Select Medical(SEM)2025-02-20 22:03Hospital Operations - As of December 31, 2024, the company operated 104 critical illness recovery hospitals, with 38%, 37%, and 33% of revenue from Medicare reimbursement for the years ended December 31, 2022, 2023, and 2024, respectively[26]. - The rehabilitation hospital segment operated 35 hospitals as of December 31, 2024, with 46%, 47%, and 45% of revenue from Medicare reimbursement for the years ended December 31, 2022, 2023, and 2024, respectively[43]. - As of December 31, 2024, the company operated 1,914 outpatient rehabilitation clinics across 39 states and the District of Columbia, employing approximately 11,300 people[58]. - The company operates 35 rehabilitation hospitals in 14 states and 104 critical illness recovery hospitals in 29 states as of December 31, 2024[71]. - As of December 31, 2024, all critical illness recovery hospitals operated by the company were certified by Medicare as LTCHs, and 22 rehabilitation hospitals were certified as IRFs[110]. Patient Care Metrics - The average length of stay for patients in critical illness recovery hospitals was 31 days for the year ended December 31, 2024[28]. - The average length of stay for patients in rehabilitation hospitals was 14 days for the year ended December 31, 2024[44]. Workforce and Employment - The company employed approximately 16,500 people in its critical illness recovery hospital segment as of December 31, 2024[26]. - As of December 31, 2024, the company employed approximately 44,100 individuals, including 30,000 full-time and 14,100 part-time employees[83]. - The company has developed a cultural framework called "The Select Medical Way" to enhance employee experience and retention[86]. - The company employs various strategies for talent acquisition, including employee referral programs and partnerships with nursing and therapy schools[88]. Financial Performance and Revenue Sources - For the year ended December 31, 2024, approximately 82% of the company's revenue from outpatient rehabilitation came from commercial payors, with the remainder from Medicare and other government programs[60]. - The company's revenue by payor source for 2024 indicated that Medicare accounted for 28.8%, commercial insurance for 51.3%, and Medicaid for 3.0%[79]. - Revenue from workers' compensation programs accounted for approximately 15% of outpatient rehabilitation segment revenue, 2% of rehabilitation hospital segment revenue, and 1% of critical illness recovery hospital segment revenue for the year ended December 31, 2024[112]. - Revenues from Medicare-covered services represented approximately 31%, 31%, and 29% of total revenue for the years ended December 31, 2022, 2023, and 2024, respectively[209]. Strategic Initiatives - The company focuses on increasing admissions by demonstrating quality outcomes and improving relationships with referring physicians and hospitals[29]. - The company aims to control operating costs by centralizing administrative functions and standardizing operations[38]. - The company is pursuing opportunistic acquisitions to grow its network of critical illness recovery hospitals[41]. - The company has a strategy to pursue opportunistic acquisitions to grow its network of rehabilitation hospitals and outpatient facilities[57][67]. Quality Assurance and Compliance - The company maintains quality assurance programs to support and monitor care standards, ensuring compliance with regulatory requirements and Medicare certifications[51]. - The company maintains a Privacy and Security Committee to monitor compliance with HIPAA regulations[174]. - The compliance program includes a written code of conduct and is overseen by a compliance and audit committee that meets quarterly[188][189]. Regulatory and Payment System Challenges - The company faces risks from potential changes in Medicare reimbursement rates, which could adversely affect revenue and profitability[210]. - The company is exposed to risks from legislative and regulatory changes that could affect payment systems under the Medicare program[210]. - LTCHs and IRFs face a 2% reduction in annual payment updates if they fail to submit required quality data[158]. Operational Challenges - The company faced significant operating issues due to a shortage of clinical personnel, which may lead to increased reliance on costly temporary personnel[84]. - Increased labor costs due to shortages and high turnover rates are impacting profitability, with significant increases in operating costs expected[215]. - The company is experiencing challenges in attracting and retaining qualified healthcare personnel, which may limit operational capacity and increase costs[216]. Economic and Market Risks - Economic downturns or inflationary pressures could negatively impact patient volumes and overall financial performance[212]. - Public health threats, such as pandemics, may create uncertainties regarding future operating results and financial conditions[220]. - Global economic conditions, including geopolitical conflicts, may adversely affect the company's business and financial results[221].