“It’s a distinctive part of the culture of UnitedHealth Group that we continue to strive to deliver on our financial commitments to you through changing environments and unforeseen challenges,” UnitedHealth Group CEO Andrew Witty said during the company’s third-quarter earnings call on Tuesday. “As we look to 2025 … we remain in a dynamic period for the health care sector. Amid this, it’s important that we continue to invest in the durable value creating capabilities of this company that support our 13% to 16% long-term growth objectives.”

Despite this current operating environment, Witty expressed optimism about the company’s ability to grow in the years to come.

The company already owns the home health giant LHC Group, and is in the process of acquiring Amedisys Inc. (Nasdaq: AMED), another one of the largest home health providers in the country.

One of the elements laying the groundwork for growth is UnitedHealth Group’s commitment to the transition of the health system to value-based care, Witty noted.

“At UnitedHealth Group, we’re purposefully organized to support the transition to value-based care,” he said. “It requires deep engagement with patients, setting the foundation to move to more coordinated care, connecting patients to primary care earlier, driving clinically accurate diagnoses more effectively, recognizing and managing chronic conditions and slowing disease progression. We’re seeing the benefits of this work come to fruition.”

Specifically, individuals who receive care services under Optum’s value-based models are more likely to receive cancer screenings. Optum is UnitedHealth Group’s health care services arm.

These individuals are also better positioned to control their diabetes and hypertension, compared to those under fee-for-service Medicare. Plus, they are 10% less likely to visit the emergency room, or be readmitted to hospital.

UnitedHealth Group’s value-based care models incorporate home-based care services, such as house calls, home health care and other in-home visits.

For the third quarter of 2024, UnitedHealth Group brought in revenues of $100.8 billion, a $8.5 billion increase over the prior year period.

Optum’s Q3 revenue was $63.9 billion, a $7.2 billion increase over the prior year.

“This was driven by an increase in both the number and type of care services we offer and the patients we serve, especially in the home and among those with complex needs,” John Rex, president and CFO of UnitedHealth Group, said during the call.

UnitedHealthcare’s Q3 revenue was $74.9 billion, a $5 billion increase over the previous year.

“Indications are tracking favorably as we head into 2025, reflecting continued strong uptake of UnitedHealthcare’s innovative offerings,” Rex said. “Our Medicare Advantage plans, on offer this fall, balance providing as much benefit stability as possible for seniors, while contending with the CMS funding cuts, IRA changes and expected care patterns.”

The post Facing Headwinds, UnitedHealth Group Remains Focused On Value-Based Care appeared first on Home Health Care News.

Working with any government agency may require cutting through a lot of red tape. Still, home care providers interested in caring for aging veterans have various opportunities to partner with the Veterans Administration (VA) and make a difference for those who served.

According to the U.S. Census Bureau, as of 2023, there were an estimated 17.9 million veterans in the United States, and nearly half of them were 65 or older. This aging veteran population needs benefits and services to address changing health conditions and their corresponding financial challenges. The VA offers assistance with personal care benefits through the Aid and Attendance and Community Care Network (CCN) programs.

VA medical centers coordinate home- and community-based services (HCBS) alongside community partners aimed at the most vulnerable veterans to reduce nursing home and medical center stays. A single program or combination of HCBS can assist veterans and their caregivers in remaining in their homes, optimizing their chronic health or rehabilitation potential, and preserving the home and family atmosphere.

“What we’ve learned is that when veterans remain in their homes, their outcomes are better, and this is critical in maximizing veteran health and overall wellbeing,” Terrence Hayes, VA press secretary, told Home Health Care News.

When setting up home care service, VA medical centers are required to use contracted network providers, if available. Providers are encouraged to work with third-party administrators, Optum and TriWest, in the appropriate region to inquire about joining the network and receiving veteran referrals.

The third-party administrators complete a review to determine if a need exists for that provider based on the availability of those in the existing network. If a need is determined, the provider begins the credentialing process to join the CCN. This ensures the organization meets the VA’s qualification requirements before caring for veterans.

For Betsey Morthland, owner of a Visiting Angels franchise in Bettendorf, Iowa, becoming involved with the VA held benefits both personally and professionally.

Bryn Mawr, Pennsylvania-based Visiting Angels is a nationwide provider of home care services to older adults, including assistance with daily tasks, companionship and specialized care.

“Offering this specialized care and helping navigate the process is a way of giving back to our veterans,” Morthland told Home Health Care News. “Another benefit is that once a veteran is in our system and we provide care for them, we know those are guaranteed weekly hours, which assists us with staffing and predicting our income stream.”

Aid and Attendance

Aid and Attendance is a tax-free benefit available to veterans who have served 90 days of active duty during a period of war, have less than $160,000 in assets (excluding a home), require assistance with two or more activities of daily living and meet the required income to medical expense ratio.

However, filing the necessary paperwork to receive this benefit can be difficult for veterans and their families. In that case, providers can partner with companies like Lake St. Louis, Missouri-based Veterans Care Coordination (VCC) to help navigate those hurdles.

VCC’s model centers around helping veterans age in place. Owner Kyle Laramie started the company in response to his grandfather, a World War II veteran who missed out on benefits that could have helped him stay home rather than move to a long-term care facility.

“We find families who need care and take them through a screening process to determine if we think we could help them access this program, which could pay for their care,” Laramie told HHCN. “The Aid and Attendance program can be confusing because it is not designed for families who are low income and need care. It’s set up for those currently paying for care month after month and then are reimbursed. This isn’t the way the world works.”

Laramie said that families often find their loved one needs care and must quickly figure out how to pay for it. They are then faced with either paying for it out of pocket or not receiving it.

“We teach providers how to instruct the referral sources, the social workers, discharge planners or rehab centers to ask if the client is a veteran or a spouse and let them know that there may be funding for them, and then they come to us,” Laramie said.

Laramie said that once a client is accepted to receive care, they often still aren’t sure who will fund that care upfront. In that case, VCC created the Advanced Care Program to finance the cost of care while the VA processes the claim.

“These families can’t wait for care,” Laramie said. “The way the program is set up is that VCC will pay for the care monthly until the VA provides the reimbursement, and then the client pays us back for the services rendered. We maintain that monthly medical expense to income ratio, working with the client and the home care agency to ensure adequate care.”

Laramie said that while VCC isn’t necessarily in the business of providing loans, the client does sign an interest-free loan document.

“We serve many different purposes,” Laramie said. “We teach home care agencies how to market veteran’s benefits in their communities. We help navigate the maze of benefits for families. If a family can’t afford care, we fund the cost while the VA processes the claim. Often, because we are used to working with the VA, we can get the claim to move through faster.”

Community of Care Network

VA uses the CCN to provide home care services to veterans. CCN benefits specifically assist with home health care costs. Qualified veterans are assigned a service care coordinator who determines how many hours per week the veteran requires care and will help the family connect with caregivers in their area. CCN benefits are paid directly to partner organizations.

By collaborating with a network of qualified health care providers, the VA’s system improves access to medical, mental health and specialized care, enabling veterans to receive personalized, timely treatment locally.

“Using the CCN allows for a broader network, decrease in wait times for services and high quality care,” Hayes said. “By joining the network, providers have the ability to expand their customer base which includes serving our nation’s veterans.”

The program prioritizes a patient-centered approach, focusing on each person’s unique needs and preferences and fostering a collaborative relationship between the veteran, their VA care team and community providers.

The network maintains the highest standards of care, ensuring all participating providers meet rigorous quality and safety standards. The VA continually refines and optimizes the program to improve health care outcomes and streamline the process of accessing care.

“Home care providers can find VA and contracted network provider processes complex and time-consuming,” Hayes said. “Optum and TriWest may determine they have a sufficient network for a particular geographic area and decline to add new providers. To ensure a high-quality network, providers sometimes experience delays in the credentialing process. Providers also experience challenges with following required protocols to ensure timely service and reimbursement.”

While joining the VA’s CCN can be challenging, it is worth the effort, according to Morthland.

“When the VA contacts us for care, everyone stops what they’re doing because they are such an important referral source that we want them to know we’re there to make their jobs easier by offering a quick response,” Morthalnd said. “We’ve got the attitude that we’re going to say yes to whatever they ask us because once you’ve said yes enough times, the VA schedulers know to call you first because you will make their jobs easier.”

Kerin Zuger, Caretech’s chief operating officer, agreed and said it’s all about relationship-building.

Caretech, based in Omaha, Nebraska, provides non-medical home care services such as personal care, companionship and household assistance.

“Like anyone else, VA case managers are busy, so if you manage some of the headaches for them, the better off you’ll be,” Zuger said. “Create a partnership and make sure that whatever their pain points are, you fill in the gaps and remove the headache.”

Zuger recommends smaller franchises or independent companies partner with a company like VCC to navigate joining the CCN. This gives clients access to dollars they didn’t know they had, and makes care management easier.

“If you’re an independent or a small franchisee, partnering with someone like VCC removes the hassle, so you don’t have to worry about applications, follow-up and management. You worry about providing quality care to the client,” she said.

Zuger also recommended reaching out to contacts to find out who might be affiliated with the VA and willing to make an introduction.

“Don’t be too proud to tap into your existing resources,” she advised. “Partner with the VA, volunteer, provide sponsorships or get on a board. Relationships matter, and no matter how many home care companies stand up, there will always be more veterans to help and support.”

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The company released its second-quarter earnings on Wednesday, without an accompanying call. It has not held an official earnings call since UnitedHealth Group (NYSE: UNH) agreed to acquire it in June of 2023, which is customary.

Home health revenue checked in at $377.4 million in the second quarter, reflecting a nearly 8% year-over-year increase. Hospice revenue checked in at $204 million, reflecting an over 2% year-over-year increase.

Amedisys’ non-Medicare home health revenue grew significantly once again, to $161.3 million in the quarter. That represents a 24% year-over-year increase.

High-acuity care revenue, meanwhile, checked in at $9.8 million, reflecting a 145% year-over-year increase. Amedisys acquired Contessa Health – an at-home, high-acuity care provider – in 2021 for $250 million. Admissions in that line of business were up 57% year over year, according to Amedisys. It now has 9 joint ventures contributing to growth, as well as 33 referring hospitals.

Overall, the Baton Rouge, Louisiana-based Amedisys has 519 care centers across 37 states and the District of Columbia.

It has been over a year since UnitedHealth Group’s Optum agreed to acquire Amedisys for $3.3 billion. Amedisys recently agreed to divest a number of locations to VitalCaring, the home health provider led by April Anthony.

That divestment is contingent on the UnitedHealth Group-Amedisys deal going through. In all likelihood, the divestment is being made to ease antitrust concerns regarding the deal. Optum already owns LHC Group, another one of the largest home health providers in the country.

The post Amedisys’ High-Acuity, Non-Medicare Revenue Skyrockets As It Waits For UnitedHealth Group Deal To Close appeared first on Home Health Care News.

Optum agreed to acquire Landmark Health early in 2021. Optum also acquired the in-home medical group Prospero Health early in 2023, rolling it into Landmark Health.

While the layoffs are not isolated to Landmark, they account for a “sizable portion,” according to Fierce Healthcare. Specifically, at least 100 licensed social workers have been dismissed across the country. Social work managers were also affected.

Landmark is also exiting close to 20 markets, according to anonymous employees who spoke with Fierce.

Episource – another Optum subsidiary – was also impacted by the layoffs. Optum laid off employees within its Optum Home & Community Care division earlier this year. Landmark falls under the Home & Community Care umbrella.

In May, Optum laid off employees in other areas of its business outside of home-based care.

Home Health Care News reached out to Optum for comment, but had not heard back by the time this story was published.

UnitedHealth Group has battled significant headwinds of late. Another one of its subsidiaries – Change Healthcare – was hit with a massive cyberattack earlier this year. It has also been the subject of a DOJ antitrust investigation.

All the while, it continues building out its home-based care portfolio. It already owns LHC Group, one of the largest home health providers in the country. It’s in the process of acquiring Amedisys Inc. (Nasdaq: AMED), another one of the largest home health providers.

Originally, the Amedisys deal was also targeted by antitrust regulators. But Amedisys has agreed to divest a certain amount of its locations to VitalCaring, in a move that could clear the path for the deal to get done.

UnitedHealth Group brought in revenues of $98.9 billion in the second quarter, an over 6% year-over-year increase.

Optum brought in $62.9 billion in the quarter, good for a nearly 12% year-over-year increase.

The post Optum’s Home & Community Business Reportedly Hit With Layoffs appeared first on Home Health Care News.

The divestiture was a way for Amedisys to avoid further antitrust concerns from regulators prior to it joining UnitedHealth Group (NYSE: UNH).

UnitedHealth Group’s Optum agreed to purchase Amedisys last June for a purchase price of $3.3 billion. Optum already owns LHC Group, another one of the largest home health companies in the country.

The Baton Rouge, Louisiana-based Amedisys has 521 care centers in 37 states and the District of Columbia. It offers home health, hospice, palliative and home-based high-acuity care.

In May, a report surfaced that UnitedHealth Group and Amedisys were working with regulators on a divestment package over “over 100 locations.”

A short time after, a “private equity-backed” buyer for those locations emerged. Home Health Care News reported that buyer was VitalCaring, the Dallas-based home health and hospice company led by April Anthony. VitalCaring is backed by The Vistria Group and Nautic Partners.

VitalCaring then reportedly backed away from the deal, due to disagreements over the worth of those locations once they left the Amedisys network, sources told HHCN.

HHCN also reported at the time that it was likely both parties would come back to the table. VitalCaring is one of the few growing home health providers with enough capital backing to pull off an acquisition of this magnitude.

Now, the deal is agreed upon between the two parties, though details are minimal. A purchase price was not listed in Amedisys’ 8-K filing, nor was the number of locations.

According to the financial filing, the divestment agreement being finalized is dependent on the UnitedHealth Group deal going through.

“Consummation of the Divestiture is contingent on a number of conditions, including the consummation of the previously announced merger transaction (the “Merger Transaction”) contemplated under the Agreement and Plan of Merger, dated June 26, 2023 (the “Merger Agreement”), by and among UnitedHealth Group, Aurora Holdings Merger Sub Inc., a wholly owned subsidiary of UnitedHealth Group (“Merger Sub”), and Amedisys, pursuant to which Merger Sub will merge with and into Amedisys (the “Merger”) upon the terms and subject to the conditions set forth in the Merger Agreement, with Amedisys surviving the Merger as a wholly owned subsidiary of UnitedHealth Group,” the filing states.

The transaction is expected to close in the second half of 2024.

The post Amedisys To Divest Certain Home Health Locations To VitalCaring, Clearing Path For UnitedHealth Group Deal appeared first on Home Health Care News.

As UnitedHealth Group (NYSE: UNH) and Amedisys (Nasdaq: AMED) work on a divestment strategy that will satisfy regulators, a lot hangs in the balance.

For one, UnitedHealth Group and Optum’s deal for the home health and hospice provider Amedisys is one of the largest deals in the industry’s history, only trailing Optum’s deal for Amedisys’ peer, LHC Group, last year. The former deal is worth $3.3 billion and still pending, while the other was worth $5.4 billion and is finalized.

Getting the deal done is important to both parties. UnitedHealth Group is banking on home-based health care for its value-based care strategy, but is under significant and widespread antitrust scrutiny. Amedisys, on the other hand, has a good deal in place – in this market – for its shareholders.

A Jefferies analyst note suggested that, if the deal were to fall through, Amedisys’ stock price would likely fall. The agreed-upon purchase price is $101 per share, but Jefferies sees that coming down to $74 per share without the deal getting done.

All the while, if Amedisys offloads 100-plus of its locations to avoid antitrust litigation, the buyer has the chance to bolster its footprint and capabilities considerably. A regional provider could become a nationwide one. A top-10 home health provider could become a top-5 provider.

With news last week that the divestment strategy has hit a snag, there’s still a lot of dominos yet to fall.

What dominos need to fall, and where they may fall, is the topic of this week’s exclusive, members-only HHCN+ Update.

Divestment dynamics

To put things into perspective, about 1% of the entire home health market could change hands in the Amedisys divestment.

There were 11,353 active home health agencies in 2022, according to the Research Institute for Home Care (RIHC). That number has likely slightly dwindled since, due to Medicare Advantage (MA) penetration and Medicare fee-for-service rate cuts.

In a fragmented home health industry, over 100 locations changing ownership is no small deal. If the Optum-Amedisys deal is completed, Optum will become the largest provider of home health care with just about 10% of the market underneath its belt.

The divestment will likely decrease Amedisys’ footprint by about 20%. Currently, the company has 522 locations across 37 states and the District of Columbia.

Initially, Amedisys had what appeared to be a perfect partner for the divestment: a private equity-backed home health provider looking to scale.

Capitol Forum reported last week, however, that the partner had walked away from the Amedisys deal. Based on information I gathered from industry sources, I later reported that partner was, in all likelihood, the April Anthony-led Vital Caring.

The Vistria Group and Nautic Partners each own one-third of VitalCaring, with Anthony owning the final third.

VitalCaring President Luke James said earlier this year at HHCN’s Capital + Strategy conference that he thought now – despite the headwinds – was a great time to scale in home health care.

“If you have a long-term vision, and your sponsors aren’t looking to exit tomorrow, then you’ve got the patience to be able to buy when it’s tough and be really well positioned when they’re looking to exit,” he said.

Whether the divestment partner was VitalCaring or another entity, the change of heart is interesting for a couple reasons. Given how long it appears talks persisted, for example, it seems likely that the interested parties hit a snag later down the line in talks. So why is that?

One source told me that the buyer may have wanted assurance that the Amedisys referral sources that exist today would exist post-acquisition. Or, if that assurance wasn’t there, that the parties would come to an agreement on a lower price.

There’s also a lot that goes into this significant of a carve-out deal. The buyer would need to have the right leadership in place to integrate seamlessly – or risk the “snake eating an elephant” analogy.

Of course, acquiring a large home health footprint could also infuse leadership talent into the buyer’s organization.

James also mentioned the need for more home health talent at VitalCaring earlier this year.

“We’re not at a point yet where we feel like we have all the talent we need,” he said. “When we’re looking at deals that have real go-getters within, talented people that have a seat at the table within the organization – that adds a lot of value.”

If the Amedisys-divestment buyer does come back to the table, it’s likely they’ll have some leverage.

As of right now, it’s a tough time to solicit offers for around 100 home health and hospice locations. Private equity money mostly remains on the sideline. Payers – like UnitedHealth Group and Humana Inc. (NYSE: HUM) – have antitrust concerns. There aren’t a ton of home health providers who fit the bill as potential suitors, for a variety of reasons.

The locations could be split up, but the Capitol Forum did suggest Amedisys is still looking for a single buyer.

And that’s why, in my view, VitalCaring would have been perfect.

The post What The Amedisys Divestment Snag Means For The Home Health Industry appeared first on Home Health Care News.

Recently, however, the health care giant has started to view value-based care as a sustainable business model that it can lean into to drive growth across its operations. And it’s home-based care that has helped UnitedHealth Group take its value-based care strategy to the next level.

“Although it’s a topic that has been talked about for probably 30 years as a theme, I would say, really, only within UnitedHealth Group and Optum are you seeing value-based care now on a scale and presence [that] allows it to operate truly as a business model,” UnitedHealth Group CEO Andrew Witty said Wednesday, speaking at an investor conference.

Specifically, home-based care – home health services, house calls and other ways of engaging with Medicare beneficiaries in the home – allows UnitedHealth Group and Optum to take a more preventative approach.

That, in turn, benefits the company as well as the health care system as a whole, according to Witty.

Optum has maintained a house calls program for years that’s available in all 50 states. As part of that program, it sends advanced practice clinicians into beneficiaries’ homes for comprehensive health assessment, with services also available virtually.

The house calls team conducts hundreds of thousands of in-home care visits annually, many of which take place in rural communities.

Increasingly, UnitedHealth Group and Optum have invested in home health services, too. The prime example of that is the $5.4 billion acquisition of LHC Group in 2023, with a separate multi-billion-dollar purchase of Amedisys Inc. (Nasdaq: AMED) pending.

Other wraparound services, including Optum’s behavioral health investments, add to the company’s ability to perform in a value-based care landscape by providing deeper clinical care, according to Witty.

“That’s a huge area for us, and you should continue to expect us to invest heavily in that going forward,” the CEO said, referring to the organization’s overall value-based care plan. “We believe that is, by far and away, the best way to deliver quality of care, affordable care [and] value. We still think it’s in the early innings as a business model.”

Heather Cianfrocco, the CEO of Optum, echoed those sentiments. Cianfrocco took over as CEO of Optum in April 2024, and she is now responsible for the strategic direction and overall performance of its three business segments: Optum Health, Optum Rx and Optum Insight.

Wraparound services, population health, behavioral health and home-based care are all keys to a sustainable value-based care strategy, Cianfrocco noted.

“It’s strong referrals to the right side of service, including surgery and specialty. It’s the wraparound services, like the population health and behavioral health services, that many of our patients need,” Cianfrocco said. “And it’s the home-based care that we’ve invested in, whether it’s home health services through many of the investments we’ve made, [or] it’s transitional and longitudinal care, or it’s just the really important preventive services and annual home checks that we’ve done for years that make sure our seniors have what they need at home … .”

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Amid the DOJ investigation, UnitedHealth Group’s planned acquisition of the home health company Amedisys Inc. (Nasdaq: AMED) came into focus, with reports circulating that the DOJ was considering an attempt to block that deal specifically.

Signs still suggest that deal is on track to be completed by the end of the year, albeit with certain divestments likely in order for Amedisys.

“We don’t comment on these sorts of matters,” UnitedHealth Group CEO Andrew Witty said Tuesday during the company’s first quarter-earnings call, referring to the DOJ investigation. “I don’t think it would be appropriate to do so today. And certainly we’d never have done in the past. So it’s not something we’re going to get into.”

The Change Healthcare cyberattack, meanwhile, rocked the entire health care industry. But UnitedHealth Group – as the parent company of Change Healthcare – has dealt with the brunt of it.

Change Healthcare provides revenue and payment cycle management, working between payers, providers and patients across the health care system. Since it was hit with a major ransomware attack in February, it has been trying to pick up the pieces. WIRED also reported that UnitedHealth Group paid the ransomware group over $20 million in an attempt to get the problem to go away.

This week, however, a ransomware group suggested it would leak further patient information from the Change Healthcare leak at some point soon if another ransom agreement was not met.

UnitedHealth Group said it took an about $870 million hit in the quarter due to the cyber attack.

“This was an unprecedented attack by a malicious actor on the U.S. health system,” Witty said. “We promptly disconnected the affected services and turned our focus to two main areas: restoration and support. The attack disrupted the ability of care providers to file claims and be paid for their work. We moved quickly to fill this gap. Fortunately, we were able to bring to bear the substantial resources of UnitedHealth Group to drive the recovery and begin to mitigate the impact – resources which a standalone Change Healthcare would not have had access to on its own.”

Witty acknowledged that some care management activities were stalled at the height of the crisis.

“Of the $870 million, about $595 million were direct costs due to the clearinghouse platform restoration and other response efforts, including medical expenses directly relating to the temporary suspension of some care management activities,” UnitedHealth Group President and CEO John Rex said on the call. “For the full year, we estimate these direct costs at $1 billion to $1.15 billion, or $0.85 per share to $0.95 per share.”

Other strategic priorities

Outside of the most pressing issues UnitedHealth Group is facing, there’s also a Medicare Advantage (MA) rate environment that’s forcing health plans – including UnitedHealthcare – to make changes.

But UnitedHealth Group maintains that MA will be an area of growth for it in the future, and that it won’t completely alter its strategy based on contemporary trends.

“2025 is the second year of the significant three-year phased funding reductions to Medicare Advantage introduced by CMS last year,” Witty said. “Here in early 2024, we’re at the beginning of our thoughtful, responsible three-year plan we developed last year to adapt to those changes. Our strategy continues to focus on providing as much stability as possible in the reduced funding environment, improving outcomes and experiences for the consumers we’re privileged to serve and delivering the performance you expect from us.”

Rex also mentioned that the company remains “comfortable” with its benefit offerings.

“We continue to be comfortable with the outlook we established last June, when we filed our 2024 Medicare Advantage benefit offerings,” he said.

Witty also said that OptumHealth is on track to serve “another” 750,000 patients in value-based arrangements in 2024 in partnership with “many payers.”

In the quarter, UnitedHealth Group posted revenues of $99.8 billion, an $8 billion and nearly 9% year-over-year increase. Optum, meanwhile, brought in $61.1 billion, a $7 billion and nearly 13% year-over-year increase.

The post UnitedHealth Group Remains Under Duress From Change Healthcare Cyberattack, DOJ Investigation appeared first on Home Health Care News.

UnitedHealth Group (NYSE: UNH) and Amedisys Inc. (Nasdaq: AMED) announced combination plans last June, under which home health giant Amedisys would become part of Optum.

Amedisys had previously entered into an agreement to merge with infusion therapy company Option Care Health (Nasdaq: OPCH), but UnitedHealth Group’s offer, scale and complementary clinical capabilities were effectively too good to pass up. As with any deal of this magnitude, however, there are complications.

Perhaps the biggest hurdle in the way of Amedisys and UnitedHealth Group successfully executing their transaction – valued at about $3.3 billion – is the government’s concern around market competition. As recently as March, reports circulated claiming the U.S. Department of Justice was still considering an antitrust case blocking the sale of Amedisys.

Others, including Sen. Elizabeth Warren (D-Mass.), continue to scrutinize UnitedHealth Group for its M&A activity more broadly. Also in March, Warren released a statement slamming Steward Health Care’s plan to sell its physician group to Optum.

“Optum, a UnitedHealth Group subsidiary, is already the largest employer of physicians in the country – controlling over 10% of American doctors – which means this deal raises significant antitrust concerns in Massachusetts and nationally,” the senator said.

In the case of Amedisys, regulators are likely spending more time evaluating industry-competition ramifications because UnitedHealth Group and Optum acquired one of Amedisys’ largest competitors, LHC Group, at the beginning of 2023. A combined Amedisys-LHC Group enterprise would mean Optum owns a sizable chunk of the historically fragmented home health market.

To pave the way for its sale, I expect the Baton Rouge, Louisiana-based Amedisys to explore a multifaceted divestment strategy, which could include selling off parts of its core home health business and other measures.

I examine what divestiture could look like – and outline some key questions Amedisys will likely need to consider – as part of this week’s exclusive, members-only HHCN+ Update.

The core home health business

Divestment is something that the Amedisys leadership team is already weighing, according to Jefferies. In a recent note, analysts from the investment banking and financial services company wrote that they believe Amedisys management is “working on divestitures” that they view as “necessary” to get regulatory approval of their deal.

Jefferies analysts also said in their note they expect the Amedisys-Optum deal to be completed in the next few months.

Deciding how to break up the core home health business would be the most important aspect of a potential divestment strategy.

As of February, Amedisys provided home health, hospice and higher-acuity care services across 521 care centers in 37 states, plus the District of Columbia. That network included more than 200 home health locations in difficult-to-enter states requiring certificates of need (CONs), permits of approval (POAs) and/or facility need reviews (FNRs).

Specifically, according to its annual report filed with the Securities and Exchange Commission (SEC), Amedisys had 233 home health centers in 14 such states and Washington, D.C., with especially strong density (20+ locations) in Alabama, Georgia, South Carolina and Tennessee.

Overall, Amedisys at the end of last year had 346 Medicare-certified home health care centers in nearly three dozen states, according to its annual report.

Geography will likely be a deciding factor in any divestment strategy around the core home health business, I expect. If regulators are concerned about a combined Amedisys-LHC Group under Optum having too much market share, Amedisys could look to offload centers where there’s ample overlap with legacy LHC Group locations.

That’s easier said than done, though, with Amedisys and LHC Group having similar footprints.

As of March 2022, LHC Group had 557 home health locations, with density in many of the same states as Amedisys, such as Alabama and Tennessee, among others.

Because the footprints are comparable, Amedisys may need to take a center-by-center approach to divestment while simultaneously considering factors beyond geography. One possibility could be examining payer mix or a market’s Medicare Advantage (MA) penetration as part of a divestment strategy.

Despite most Medicare beneficiaries having access to plans operated by several different insurance firms, MA enrollment in 2023 was concentrated in plans operated by UnitedHealthcare and Humana (NYSE: HUM), according to Kaiser Family Foundation data. Those two entities alone accounted for nearly half of all 2023 MA enrollment.

I could see a scenario where Amedisys’ home health locations with higher levels of MA business being prioritized.

Amedisys has been successful in growing its non-fee-for-service Medicare revenue over the years.

For full-year 2023, the Amedisys home health business had a net service revenue of about $1.4 billion. Medicare revenue on the year came in at $874.2 million, while non-Medicare revenue totaled $529.4 million.

If Amedisys does sell off parts of its core home health business, it will likely have plenty of suitors. Along with Option Care and Optum, in fact, Amedisys attracted M&A interest from other payer-type buyers last year.

Carving out hospice

Identifying divestiture opportunities in its home health business is Step 1 for Amedisys. Once the Amedisys-UnitedHealth Group transaction closes, Step 2 will be figuring out what to do with Amedisys’ hospice line.

Pairing LHC Group and Amedisys under Optum wouldn’t just give UnitedHealth Group a large portion of the home health market. It also would make Optum a hospice leader – and I question just how valuable that is for UnitedHealth Group.

As of December 2023, Amedisys had 165 Medicare-certified hospice care centers in over 30 states. For full-year 2023, the hospice business line brought in $798.8 million in net services revenue.

Expanding into hospice had been a major focus for Amedisys heading into the Patient-Driven Groupings Model (PDGM) implementation Year 1, with its industry-shaping end-of-life care deals including its $340 million purchase of Compassionate Care Hospice in 2018.

“We wanted to go out and balance any ill effects there may be — or may not be — with PDGM,” Amedisys Chairman and former CEO Paul Kusserow told HHCN at the time. “We wanted to bulk up on hospice, which has a very near-term, rosy regulatory future, so we believe this should offset any of the PDGM chop that could occur.”

Meanwhile, LHC Group has also worked to methodically grow its hospice arm, seeking to co-locate or even tri-locate its home health, hospice and personal care services lines.

As of December 2022, LHC Group operated 159 hospice locations, of which 96 were wholly-owned and 61 majority-owned through equity joint ventures. Two were under license-lease arrangements.

LHC Group’s hospice net services revenue for full-year 2022 was about $407.5 million, according to its last annual report filed with the SEC.

Since LHC Group became part of Optum, I’ve wondered exactly how hospice fits. Home health has been shifting toward MA and value-based care, but hospice is still predominantly paid for by traditional Medicare.

That isn’t going to change any time soon, either, with the U.S. Centers for Medicare & Medicaid Services revealing in March that the agency will end the hospice component of the Value-Based Insurance Design (VBID) model at the end of the year. Effectively, hospice is being carved back out of MA again.

Hospice is an incredibly valuable service, but there’s not the same degree of synergy with the broader UnitedHealth Group, I believe.

So what’s going to happen? Well, I can see UnitedHealth Group eventually taking a page out of the Humana playbook. An Amedisys-LHC Group hospice enterprise would be extremely valuable, and UnitedHealth Group could sell a majority stake in that combined business similar to what Humana did with the legacy Kindred/Curo platform.

Humana completed a $2.8 billion sale of Kindred at Home’s hospice and personal care segments, divesting a 60% stake, to the private equity firm Clayton, Dubilier & Rice in August 2022.

“Humana will continue to support the long-term success of these operations through our minority ownership and ongoing strategic partnership,” Humana CFO Susan Diamond said at the time. “Hospice and palliative services play an important role in the full continuum of care, and we are confident that this new standalone company will continue to provide patients and their families with the resources and high-quality care they need.”

Contessa questions

Contessa is Amedisys’ higher-acuity care engine, acquired for $250 million in 2021. Contessa was once a standalone business – and there’s always the chance it could be again in a post-Optum future.

But I see Optum and Amedisys wanting to keep Contessa and all of its higher-acuity care capabilities, which include hospital-level care in the home, home-based palliative care and its SNF-level care in the home.

Strategically, Contessa’s higher-acuity care know-how would amplify some of Optum’s other care delivery assets. It’s important to note that, in 2021, Optum also purchased Landmark, and, in 2023, it acquired Prospero Health.

Contessa has largely found success via its joint venture strategy, however. Optum ownership could complicate existing JV arrangements, or make some potential health system or payer partners hesitant.

It has happened before

This week’s HHCN+ Update is purely an exercise on how Amedisys might think about divestment, if that’s something it sees as beneficial in working toward a finalized Optum deal.

In this exercise, though, it’s useful to remember that Amedisys does have a recent track record of strategically separating parts of the business. The company just took that very measure with its personal care business, which at the time of divestment included 13 care centers in three states.

The post Exploring What An Amedisys Divestment Strategy Could Look Like appeared first on Home Health Care News.

Thanks to impactful, large-scale transactions over the last decade, the collective face of home-based care has changed forever.

Traditional providers in both home health care and personal home care have merged. Payers became involved in the home-based care space like never before. Of late, retailers have too.

But it’s often easy to forget how the current landscape became what it is.

Below, Home Health Care News takes a look at some of the most important and impactful deals in home-based care over the last decade – deals that explain, in part, where the home health and home care industries are today.

‘Big time’ provider deals

This past decade’s first blockbuster remained one of the most impactful throughout the last 10 years.

In 2014, April Anthony’s Encompass Home Health & Hospice was acquired by HealthSouth Corporation for $750 million. HealthSouth took a swing at home health and hospice, merging an in-patient facility business with a post-acute care business.

Four years later, HealthSouth would rebrand completely, taking on the home health and hospice entity’s name. Encompass Health Corp. (NYSE: EHC) still exists today, but is again without post-acute care capabilities.

The HealthSouth-Encompass deal is like a few other deals in home health care, in that it set off a domino effect and a winding life cycle of a home health entity.

Anthony left Encompass Health in 2021, and after her home health and hospice company operated as a segment within the larger organization for nearly a decade, Encompass Home Health & Hospice was spun off into its own public company: Enhabit Inc. (NYSE: EHAB).

That happened in 2022, and two years later, Enhabit may land in the hands of a different owner after it concludes its own strategic review. Anthony now runs VitalCaring, which is backed by her, The Vistria Group and Nautic Partners.

Over the decade, larger health care organizations like Encompass Health have also bundled up services, and also unbundled them.

For instance, Brookdale Senior Living (NYSE: BKD) had one of the largest home health footprints for a long time. After COVID-19 woes, however, it offloaded that to a health system eager to get into home health care: HCA Healthcare (NYSE: HCA). LHC Group would later acquire some of the assets jointly owned by Brookdale and HCA Healthcare.

Ascension Health, too, teamed up with TowerBrook to buy the home health and hospice provider Compassus in 2019.

A theme that has been a mainstay, and will likely remain a mainstay, is health systems changing course on their strategic planning – and deciding whether to own home health care themselves or focus on core operations and partner with home health care instead.

“You’re seeing a lot of these facility-based providers divesting or spinning off assets,” Chaz Bauer, director at Fifth Third Securities, told Home Health Care News. “They realize they have fundamentally two different businesses. They’re very related and intertwined. But fundamentally, you have these facility-based businesses that are very centralized models, very capital intensive. Whereas home-based care businesses, they’re very decentralized; they’re very capital-light. Part of the motivation there – in unbundling – is they can unlock value for their shareholders by splitting those businesses.”

But then there’s the M&A that has come from within the home health sector itself.

For instance, “the merger of equals” that turned LHC Group into a true home-based care powerhouse.

In late 2017, LHC Group agreed to merge with Almost Family in a $2.4 billion transaction. A straight line can be drawn from that deal to UnitedHealth Group’s (NYSE: UNH) acquisition of LHC Group, which was finalized in 2023.

LHC Group and Almost Family’s merger is not an anomaly, either. Not long after, Great Lakes Caring, National Home Health Care and Jordan Health Services combined in a three-way merger to create another one of the largest home health companies in the U.S.: Elara Caring.

That deal was powered by the PE firms Blue Wolf Capital Partners and Kelso & Company.

PE money in home-based care has turned a lot of sizable providers into powerhouses. The aforementioned PE firms – Blue Wolf, Kelso, Vistria and Nautic – have all played a part in that, in the transactions mentioned already and otherwise.

That will also continue, particularly as some of the holding periods of the largest companies turn over. There’s also a chance, however, that PE firms direct more attention to other parts of home-based care – like personal care – given the uncertainty surrounding home health payment rates.

In home care, Vistria and Centerbridge Partners uplifted Help at Home, turning it into one of the largest providers of home- and community-based services (HCBS) in the country.

Waud Capital recently acquired the large home care franchise Senior Helpers. Wellspring Capital Management acquired Interim HealthCare’s parent company Caring Brands International in 2021. Last September, The Halifax Group acquired Comfort Keepers from Sodexo.

PE has always been involved in home care. Bain Capital’s 2018 creation of Arosa, one of the largest non-franchised home care companies in the country, is one past example.

In the future, it’ll be interesting to see if PE will drive more large-scale, impactful deals like it has in home health care over the last decade.

Payers enter the fold

Any commentary on the biggest deals in home-based care over the last decade needs to note increased payer involvement.

Enter Humana Inc. (NYSE: HUM).

When people think of the company’s home-based care investments, most go straight to its takeover of Kindred at Home.

But let’s take a step out of the last decade, just for a second.

In 2011, Humana acquired the home-based care provider SeniorBridge, which was doing just $72 million in annual revenue at the time. When that deal was announced, it was not exactly frontpage news. But one could argue that kickstarted a chain of investments that changed the M&A landscape in home-based care forever.

“SeniorBridge fills a growing market need and is consistent with Humana’s focus on delivering clinical care for seniors in their homes,” Michael B. McCallister, Humana’s chairman and CEO at the time, said in a statement. “Acquiring SeniorBridge will immediately expand Humana’s existing clinical capabilities with the addition of SeniorBridge’s national network of 1,500 care managers. The company does a terrific job of reducing hospital readmissions and emergency-room utilization, all while helping seniors achieve lifelong well-being.”

Humana’s home-based care thesis was already there, but the SeniorBridge deal was likely the deal that set the stage for what eventually became CenterWell.

“The deal was a game changer. I was initially surprised by the size of the transaction. It was pretty small by Humana standards,” Mertz Taggart Managing Partner Cory Mertz told HHCN. “It didn’t take long for Humana to tout the savings SeniorBridge created for their membership, saving it billions of dollars within the first couple years of the deal, by keeping their members at home and out of the hospital.”

Nearly 13 years later, Humana is one of the largest home health providers in the country through CenterWell Home Health.

The company, with the help of the PE firms TPG Capital and Welsh, Carson, Anderson & Stowe (WCAS), acquired and merged Kindred at Home and Curo Health Services. Yet another home health and hospice powerhouse was formed, this time under the watch of one of the largest payers in the country.

In 2021, Humana opted to take over a remaining 60% of the enterprise (it had previously owned 40%), which was worth over $8 billion at the time.

In 2022, it divested the hospice and home care operations of Kindred to Clayton, Dubilier & Rice (CD&R). Those divested assets became what is now known as Gentiva, led by David Causby, the former CEO of Kindred at Home.

The home health assets Humana held onto are now under CenterWell Home Health. CenterWell, overall, includes primary care, pharmacy and home health services.

In 2024, most large payers – namely the ones with large MA memberships – have some sort of home-based care capabilities. That was not the case when Humana acquired SeniorBridge way back when.

“This has been an ongoing development, and it’s really just vertical integration,” Bauer said. “The thought is: why not get into that downstream, and then be able to more directly control those costs and quality outcomes on the payer side?”

The other heavily involved payer is the only one that has a leg up on Humana in MA: UnitedHealth Group.

UnitedHealth Group’s Optum already had a variety of health care provider assets, but it decided to make its first big home-based care splash early in 2022 when it announced the $5.4 billion acquisition of LHC Group.

While payers liked the thought of vertical integration, large providers like LHC Group were also recognizing an existential threat to home health business: MA penetration. More MA beneficiaries meant fewer traditional Medicare beneficiaries, which meant a less sturdy financial leg to stand on.

UnitedHealth Group further cemented its interest not long after, when it made a $3.3 billion all-cash offer for Amedisys. That deal was agreed to in June of 2023, but is still pending.

Though UnitedHealth Group may have to divest some Amedisys assets to finalize the deal, the company will most likely have the largest home health market share when that deal closes. Estimates suggest Optum will have about 10% of the U.S. home health market under its belt.

Not only are payers now involved in the home health industry, but they are also creating scale.

“You can make an argument that Optum acquiring LHC group, and now Amedisys, is a scale transaction, like ones we’ve seen before,” Bauer said. “Because it puts together two of the largest providers to make an industry leader.”

New kids on the block

Like payers before them, another group of companies is now firmly involved in home-based care investment: retailers.

In fact, they’re so invested, they may not be labeled as just retailers five to 10 years from now.

CVS Health (NYSE: CVS) has a new health care services segment dubbed CVS Healthspire. Walgreens Boots Alliance (Nasdaq: WBA) has the same with its U.S. Healthcare segment.

Both of those segments are arguably the future of their respective parent organizations. And both include home-based care services.

Payers and retailers have different business models, but tend to want the same thing: pharmacy, primary care and home-based care services.

In 2020, Walgreens made an over $1 billion investment in VillageMD, a home- and community-focused primary care provider. After subsequent investments, it has backed VillageMD with over $6 billion.

After that, Walgreens found its next health care services asset in the health-at-home solutions platform CareCentrix. Though he is no longer in the position, CareCentrix’s former CEO, John Driscoll, was the initial leader of Walgreens new U.S. Healthcare segment.

“We continue to see strong results and potential for growth from our partnership with CareCentrix. Our full acquisition further accelerates our transformation to become a consumer-centric health care company, leveraging innovative platforms that extend our capabilities into fast-growing segments of health care,” former Walgreens CEO Roz Brewer said at the time. “CareCentrix is key to offering services to our patients at every stage of the care continuum, and to driving long-term, sustainable growth as part of our U.S. Healthcare strategy.”

Not to be outdone, CVS Health agreed to acquire the home- and value-based care enabler Signify Health in 2022 for $8 billion. Shortly after that, it got its primary care provider, too, with the over $10 billion acquisition of Oak Street Health.

While none of these assets are traditional home health or home care assets, this retailer involvement represents a seismic change in U.S. health care – and home-based care is a major part of it.

These companies could go after more assets in the future, or they could become major partners for those traditional providers.

Honorable mentions

It’s impossible to highlight every deal, but there are some that don’t fit perfectly into “themes” that are still worth mentioning.

The home care technology company Honor acquired the home care franchise brand Home Instead in 2021, for instance. In lieu of strictly partnering with providers to see its vision through, Honor opted to purchase Home Instead to speed up the process. The jury is still out on that deal, however.

Prior to agreeing to become a part of Optum, Amedisys also made plenty of deals that turned it into a multi-billion-dollar business.

It acquired the hospital-at-home platform Contessa Health in 2021 for $250 million.

It acquired Compassionate Care for $340 million in 2018, and AseraCare Hospice in 2020 for $235 million. Those two deals significantly bolstered its hospice arm.

Modivcare (Nasdaq: MODV) entered into the personal care game in a real way with its $575 million acquisition of Simplura Health Group in 2020 and its $340 million deal for CareFinders Total Care in 2021.

BrightSpring and PhaMerica completed a merger in 2019 that eventually led to today’s BrightSpring Health Services (Nasdaq: BTSG), which is now a public home-based care company.

Finally, Aveanna (Nasdaq: AVAH) – formerly a pediatric provider – entered into the home-based senior care world with its $345 million acquisition of Comfort Care Home Health in 2021 and its acquisition of Accredited Home Care for about $200 million later that year.

Addus Homecare Corporation (Nasdaq: ADUS) has executed several high-profile transactions of its own, most recently acquiring Tennessee Quality Care in a $106 million deal.

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