Based in Eagle, Idaho, Pennant is a holding company with independent operating subsidiaries that provide health care services. It has 117 home health and hospice agencies and 54 senior living communities across 13 states.

Walker is a veteran at Pennant, which spun off from the Ensign Group (Nasdaq: ENSG) in 2019. He first joined the company as a medical director at one of its Idaho branches in 2011. After that, Walker began conducting house calls.

“We started doing the house calls, mobile palliative care, geriatric primary care work,” he told Home Health Care News’ sister site Hospice News. “We started to develop that process in 2014 through 2016 with pilot programs. I started to do visits at home and take my doctor bag and go sit on someone’s couch and talk them through how their health is doing, and that’s been a big portion of what I’ve done with Pennant over the past few years.” 

Walker described his latest position at Pennant as a “developing role.”

“Pennant is an enigma in the health care system, because it’s not a top-down-driven company,” he said. “We’re a leadership company.”

Indeed, building a strong network of leaders across Pennant has been a key component of the company’s strategy. In recent years, Pennant unveiled its initiative to build a pipeline of 100 CEOs.

For Walker, entering patients’ homes as part of the house call process gave him better context to provide clinical services. 

“To me, the main thing is the perspective of what you see and experience in the patient’s home,” he said. “It’s really difficult and different to sit in a clinic and see a patient and try to understand how to help them. You can prescribe, and you can do the tests and labs. But being in their home and seeing how their life is, and seeing who they are, it changes your paradigm significantly.” 

Currently, the company’s mobile physician program — which incorporates palliative care — is top of mind for Walker.

“Our vision is to focus on completing the health care continuum in the home space,” he said. “My belief, strongly, is that palliative care is needed very early in a patient’s lifetime. The way we view it at Pennant is that the post-acute care continuum is still too siloed, and it still has too many gaps. So as we’ve designed our home visit programs, it’s been focused on what are those gaps, and how we fill them? Does a patient need palliative care, or do they need geriatrics, or do they need primary care? What is it that they need the most?”

Hospice News Senior Editor Jim Parker contributed to this report.

The post Pennant’s New CMO: The Vision Is Completing The Continuum In The Home appeared first on Home Health Care News.

The 2025 proposed rule brings additional cuts that may further strain the industry’s ability to serve all patients. That was already a challenge before the pandemic, when only 77% of those needing care in 2018 received it. Six years later, that number is down to 65%.

“It’s a critical opportunity for us as an industry to make sure that the leaders at CMS, and the leaders in Congress, are recognizing the value of home health services within the continuum of care and within the entire health care ecosystem,” says John Gochnour, President and COO of The Pennant Group. “The home health proposed rule doesn’t do that.”

Here are three insights home health providers must know about the new rule and how they can successfully navigate it.

Not all providers are affected equally

The proposed rule includes a payment decrease in the aggregate of 1.7%, translating to about $280 million in lost revenue. Yet the impacts vary widely based on geography and patient case mix. Some factors, such as wage index, have seen erratic changes year after year.

“Turnover and wage costs are not changing abruptly. You’re not all of a sudden paying more one year and then less the next year,” says Scott Pattillo, Chief Strategy Officer, Homecare Homebase. “So it’s really important that you know — based on your geographic mix, your patient mix, your patient types and your acuity types — how it’s going to impact your agencies.”

The industry’s financial pressures are mounting — and the new rule doesn’t always account for that

Running a home health business is challenging enough on its own. It gets even trickier when CMS views the industry substantially differently than providers do.

“CMS is of the opinion that there are very high margins in Medicare,” Pattillo says. “They believe there’s a 17% margin on Medicare claims.”

Pattillo notes that CMS’s response to last year’s provider comment letters was that: “In a 17%-margin environment, we just don’t understand how a 1% to 2% decrease can impact anything materially. Taking 1% to 2% of that 17% margin does not make sense to us that it would destabilize the industry.”

But CMS’ view that providers see a 17% margin on Medicare claims does not account for multiple important factors, including:

• Wage increases and the inflationary environment
• The high number of Medicare Advantage patients that providers care for
• The high number of MA plans with reimbursement rates under the cost of care

Those last two are the big ones. Providers may have a 17% margin if they only took Medicare patients, but when half of their patients are under MA plans, their margins come out to more like 1-5%. In short, home health agency margins are much slimmer than CMS implies.

“The individual elements of cost of care are absolutely not going down,” Pattillo says. “There is nothing that has gotten cheaper about caring for patients, and we know the acuity of those patients is rising in terms of the way that they’re coming into your home health agencies.”

Adjusting to the new rule starts with turning to HCHB

When a new rule proposal is released, care providers turn to the HCHB Analytics Impact Model to review the rule’s potential impact and figure out what changes they need to make.

“The first thing that we do after the proposed rule is released is look to the Homecare Homebase model,” Gochnour says. “We then work from that to refine and understand, because we operate in 14 states across the country, so we have a lot of variability in how a proposed rule is going to impact each individual operation.”

The HCHB dashboard allows companies to see where they fit in the new rule. Benefits include insight into:

• The variability in CMS’s methodology
• How that variability your branches in different states
• How your agency will be affected by case mix changes
• The potential effect you will see to your revenue
• The ability to understand when and how to add new service lines

“We use this model to really estimate that impact and immediately provide our local operators with some insight into what the impact is going to be for them, so that they can begin honing in on what changes they may need to make,” Gochnour says.

This article is based on a recent HHCN-HCHB webinar featuring Scott Pattillo and John Gochnour. HCHB delivers powerful new tools and intuitive software that’s easy to learn and use. From scheduling, routing, documentation and reporting to intake, billing, and compliance we give you everything you need to boost productivity and profits while empowering exceptional patient care. To learn more, visit hchb.com.

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Pennant completes acquisition of Signature assets

The Pennant Group (Nasdaq: PNTG) has completed its acquisition of Signature Healthcare at Home’s Washington and Idaho assets. With an $80 million purchase price, the transaction was the largest in Pennant history.

The deal was first announced in early July, and is just one of many deals Pennant has recently executed on.

“This period of expansion provides insight into our potential as a provider of choice in our local communities, a best-in-class operator across our industries and a disciplined – yet bold – growth company with the sophistication and adaptability to become a key solution in the health care continuum,” Pennant Group CEO Brent Guerisoli said on the company’s second-quarter earnings call. “Since the beginning of the year, we have entered into the Muir Home Health joint venture; closed an additional two home health and two hospice transactions; initiated a management agreement with Hartford HealthCare; announced the largest acquisition in our history with the Signature transaction; and completed three senior living deals.”

Based in Eagle, Idaho, Pennant is a holding company with independent operating subsidiaries that provide health care services through 117 home health and hospice agencies and 54 senior living communities across 13 states.

Pennant had previously acquired other Signature assets in 2020.

The transaction allows Pennant to expand further in the Pacific Northwest, where it already has a strong footprint. It also allows it to expand its home health footprint in Certificate of Need (CON) states.

Aging Advocates CNY acquires Senior Home Care Solutions

The care management practice Aging Advocates CNY announced in late July that it had agreed to acquire Senior Home Care Solutions. The deal goes into effect on Jan. 1, 2025.

Based in New York, Senior Home Care Solutions is a non-medical home care provider led by Sheila Ohstrom, who will stay on as a consultant post-acquisition.

“This is an exciting time for both organizations and the Central New York area,” Ohstrom said in a statement. “By combining our strengths, we can better serve our clients and help more seniors remain in the safety and security of their own homes for as long as possible.”

As part of the deal, Aging Advocates will gain 60 employees from Senior Home Care Solutions, including caregivers and an office management team.

“This acquisition aligns with our mission to promote dignity and independence for our clients while providing peace of mind for their families,” Aging Advocates founder and CEO Melissa Murphy said in a statement. “We have a great working relationship with Senior Home Care Solutions and deeply respect their service to the community. As our population ages, it’s crucial to maintain quality in-home care providers in Central New York.”

Cardiovascular Associates of America acquires home-based care company

Earlier this month, Cardiovascular Associates of America (CVAUSA) announced the acquisition of Novolink Health, which provides care services to complex patients in the home.

Based in Orlando, CVAUSA is a physician-centered cardiology company with a mission of “saving lives, reducing costs and improving patient care through clinical innovation.” The Fort Lauderdale, Florida-based Novolink, meanwhile, aims to fill care gaps between the hospital and home. As a division of CVAUSA, it will “offer a proven alternative to traditional hospital-based care,” according to a press release.

“Our mission has always been to provide exceptional and personalized care to our patients. Joining CVAUSA, one of the largest US cardiology networks, allows us to leverage the extensive resources and reach in our journey to revolutionize healthcare delivery,” Novolink President and Chief Medical Officer Michael Shen said in a statement. “We are very excited to work closely with Tim and the CVAUSA family to bring our innovative model to more communities and improve the quality of care for all patients in the comfort of their homes.”

Prior to the COVID-19 pandemic, Novolink developed a “high-risk care at home” model, which piqued CVAUSA’s interest in the company.

“I have known Dr. Shen since 2005. He’s an excellent cardiologist and is always experimenting and exploring ways to provide better and lower-cost care,” CVAUSA CEO Tim Attebery said in a statement. “Years before the term ‘hospital at home’ was coined, Dr. Shen realized that remote monitoring technology and home-based diagnostic services could create an Amazon-type solution, allowing certain high-risk patients to receive high-quality and safe care at home instead of being in a hospital or skilled care facility.”

Adena Health and AHSN form home health, hospice JV

The Ohio-based health system Adena Health has agreed to form a home health and hospice venture with Alternate Solutions Health Network (ASHN).

The JV will be branded as Adena Home Health and Hospice, and will focus on caring for seriously and terminally ill patients in South Central and Southern Ohio.

“This is an exciting and significant step forward in our home health and hospice care delivery,” Adena Chief Clinical Officer Dr. Shaheed Koury said in a statement. “Building on our long-standing commitment to providing compassionate, patient-centered care to our communities and leveraging the breadth and experience of Alternate Solutions Health Network, our caregivers will be well-positioned to offer patients even more convenient and personalized care options.”

ASHN provides home health and hospice care primarily through partnerships. It has partnerships with more than 40 health systems and more than 90 home health and hospice providers.

Spectrum Brands plan to spin off home health, personal care business

In early July, Spectrum Brands Holdings (NYSE: SPB) – a “home essentials” company – announced that it had filed a confidential Form 10 registration with the U.S. Securities and Exchange Commission (SEC) to spin off its home care business.

“As previously announced, Spectrum Brands has accelerated its efforts to separate its HPC business from its remaining businesses through a spin-off, sale, merger or other strategic transaction,” the company wrote in a statement. “The filing of the confidential Form 10 registration statement with the SEC represents an important step forward in this process. The filing of the Form 10 registration statement does not obligate Spectrum Brands to complete the spin-off or engage in any other transaction.”

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There are certain headwinds affecting all home-based care providers right now, whether it be in payment, staffing or otherwise. Amid those challenges, the largest companies are all taking slightly different approaches to growth.

Enhabit Inc. (NYSE: EHAB), for instance, grabbed the attention of home health providers everywhere last week when it announced that it had terminated its contract with UnitedHealth Group’s (NYSE: UNH) UnitedHealthcare. That move fell in line with its overarching “payer innovation” strategy.

Aveanna Healthcare Holdings Inc. (Nasdaq: AVAH) is also focusing on its “preferred-payer” strategy, which includes drawing a hard line on rates – as Enhabit is doing – but also advocating for proper reimbursement from states in home- and community-based services (HCBS).

Leaders from Amedisys Inc. (Nasdaq: AMED) have been quiet over the last year, given the pending UnitedHealth Group acquisition. But, when it comes to its payer strategy, the company’s numbers tell a story worth paying attention to.

Elsewhere, Addus Homecare Corp. (Nasdaq: ADUS) is taking advantage of the headwinds. High interest rates and payment uncertainty across home-based care has led to a slow M&A market, allowing the company to pounce on acquisition targets with little competition.

The Pennant Group (Nasdaq: PNTG) has done the same.

All of the aforementioned companies’ strategies differ to some extent, and yet all are in place to achieve growth during a somewhat turbulent time for home-based care.

What’s behind those strategies is the topic of this week’s exclusive, members-only HHCN+ Update.

Finding the right payers

Aveanna and Enhabit are both trying to turn around their businesses. Each saw their share price tumble after going public, and each has addressed that issue – at least in part – by revamping their payer strategies.

Enhabit’s payer innovation strategy has been well documented, and I covered its decision to walk away from UnitedHealthcare in last week’s HHCN+ Update.

“After over nine months of unsuccessful negotiations with UnitedHealthcare, we submitted our termination notice on August 1,” Enhabit CEO Barb Jacobsmeyer said last week. “We will dedicate our clinical resources to fee-for-service Medicare patients, and those members of the 68 favorable contracts. We remain committed to providing our strong quality of care to UnitedHealthcare members, if at some point they decide to contract with acceptable rates.”

Similar to Enhabit, Aveanna is taking back its most vital resource: frontline workers.

“By focusing our clinical clinical capacity on our preferred payers, we achieve solid year-to-year growth in revenue and adjusted EBITDA,” Aveanna CEO Jeff Shaner said on the company’s second-quarter earnings call. “We also experienced improvement in our caregiver hiring and retention trends by aligning our efforts to those payers willing to engage with us on enhanced reimbursement rates and value-based agreements. While we continue to operate in a challenging labor and inflation environment, our preferred payer strategy allows us to return to a more normalized growth rate in our business segments.”

Aveanna posted solid year-over-year growth in all three of its segments – private-duty services, home health and hospice, and medical solutions – in the second quarter.

Enhabit has touted its 68 “favorable” non-Medicare agreements. Aveanna, too, is taking stock of the payers and states that are willing to pay it an adequate rate for home-based care services.

Aveanna said that no single payer makes up more than 10% of its business, which lends itself to a healthy business. At the same time, that means work is cut out for the company when it comes to renegotiating higher rates for services.

As seen above, Aveanna is set to triple and nearly triple its preferred payers and value-based care arrangements, respectively, by the end of 2024.

Traditionally, one concern in home-based care has been that at least one provider will be willing to accept substandard rates, making negotiations for the rest of providers tougher.

Now, though, the larger companies are leading by example.

“As we continue to grow, we are accelerating our preferred payer strategy and medical solutions by aligning our capacity with those payers that value our services and appropriately reimburse us for the care we provide,” Aveanna CFO Matt Buckhalter said on the call. “We continue to fight through a difficult labor environment while keeping our patients’ care at the center of everything we do. It is clear to us that shifting caregiver capacity to those preferred payers who value our partnership is a path forward.”

Amedisys is likely to be joining a payer itself by year end. But it has clearly been focused on winning better MA business over the last couple of years. In the second quarter, its non-Medicare home health revenue grew by 24% year over year.

Another study published this week suggested that MA members utilize home health care less than their traditional Medicare counterparts. While there’s likely a lot of reasons for that, it’s probably not a good long-term strategy for MA plans to cheap out on home health care, an essential and less costly service.

‘Bold’ M&A

One of the other most enlightening admissions of this past earnings season came from Addus, which suggested its recent M&A activity was partly made possible by less competition – particularly of the private equity variety.

Last year, Addus acquired Tennessee Quality Care for $106 million, enhancing its value-based care capabilities in the state. This year, it agreed to acquire Gentiva’s personal care assets for $350 million, allowing it to enter multiple new states.

Over the past two to three years, M&A has reached historical lows in the home-based care space. Activity across home health care, home care and hospice has fallen off a cliff since there was the flurry of activity in 2020 and 2021.

“Realistically, over the last 12 to 18 months, we’ve not seen a lot of competition out there,” Addus CEO Dirk Allison said on the company’s second-quarter earnings call. “There’s been the occasional smaller strategic player that’s bought a few deals on a localized basis. From a PE standpoint, it’s really been very slow as far as competition for the last bit. Now, obviously, if rates come down in September, as everybody’s expecting, there’ll be a point where PE will come back in and that’s fine. It’s been a market in which up until the last year or so, we’ve always operated with competition from those folks.”

The Pennant Group (Nasdaq: PNTG) has joined Addus in bucking the downward M&A trend. It has executed a slew of transactions over the past couple of years, including a large deal for Signature Healthcare assets in its current footprint, as well as a deal that will place it on the East Coast for the first time.

“This period of expansion provides insight into our potential as a provider of choice in our local communities, a best-in-class operator across our industries and a disciplined – yet bold – growth company with the sophistication and adaptability to become a key solution in the health care continuum,” Pennant Group CEO Brent Guerisoli said on the company’s second-quarter earnings call. “Since the beginning of the year, we have entered into the Muir Home Health joint venture; closed an additional two home health and two hospice transactions; initiated a management agreement with Hartford HealthCare; announced the largest acquisition in our history with the Signature transaction; and completed three senior living deals.”

Most of the largest home-based care providers recognize the need for two things in this market: better contracts with all managed care partners, and scale that will allow them to sustain success in the face of stroke-of-the-pen risk.

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The Centers for Medicare & Medicaid Services (CMS) isn’t letting up on cuts to home health payments, but its recent rulemaking in Medicare Advantage (MA) may end up benefiting home health providers indirectly.

As MA plans become more scrutinized by regulators and lawmakers – and payment updates come with more meager increases – MA penetration is likely to plateau, or at least slow down in its rate of increase.

CMS finalized a 3.7%, or $16 billion, increase to payments for MA plans in 2025, in an update that will likely end up being a cut to “core” rates by 0.16%, according to the investment banking company Stephens.

That will be the second cut to core rates in a row for MA plans, a change in direction from the positive payment rulemaking they had previously been experiencing.

As a result, some of the largest MA plans have pulled back from expanding, and some have even exited markets. BCBS of Kansas City announced that it would be exiting the MA market in Kansas City by the end of 2024, for instance. Humana Inc. (NYSE: HUM) leaders said the company would exit certain markets in MA in 2025 and instead “prioritize profitability.”

Last year was the first year in which there were more MA beneficiaries than traditional Medicare beneficiaries, according to Kaiser Family Foundation. Just a decade prior, in 2013, only 29% of Medicare beneficiaries were underneath an MA plan.

Such trends resulted in the belief that MA penetration would continue unabated over the next decade. MA plans took over 50% of market share much quicker than most believed, so the theory held that penetration would continue at the same rapid pace moving forward.

Anecdotal signs suggest that may not be the case, however. In addition to the MA plans that have announced their departure from certain markets, home health providers have also suggested that MA share has been plateauing in their own markets, as far as they can tell.

“Anecdotally, we’re sort of seeing the limits of managed care penetration,” The Pennant Group President and COO John Gochnour recently told me. “I think we are seeing – and will see – some leveling off.”

MA’s headwinds, and how they will affect home health providers, is the topic of this week’s exclusive, members-only HHCN+ Update.

MA penetration

When it comes to factors that affect home health providers state by state, there are few that display more variability than Medicare Advantage penetration.

“That is probably the largest variability we see at a state level, of maybe any data point we have – MA penetration rates,” Research Institute for Home Care Executive Director Jennifer Schiller told me.

For instance, some states are far above a 50% penetration rate, and some states still have a penetration rate from 20% to 30%.

But that wouldn’t be a reason why some providers are seeing a slowed increase in penetration right now. Schiller explained that, no matter what penetration rates are currently in each state, they all follow a similar trend line.

“Despite where they start – with some states being much lower in terms of penetration – if you were to look at the year-over-year data, it has the same trajectory line,” Schiller said. “There’s a different starting and ending point, but the same curve from one point to the other.”

That makes the comments from The Pennant Group Inc. (Nasdaq: PNTG) and similar comments from Addus HomeCare Corp. (Nasdaq: ADUS) more interesting.

Earlier this year, on Addus’ first-quarter earnings call, CEO Dirk Allison said that he and his leadership team believe MA penetration is leveling off in the company’s markets.

“We continue to be affected by the movement of Medicare beneficiaries from Medicare fee-for-service to Medicare Advantage, but we feel we may be seeing a leveling off of this shift in the markets we currently serve,” Allison said. “We are continuing to work with our Medicare Advantage payers to obtain higher rates.”

It’s of note, too, that Pennant and Addus do not have similar footprints. Like Pennant, Addus has a presence up the West Coast. But it also has a very large footprint in the Midwest and the Rust Belt.

Because payment rates have only been unsatisfactory – from the MA plan perspective – for two years in a row, there could be lagging indicators, too.

If home health providers are noticing signs of a penetration stall now, and MA plans are announcing market departures here and there, it may take a couple of years for real data to prove out that reduced penetration rate.

What this means for home health care

It’d be hard to find a home health provider that’s fond of MA penetration. MA plans pay less than traditional Medicare does for home health services.

“It’s frustrating to see where Medicare is going with their rates, and what they’re trying to do with clawbacks,” VitalCaring CEO April Anthony said last year. “But, if one of our managed care partners came to us with those [traditional Medicare] rates, we would be jumping for joy. We’d be saying, ‘This is the greatest contract we could possibly hope for.’”

Given the more cumbersome back-office requirements MA payment requires, and the lower rates, it takes providers time to adjust. They need to adjust systems and drive efficiencies to make taking on MA patients viable.

Enhabit Inc. (NYSE: EHAB), for instance, has been in the process of adjusting its revenue mix for the last two years to adjust to shifting market trends. After it spun off of Encompass Health (NYSE: EHC), its revenue mix was dominated by traditional Medicare – at close to 80%. Now, it’s gotten that number down to closer to 60% – in order to be a better referral partner – but not without speed bumps.

Since it began on that initiative via its payer innovation team, it has financially underperformed. It underwent a strategic review, and now is in a battle with an activist investor – AREX Capital Management – which has been dissatisfied with its strategic course.

And that’s for a large, at-scale provider with a nationwide presence. Consider, then, what such an undertaking may do to a less resource-rich provider.

So, if penetration does wane, home health providers would likely welcome that. But it doesn’t mean that providers should stop fighting for higher rates from MA plans, or stop planning for a future dominated by MA plans.

“Our focus is on the things that we can control,” Gochnour said. “The things that we can control are delivering great care, being the solution for the community that we serve and for the referral sources who help patients get care. Then, we worry about whether we have the best contracted rates that are possible out there, so that we can take volume, in whatever form it comes. If we control the things that we can control, we feel confident we can be successful. Even in an environment where there’s dislocation or change.”

The post What ‘Leveling Off’ Medicare Advantage Penetration Would Mean For Home Health Providers appeared first on Home Health Care News.

The Pennant Group (Nasdaq: PNTG) is one of the largest home health providers in the country, and has also been one of the more acquisitive ones over the last year. Now, it’s moving eastward, in a move that could set the table for an aspirational future.

In June, the company announced a partnership with the Connecticut-based Hartford HealthCare at Home (HHCAH), the home health and hospice segment of Hartford HealthCare. Previously, the Idaho-based Pennant had not had any home health locations east of Wisconsin.

The deal with HHCAH is unique in its own right, too. It includes a management and consulting services agreement.

It’s also hard to oversell. In fact, some of Pennant’s “key leaders” are even moving out to Connecticut permanently, according to president and COO John Gochnour. The company is establishing an East Coast service center, which clears the way for further expansion in the region moving forward.

“When we think about going to a new market, we think about how we create a center of strength, a center where from that we can build and impact the communities that we’re going to serve,” Gochnour told Home Health Care News.

Pennant is the holding company of independent operating subsidiaries, including 115 home health and hospice locations and 54 senior living communities across a dozen states. In all likelihood, that state-count will increase in the coming years.

Pennant’s focus had generally been from Texas, all the way to the West, and then up the coast into the Pacific Northwest. Its footprint in Wisconsin was a bit of an outlier. But now, with a service center on the East Coast, that’s expected to change.

On its end, HHCAH is a nonprofit integrated health system that has more than 1,000 employees. Over the past 12 months prior to the agreement with Pennant, the health system had 33,000 home health admissions and 4,000 hospice admissions.

“There’s a cultural alignment [with HHCAH],” Gochnour said. “There’s an alignment around innovation and our belief in the future of home health care, and what we can do in home health and hospice to reduce rehospitalization rates, to affect clinical outcomes. And not just for the patients who are currently on service, but across the integrated health system and across the state. And that’s what I think resonated with them – the commitment that they saw from us on that.”

Gochnour believes its proof of concept elsewhere will work in Connecticut, particularly when it comes to driving efficiencies through technology.

“We have the resources focused and dedicated to the East Coast, they’re all going to be focused and dedicated on this venture in the foreseeable future,” he said. “We can foresee a time when it makes sense to grow further on the East Coast, because we have a service center developed out there, we have a group of people who are part of those communities and are excited to continue to make a deeper impact.”

Specifically, that service center has created a base of support for “New England operations,” according to Pennant.

That will provide financial support services to its home health locations, as well as human resources advising, information technology and other management consulting services.

“We just feel so strongly about this venture and feel so strongly about the opportunity to impact lives out there,” Gochnour said.

Bucking the trend

Over the last three years, home health M&A has been down significantly. That’s for a variety of reasons, but namely high interest rates and fee-for-service Medicare cuts.

But Pennant has been one of the more active players in M&A, particularly over the last year.

Even just year to date, the company acquired the Utah-based South Davis Home Health and South Davis Hospice, as well as the Texas-based Nurses on Wheels. It also established a joint venture with the San Francisco-based John Muir Health.

Just last week, it agreed to an $80 million purchase of certain Signature Healthcare at Home assets. Signature has a footprint in Washington, Oregon and Idaho. It has more than 650 home health and hospice staff members.

“This Signature deal has actually been five years in the making,” Gochnour said. “We purchased their assets in northern Utah and southeastern Idaho about five years ago. … It was just a really natural opportunity to expand our footprint with partners that we’ve known for a long time and have a lot of trust in. And it fits within our disciplined acquisition strategy.”

The deal also will allow Pennant to expand in Washington and Oregon, which are Certificate-of-Need (CON) states.

Over the last few years, Medicare Advantage (MA) penetration has hurt home health providers considerably. But it hasn’t with Pennant, which developed a sound MA strategy long before penetration became a significant issue.

And, all the while, the company has continued to grow through acquisition.

Its stock price has also steadily risen – from about $12 to $27 – over the last year.

Ultimately, it wasn’t set up to be a home health powerhouse when it spun off of the Ensign Group Inc. (Nasdaq: ENSG) in 2019. Now, it has all the makings of one.

The post Pennant Continues To Buck M&A Downturn, Inches Toward Home Health Powerhouse Status appeared first on Home Health Care News.

“This is a significant acquisition in Pennant’s history,” Pennant CEO Brent Guerisoli said in a press statement. “We are excited to make this investment because of the quality of Signature’s people and operations. Its locations, its philosophy, and its culture are a perfect complement to our existing operations in the Pacific Northwest. A key tenet of Pennant’s disciplined growth strategy is that we make acquisitions from a foundation of strength, where we have solid existing leaders and well-performing operations.”

Signature provides home health and hospice services in the Pacific Northwest, and has locations throughout Oregon, Washington and Idaho. The company has more than 650 home health and hospice staff members.

The deal allows Pennant to continue to increase its presence in Washington and Idaho. It also will add seven additional locations to Pennant’s Oregon footprint.

On its end, Eagle, Idaho-based Pennant is a holding company of independent operating subsidiaries located across the U.S., with a network that includes 115 home health and hospice agencies and 54 senior living communities.

Overall, Signature rakes in annual revenue of $78 million.

Additionally, Signature home health admissions checks in at over 12,000. The company has an average daily hospice census of more than 300.

“The deal should contribute an incremental +13% of revenue, +25% home health admissions, and +3% hospice ADC,” an analyst note from Stephens read.

The acquisition agreement includes two separate transactions — the sale of Signature’s Washington and Idaho assets and the sale of its Oregon assets. The former is slated to close on Aug. 1, 2024, while the latter is expected to close Jan. 1, 2025.

“We have known Signature and its leaders for years, including through the acquisition of their Northern Utah and Eastern Idaho locations several years ago,” John Gochnour, president and COO of Pennant, said in the press statement. “We have great respect for the talented team they have built and its impact on many communities across Oregon and Washington that we don’t currently serve. As we transition these operations into the Pennant fold, we are pleased to deepen our presence in these key states and to provide Signature’s leaders and staff the opportunity to benefit from our innovative operating model and leadership development programs, while also implementing clinical and operational best practices that will benefit patients and their communities.”

Gochnour noted that Pennant will remain bullish when it comes to M&A. In terms of potential acquisition targets, the company plans to go after strategic and underperforming home health, hospice and senior living operations of all sizes.

Most recently, Pennant developed a partnership with Hartford HealthCare at Home, the home health and hospice arm of Hartford HealthCare. The company will offer management and consulting services as part of the partnership. That deal took Pennant into the East Coast for the first time.

In May, Pennant announced that it acquired the Davis County, Utah-based South Davis Home Health and South Davis Hospice. The move allowed Pennant to expand in Utah.

The post The Pennant Group Agrees To $80M Purchase Of Pacific Northwest Home Health Provider appeared first on Home Health Care News.

The deal is a management and consulting services agreement, which has an aim of providing operational support to HHCAH.

“We have deep admiration for Hartford HealthCare and the commitment to home-based care it has long demonstrated through HHCAH,” Pennant CEO Brent Guerisoli said in a press statement. “We are thrilled to collaborate with Hartford HealthCare and contribute home health and hospice expertise to Hartford HealthCare’s impressive integrated care system. Hartford’s selection of Pennant is an honor and testament to the effectiveness of our unique operating model that empowers local leaders to transform operations and provide life-changing service in their communities.”

Eagle, Idaho-based Pennant is a holding company of independent operating subsidiaries located across the U.S., with a network that includes 113 home health and hospice agencies and 54 senior living communities.

On its end, Hartford HealthCare is a non-profit integrated health system in Connecticut. It’s home-based care arm has 8 locations and employs over 1,000 people.

As part of the agreement, Pennant will launch a service center based in Connecticut in order to support HHCAH’s operations. The center will deliver financial support services, human resources advising, information technology and more.

It is Pennant’s first time entering into Connecticut, and its only presence east of the Mississippi, besides Wisconsin.

“At Hartford HealthCare, we know that home-based care offers a more affordable, vital and expanding part of the care continuum, as more patients receive care in their homes every year,” Jeffrey A. Flaks, president and CEO of Hartford HealthCare, said in the statement. “This innovative collaboration with Pennant will help us create access for people who need and benefit from in-home care, improve our service offerings and programs, and allow us to provide high-quality in-home care utilizing the expertise of a national homecare leader. We are delighted that this engagement will also create jobs in Connecticut, and bring Pennant’s proven operating model to the East coast.”

Indeed, Pennant’s signature operating model includes the empowerment of local health care leaders and organizations.

Typically, Pennant accomplishes this through acquisitions, but with this partnership, HHCAH will remain under the ownership of Hartford HealthCare.

Still, Pennant is bullish on opportunities to achieve growth through other strategic means.

“We view the base establishment in CT as a prime opportunity for PNTG to pursue new markets and drive continued accelerated growth for the enterprise,” Stephens wrote in an analyst’s note.

However, Stephens also noted that fee-for-services reimbursement could be a deterrent to top line growth for Pennent’s home health business.

“Given the portfolio optimization initiatives, we recognize that [home health] segment top-line growth may be constrained in the N-T as FFS reimbursement will continue to be a notable industry headwind in 2024 and [Pennant] becomes more selective with its caseloads to drive margin improvement,” Stephen’s wrote. “We see Medicare [home health] reimbursement possibly hitting its trough in 2024 with potential improvements being additive to the company’s L-T initiatives already underway.”

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Home health providers want better rates and arrangements from Medicare Advantage (MA) plans. The plans, on the other hand, sometimes still can’t figure out what they want from providers.

Some of the largest home health companies have begun to make headway with MA plans.

“I think the payers are recognizing that this is not a commodity business; there is a real need to partner with high-quality providers in the communities,” Pennant Group Inc. (Nasdaq: PNTG) CEO Brent Guerisoli recently said.

But a simple recognition of the value of home health care is not always sufficient, particularly within regional or nationwide plans.

Enhabit Inc. (NYSE: EHAB), for instance, has spent the last couple of years diversifying its revenue to include more of a MA mix. But, in doing so, it has had to get better rates from MA plans to ensure its bottom line doesn’t sink too far.

The company has been successful at that, agreeing to dozens of new contracts that have allowed it to inch closer to sustainability.

The negotiations haven’t always been easy.

I wrote last year about how some health plans didn’t even have point people specifically assigned to home health care, an obvious thorn in a provider’s side.

Enhabit CEO Barb Jacobsmeyer also explained Wednesday, at the Leerink Partners Healthcare Crossroads Conference, that even if there is a point person, they’re sometimes incentivized only to keep costs down.

“The most resistance is when you find that they’re siloed within their negotiating departments,” Jacobsmeyer said. “If it is the group that handles just home health, frankly, what we’ve learned is that they have a bonus, or incentive, to keep their unit cost in place. If they’re not talking across the hall with those that are focused on emergency room visit cost, acute care utilization costs, that’s where we see the barrier.”

I also wrote last summer about the leg up that home health-friendly MA plans would have in the future.

In order for there to be more “home health-friendly” MA plans, though, plans need to take a more holistic view of health care costs across the continuum.

Right now, that’s not always happening. And that’s the topic of this week’s exclusive, members-only HHCN+ Update.

A short-sighted view

Earlier this month, I spoke with CareCentrix CEO Steve Horowitz about post-acute care, payers and the friction between the stakeholders involved on each side.

He made something clear: Home health costs going up, generally, is a good thing.

“You actually want more home health,” Horowitz told me. “You want your home health costs to go up. You don’t want to overpay for anything, but you want your home health cost to go up, because it’s a cheaper setting than if you were taking care of the patient in the facility.”

Now a part of Walgreens Boots Alliance (Nasdaq: WBA), CareCentrix is a home-based care coordination platform, as well as a value-based care enabler.

If one department is squeezing down home health costs, they may believe they’re doing their jobs. But, on the other end, as Jacobsmeyer pointed out, emergency care and rehospitalization costs may be skyrocketing.

“I can cut home health costs in a heartbeat, or DME costs, or inpatient utilization,” Horowitz continued. “But every time you squeeze it, something else blows up. That’s the hard part, if you think about it only in a silo.”

To be fair to MA plans, the Centers for Medicare & Medicaid Services (CMS) arguably takes the same approach. Models like the Home Health Value-Based Purchasing (HHVBP) Model have saved Medicare billions, only for CMS to turn around and continue to cut home health payment rates.

That’s part of the reason why home health advocates have urged CMS, The Medicare Payment Advisory Commission (MedPAC) and others to take a more holistic view of home health payment. Advocates urge these groups to consider MA payments rates to home health agencies, but also the savings that greater home health access could bring to the entire health care system.

“As the nation faces a debt ceiling of $34 trillion and climbing, it’s no surprise that the federal government is under pressure to find ways to cut program costs and crack down on overspending,” a dozen home health advocate and provider voices wrote last week in an op-ed for HHCN. “What is surprising is that the program they continually target in budget cutbacks has an impressive record of saving the government billions: Medicare-certified home health care.”

That evoked something Michael Johnson – Bayada’s home health and hospice leader – told me last year, which is that all CMS policymakers have “is a hammer,” meaning that cost-cutting in home health care was their one vehicle to make a difference.

In MA, the little leverage that providers do have is the fact that plans need home health services for their patients, and access is dwindling with fee-for-service rate cuts.

Enhabit has drawn a hard line: It won’t take more than a 25% “discount” on rates from plans. That discount is compared to the fee-for-service Medicare rate. Instead of 40% discounts, Enhabit has achieved either episodic contracts or per visit contracts that are generally 10% to 25% below Medicare fee-for-service rates.

The company still prefers the more value-based, episodic arrangements, but those require collaboration between plan and provider.

“It really aligns their incentives with ours,” Jacobsmeyer said. “We want to be paid better, but we also want to help them where their pain points are, and that is having a timely and efficient movement of patients in institutional settings [back into the] home.”

It seems everyone knows – or assumes – that more responsible home health utilization equals lower costs for a population, whether that’s a small sample size or a nationwide one.

CareCentrix, which is in the middle of these arrangements, should be an authoritative voice on the subject.

But there are other experiments currently ongoing that should bear proof of that assumption. And that lies within the large payer organizations that own home health organizations, like Humana Inc. (NYSE: HUM) and UnitedHealth Group (NYSE: UNH).

Specifically, CenterWell President Sanjay Shetty told me earlier this year that one of his goals is to prove home health care’s worth to Humana – and everyone else.

Although some home health providers are queasy at the idea of these large payers owning top providers, they do offer hope in that way.

“It’s an opportunity for us to continue to evolve the thinking around home health, which is giving home health its due for driving outcomes along the entire continuum of care,” Shetty told me. “I think, hopefully, that proof point will help. The other thing that’s important to keep in mind is that CenterWell will never be able to provide 100% of care to all Humana members, even as big as we are. We are absolutely dependent on a broad payer network and a broad provider network.”

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The Pennant Group secures 2 more acquisitions

The Pennant Group has completed two acquisitions thus far in May.

Announced first was its acquisition of the Davis County, Utah-based South Davis Home Health and South Davis Hospice.

“This acquisition provides us with an opportunity to further expand in the state of Utah, and will complement our agencies throughout central and northern Utah,” Pennant CEO Brent Guerisoli said in a statement. “We continue to be the provider of choice in these communities, and this opportunity expands our ability to provide life-changing hospice services to residents of Davis County and its surrounding communities.”

Based in Eagle, Idaho, Pennant is a holding company of independent operating subsidiaries, including 112 home health and hospice agencies and 53 senior living communities spanning 14 states.

Guerisoli also reiterated the company’s commitment to more transactions in the near-term future, and two weeks later, the company announced another hospice acquisition.

Pennant also acquired the Corpus Christi, Texas-based Nurses on Wheels, a provider of hospice services.

“We are excited to expand the reach of our hospice operations in south Texas,” Guerisoli said in a statement. “Our strategy of empowering local leaders to meet the needs of local communities has resonated deeply across our platform and we look forward to bringing our innovative operating model and high-quality resources to enhance the services offered in South Texas.”

Family Resource Home Care acquires Specialty Service Solutions

The Liberty Lake, Washington-based Family Resource Home Care has acquired Specialty Service Solutions.

Specialty Service Solutions is also a home care provider, and will integrate into Family Resource’s existing footprint in the Moses Lake, Washington area.

“Specialty Service Solutions is a fantastic addition to our growing Moses Lake operation. We’ve been aware of their strong presence and reputation in the market for quite some time and the ability to integrate them into our company is an honor,” Family Resource CEO Hector Barragan said in a statement. “Their team brings additional market intelligence and expertise that will be valuable as we continue to expand our services in central Washington.”

Family Resource provides home care services across 35 locations spanning Washington, Idaho and Oregon.

“After founding Speciality Service Solutions, LLC in 2017 with over 20 years in health care, I was motivated by the desire to provide a needed service that makes a difference in people’s lives,” Emilie Milburn, the founder and owner of Specialty Service Solutions, said in a statement. “I’m excited to be able to integrate my business with Family Resource, while retaining roles for all of my office and caregiving staff with Family Resource Home Care.”

Milburn will stay on as the branch manager for Family Resource in Moses Lake.

Compassus, Bon Secours Mercy Health finalize joint venture

In February, Compassus and Bon Secours Mercy Health announced that they would be partnering on a home health and hospice venture across five states.

As of early May, that joint venture agreement has been finalized.

“Together, Compassus and Bon Secours Mercy Health will support continuity of care while providing patients and families with options to receive hospice and home health at home or in residential care facilities,” Compassus COO Laura Templeton said in a statement. “The BSMH health system is an innovator and leader in care, which make this joint venture an ideal partnership. As mission-aligned organizations, we are committed to upholding the high standards of care that BSMH patients are accustomed to and that Compassus is known for across the country.”

The Brentwood, Tennessee-based Compassus provides home health, hospice, palliative care and home infusion services to more than 100,000 patients annually across more than 250 locations in 29 states.

In the agreement with Bon Secours Mercy Health, it will operate and manage 10 home health agencies and 11 hospice operations on behalf of the health system. Those locations span Florida, Illinois, Kentucky, Ohio, South Carolina and Virginia.

Arden Home Health & Hospice acquires Mid-Delta Home Health

The Hattiesburg, Mississippi-based Arden Home Health & Hospice has acquired Mid-Delta Home Health, which is a “40+ year family-owned, Mississippi business covering predominantly the Mississippi Delta and surrounding areas,” according to the two companies.

Arden Home Health & Hospice was founded in the fall of 2023, and has quickly added to its portfolio.

“As of May 1, 2024, Arden is now the largest home health and hospice company that is proudly owned, headquartered, and operating in the State of Mississippi,” the company said.

Community Based Care acquires HCBS provider

The home- and community-based services (HCBS) provider Community Based Care has acquired CustomCARE, a Minnesota-based home care provider.

Community Based Care providers home care and I/DD support to over 5,000 clients in Florida, North Carolina, Ohio, Rhode Island and Virginia. It has over 3,000 team members.

Meanwhile, CustomCare provides HCBS services across 87 counties in Minnesota.

“We are thrilled to welcome CustomCARE into the Community Based Care Family of Providers,” Community Based Care CEO Mike Kotzen said in a statement. “This partnership aligns perfectly with our mission to provide high quality, personalized care to the families and individuals we serve. By combining resources, we will further enhance our ability to deliver comprehensive home care solutions on a greater scale that promotes independence, dignity, and well-being for all our clients by bringing the care they need to the place they love, their home.”

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