CEO Plots Strategy for Arosa+LivHome, Bain’s Impact Investment in Home Care

Earlier this year, Bain Capital Double Impact acquired and combined two regional health care companies, Arosa and LivHome, creating a new national in-home care provider. The combined company is led by Ari Medoff, whose background includes an application to the Marines as well as stints with major investment banks and private equity firms. He’s focused on expanding and differentiating the newly merged company from the competition, with an initial focus on workforce initiatives.

In general, the October acquisition was reflective of the ongoing private equity interest in the home care space, especially as U.S. demographics continue to skew older. The deal also marked the first home care investment for Bain Capital Double Impact, which serves as the impact investing arm of Boston-based Bain Capital, a firm with more than $105 billion of assets under management.

Durham, North Carolina-based Arosa Acquisitions invests in the health care service industry, with affiliate companies including Nurse Care of North Carolina and Development Therapy Associates. Los Angeles-based LivHome is a suite of in-home care and care management solutions serving residents of California, Illinois and Texas through a network of experienced senior care managers.

The recently merged entity — dubbed Arosa+LivHome — is looking to differentiate itself from competitors by “creating better jobs,” CEO Ari Medoff recently told Home Health Care News. Highlights from that conversation are below, edited for length and clarity.

HHCN: We had a chance to catch up with you back in October when the news first broke that Bain Capital Double Impact acquired and planned to combine Arosa and LivHome, with you as CEO. Before we get into this new platform you’re leading, can you tell us a little bit about yourself and your history in the home care space?

Medoff: I was an entrepreneur in college — Duke University — and then eventually went into finance. I helped start a company called CFlix, a video streaming company. Coming out of college, I wanted to join the Marine Corps and was accepted into officer candidate school. For medical reasons, I was not allowed to go to Quantico, so I applied to the Peace Corps at that point.

So, how does somebody make a jump from considering and applying to the Marine Corps and Peace Corps to being the CEO of a home care company?

Well, after that, I took a couple different jobs on Wall Street, with Lehman Brothers and Goldman Sachs. I decided I wanted a boot camp experience of going into finance, worked in private equity for five years. While I was in private equity, I had the urge to get back to building teams and being an operator.

I left to business school and public policy school. I did a [master’s of public policy degree] and MBA at the Harvard Kennedy School and the Harvard Business School from 2008 to 2011.

Two weeks into my graduate school career, Lehman Brothers collapsed, which was shocking to see, having left in 2006 when Lehman was at its peak. I also had some pretty transformative travel experiences, having spent a summer living and working in Karachi, Pakistan, with the Acumen Fund, a social entrepreneurship nonprofit.

Combining those two experience and learning about wage inequality, I felt our country was somewhat at a turning point where we would need to figure out how to create better jobs. Otherwise, I thought, we were going to bounce from crisis to crisis. I thought owning and running a small business would be a tremendous way to make a difference in people’s lives, in employee’s lives.

Instead of starting a business from scratch or going into consulting, investment banking, private equity, I thought it would be best to find a small business to buy. Coming out of business and public policy school in 2011, I emailed 20,000 companies from Georgia to Pennsylvania — not health care specific. I looked at a company that did motocross TV production. I looked at a company that did underwater treadmills. I looked at a huge range of businesses.

The one the caught my eye as a good business: Nurse Care of North Carolina, based in Durham.

Nurse Care of North Carolina is an in-home non-medical care provider, founded in 2000 Arosa Acquisitions purchased it in 2014, at which point you became CEO. What attracted you to Nurse Care of North Carolina?

Some of the obvious things. There’s the growing need and demand for services. Most important to me, though, was that I thought we could create better jobs for our caregivers. It’s an industry with an extraordinarily difficult employment dynamic.

There are good reasons that it’s hard to have good jobs in home care, but I felt that we could do better. I was able to buy Nurse Care in October 2012 from the founders, and it has now been a six-year journey of building that culture. Our mission really since the early days has been to attract, train, retain and treasure the best care professionals out there.

How did Arosa+LivHome come up?

Over the the years, I grew Nurse Care both organically and through acquisition. We went from one office to four offices, basically tripling in size, tripling in headcount. Bain Capital Double Impact called me in early 2017 to learn more about my business. They expressed an interest in the industry.

Candidly, we were too small for them to consider investing in.

But I was very pleased with our trajectory and proud of the work we were doing, the culture we were building at Nurse Care. Throughout 2017, we still had a couple of check-ins, continued to catch up. [Bain] had asked about a couple of other home care opportunities that hadn’t been things I was interested in. Then in the spring, they told me about LivHome, this company in California.

I had long believed that care management plus home care was an interesting model. In fact, one of the companies I had looked at of the 20,000 I emailed was a care-management-plus-home care provider, a similar model to LivHome.

Bain and I went through the process of learning more about LivHome, recognized, again, how the care-management-plus-home care model is relatively unique. We feel like it provides a higher level of service to the client, but also more support for our caregivers.

I felt strongly that LivHome has a tremendous number of top-quality professionals across the organization. That is certainly true in case management and local leadership. Working with Bain Capital Double Impact, we saw an opportunity to come together with LivHome and transform the industry.

Can you elaborate a bit more on the business details and what you’re looking to do with Arosa+LivHome?

We have merged Nurse Care in with LivHome. Arosa is the legal entity name of Nurse Care. Arosa+LivHome is the combined entity.

The first impact we’re looking to make is creating better jobs for our care professionals, doing that through strong wages and understanding the stresses of the job. The second main impact is using new business models, new opportunities to create better services for consumers.

I’m the partner with Bain in terms of ownership. I’m the CEO of the combined entity.

Today, we’re in four states, so California, North Carolina, Illinois and Texas. We have several thousand employees. We’re not giving out [patient] numbers right now.

We are looking to actively grow in the Chicago market and have some opportunities to do so. We anticipate having several offices in the Chicago metro area.

But you’re not just looking to grow Arosa+LivHome in the Chicago area moving forward, correct? Do you anticipate being in any new states in the coming year or two?

In the coming two years, we will certainly be in at least three to five additional states. We are not looking to get into the Medicare home health space. We are looking to just continue to grow a national home care brand.

We’re committed to the private-pay care management, private-pay home care model. Over the years, we’re going to innovate on our business model to make services more affordable to larger swaths of the U.S. population.

Home care, in general, is being more widely recognized as an important part of the overall continuum of care. The Centers for Medicare & Medicaid Services (CMS) in April opening up the Medicare Advantage door in an example of that. What are your high-level thoughts on the rise of home care today? You obviously feel pretty good about it if you have plans to build this national platform.

At this point, there are a lot more unknowns than there are knowns in terms of how we’re going to fit into that continuum of care. I can tell you that we have been strikingly absent from the health care system.

We are not on the same EHR as health systems. Medicare doesn’t pay for what we do.

I think that the plan is to be selective about how we engage with third-party payers or health system partners. I believe firmly that the care we provide is high-value, high-touch, low-cost. It just is. The more options that Medicare, health systems and private insurers can offer to families to get this type of care we provide is hugely beneficial for the system.

Keeping clients and individuals at home — where they want to be — is important.

If we can shift dollars from expensive and unnecessary hospitalizations, procedures, drugs to the type of care we provide, I think that is only going to be beneficial.

We feel we’re in the most entrepreneurial part of health care. Once you start getting into CMS-related programs, though, the opportunities to entrepreneurial are potentially constricted or altered.

There’s a ton of home health, hospice and home care deals that happen every month. How does Arosa+LivHome fit into that?

There’s been a lot more actively that we’ve seen in the home health and hospice sides than there has been in home care over the years. I think that trend will continue because there are more companies of scale in those industries.

But I know there’s been a lot of interest in home care. There still aren’t a ton of companies of size and scale for private equity firms to invest in.

I think more of the deal activity from the financial buyers has been around the franchisers than direct providers. We feel like we’re in a very good place to continue findings attractive, best-in-class home care providers. Acquisition will be a part of our growth strategy, as will organic growth.

There are thousands of home care companies. Many of them are providing an important service, but most of them are doing it in the same way. Finding companies that are doing things better and differently in our space has been a challenge for investors.

Editor’s note (Jan. 9, 2019): An earlier version of this story stated that Ari Medoff’s background included a stint in the Marines. Medoff applied to the Marines, but never served.

Written by Robert Holly