher T. Gerard -- Chief Operating Officer

Yes.

Paul Kusserow -- President and Chief Executive Officer

Yes.

William Sutherland -- The Benchmark Company, LLC -- Analyst

Yes.

Paul Kusserow -- President and Chief Executive Officer

Also frankly, as we look to this as a potential future opportunity, where we don't have footprint, if we can do that. But obviously, we want to do it initially where there is footprint, but if we can get into the business and partnership with ClearCare of building a nationwide personal care network, my sense is no one else has done it, so it would be valuable, particularly to large players who want to have large contracts and large reach.

Again -- but this will be a sorting process initially. We just want to stay away from the any warm body scenario, where we've seen out there and that will take some sorting. And Chris is right. He put in some very rigorous contracts, which fundamentally make sure that what we know about the personal care business and what we determine is important from quality delivery, we incorporate it in those contracts, therefore, we will hold them to those contracts.

William Sutherland -- The Benchmark Company, LLC -- Analyst

And so you're in the process of obviously setting this all up. Probably that runs through the remainder of the year and we begin to see some impact on numbers next year. Is that the way to think about it?

Paul Kusserow -- President and Chief Executive Officer

Yes. We're in the sign-up mode now. We're -- I'm spending a lot of time on the road, meeting with people, taking calls, doing all that, particularly with some of the franchisees who -- some of the larger franchisees who we are bringing on and hope to bring on, which have other controls in place, which we do like. So we're doing that. And then we're going to be doing some test pilots in the end of September in three markets, where we're going to be moving in and doing combined work. And then we also have a lot of technology work to do, so that we can combine the data that we have from Homecare and Homebase in with the data that we're getting from ClearCare, so that we can ultimately have coordinated care with all those lines of business. So that's going to be a big to do on our list for this fall.

Christopher T. Gerard -- Chief Operating Officer

Hey, Bill, this is Chris. The only thing I'd add to that is, is that with these agencies signing up, again, this is creating opportunity for us to incrementally grab some Medicare home health growth from these providers as we start to perform these relationships -- to materialize these relationships with each other. So we hope to see and we expect to see that, that's going to generate additional flow of patients.

William Sutherland -- The Benchmark Company, LLC -- Analyst

That makes sense too. And just one last one, unrelated, a real quick. Paul, as you get your intelligence from Washington on these states, any sense of the timing as far as any legislative push?

Paul Kusserow -- President and Chief Executive Officer

Yes. I'm going to have Dave, our Head of Government, he's here and he'll talk to you a bit about it. But we're feeling better about it as things got worse on the PDGM side, so.

David Kemmerly -- General Counsel and Senior Vice President of Government Affairs

Yes. First, let me expand upon something Paul talked about earlier. We've now got 40 cosponsors in the House and 20 in the Senate, and that's up from 29 in the House to 40 in the House. And that's largely we added those 10 or 11 since the proposed rule came out. Same thing in the Senate, we're up from 16 to 20. Those three to four were added since the proposed rule came out, so we feel some momentum there. So the rule didn't hurt us. In fact, it probably helped us jump start our momentum.

So -- and also it's important to note is we're almost evenly split on cosponsors between Republicans and Democrats. We also have six Senate finance committee members and 12 House Ways and Means members who are cosponsors. So we got the right cosponsors and we want everyone, but those are key people to have. So timing's going to be sometime in the fall. It's hard to predict that, Bill. But we'll be looking for vehicles -- big vehicles like surprise billing, drug pricing, Medicare extenders package, but realistically, I think it's sometime in September, October, November, that window.

Paul Kusserow -- President and Chief Executive Officer

Yes.

David Kemmerly -- General Counsel and Senior Vice President of Government Affairs

Certainly, they're on recess and all I guess, so you're looking in the fall. But we will be working this till December 31. But we feel good about where we are. So it's a parallel strategy which is nothing's changed since the rule came out on our strategy. We've just gotten a little more momentum, and more interesting Congress' behavioral assumptions have kind of gone the wrong way.

So we had a compelling argument before and it's equally as compelling if not greater now. So we'll just keep moving. We'll keep working. You heard today what Scott and Chris and Paul and the team are doing on preparing to operationalize all this. We continue on the legislative path to try and get some relief on behavioral assumptions. So that's we are. I don't know if that really helps you. It won't surprise you. We've got five months left and it'll be in the latter part of the year.

Paul Kusserow -- President and Chief Executive Officer

Yes. But we're in a good shape today. So -- but we're going to -- the urgency is now being increased, so that's good.

David Kemmerly -- General Counsel and Senior Vice President of Government Affairs

Yes.

Paul Kusserow -- President and Chief Executive Officer

And it gives us flopping big numbers on the table about Susan Collins, for example, signed a letter saying to CMA, we think you should really rethink this. And then some of the data that we've been generating says there's a fair portion of home health agencies that are going to be in negative margins, over 50% in the state of Maine. So we'd love to go see Susan Collins and say, wow, you should be really worked up about this.

David Kemmerly -- General Counsel and Senior Vice President of Government Affairs

Yes. Bottom line what Paul's saying is that the behavioral assumptions not surprisingly create potential access issues, especially in rural and urban areas. So that's more of a calling card, but creates problems for everyone. But certainly Congress is interested in maintaining access in those areas. And they're interested in expanding access to high quality care everywhere.

Paul Kusserow -- President and Chief Executive Officer

Yes.

David Kemmerly -- General Counsel and Senior Vice President of Government Affairs

So -- and this would impede that if the rule goes -- is implemented as written today.

Paul Kusserow -- President and Chief Executive Officer

Yes. So we're -- this is -- this adds a little fuel to the fire, so it's good.

David Kemmerly -- General Counsel and Senior Vice President of Government Affairs

Thanks for the question.

Operator

We have reached the end of the question-and-answer session. And I will now turn the call back over to Paul Kusserow for closing remarks.

Paul Kusserow -- President and Chief Executive Officer

Thanks, Omar, appreciate it. I want to thank everyone who joined us on the call today. I'd also like to again thank all of our people who delivered these fantastic results. Keep doing what you're doing, taking care of people who need us the most. We hope everyone has a wonderful day and appreciates the results. And we look forward to updating you on our ever evolving progress, and purposeful work on the road or during our next quarterly earnings call in October. Have a good day, everyone. Thanks.

Operator

[Operator Closing Remarks]

Duration: 73 minutes

Call participants:

Nick Muscato -- Vice President of Strategic Finance

Paul Kusserow -- President and Chief Executive Officer

Scott G. Ginn -- Chief Financial Officer

Brian Tanquilut -- Jefferies & Company, Inc. -- Analyst

Christopher T. Gerard -- Chief Operating Officer

Matt Larew -- William Blair -- Analyst

Matthew Gillmor -- Robert W. Baird & Co. -- Analyst

John W. Ransom -- Raymond James & Associates, Inc. -- Analyst

Kevin Ellich -- Craig Hallum Capital Group LLC -- Analyst

Joanna Gajuk -- Bank of America Merrill Lynch -- Analyst

William Sutherland -- The Benchmark Company, LLC -- Analyst

David Kemmerly -- General Counsel and Senior Vice President of Government Affairs

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