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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Over the next 12-18 months, the mergers and acquisitions that do or do not take place in home-based care will tell a story worth listening to about the future of the space.

The context has become monotonous to tell at this point: high interest rates are affecting dealmaking across the country; Medicare Advantage (MA) penetration is causing payment issues for most providers; home health agencies, specifically, are navigating fee-for-service rate cuts; and valuation expectations have been too high after a whitehot 2020 and 2021.

There’s a general expectation that interest rates will come down at some point this year. Potential buyers have also signaled that seller expectations around pricing have started to come down, helping both parties start negotiations with more reasonable expectations.

The rest of the aforementioned context points remain the same. MA penetration is likely to continue, and there is no sign the Centers for Medicare & Medicaid Services (CMS) will back off home health rate cuts in traditional Medicare.

Of course, home-based care M&A could tick up in 2024, and one sector could still have a down year. For instance, Medicaid home- and community-based services deals had a strong fourth quarter, but traditional home care and home health care did not.

But what may be more interesting is how the market responds in each section of each sector. There’s the large providers, those in the middle and the mom-and-pops.

In this week’s exclusive, members-only HHCN+ Update, I take a stab at projecting how M&A will play out over the next 12-18 months in each part of the market.

The largest players

In Home Health Care News’ trends piece at the beginning of 2023, we predicted that “there was a good chance that 2023 [passed] without another monster, jaw-dropping mega deal anywhere close to UnitedHealth Group’s LHC Group buy.”

We got egg on our face almost immediately, as UnitedHealth Group agreed to purchase Amedisys Inc. (Nasdaq: AMED) a few months later.

We’re most likely in the third year in a row where a mega-home health deal will be agreed to, at the very least. Enhabit Inc. (NYSE: EHAB) has a fourth-quarter earnings call in early March – which is later than usual – and I expect their strategic review to be completed by that time.

I also expect that to wind up in a sale, but Enhabit is being affected by just about everything that’s currently affecting the home health market, whether macro or micro.

For one, many buyers that may have jumped at the opportunity to buy Enhabit just a few years ago could be out of the game, for one reason or another. They may have already purchased another entity, or have decided to stay out of home health care entirely until the MA and fee-for-service rate questions get cleared up.

In my estimation, though, Enhabit would have a large, willing buyer right in front of it right now if it wasn’t for the current M&A environment. On Monday, I wrote briefly about the impact that the Biden administration’s attitude toward health care dealmaking is having on the market.

Currently, regulators and lawmakers are taking a hard stance against major consolidation and private equity involvement in dealmaking.

If that weren’t the case – and it obviously may not be the case following this fall’s election – I believe UnitedHealth Group (NYSE: UNH) would be happy to add Enhabit to its home health repertoire, which would then include Enhabit, LHC Group and Amedisys Inc. (Nasdaq: AMED), if the Amedisys deal went through.

UnitedHealth Group’s Optum would still own just about 15% – or less – of the home health market, not a huge number in other industries. But the juice may not be worth the squeeze for the company at this point, as they are under the spotlight for pending acquisitions in other sectors, too.

Where Enhabit goes is of note for the entire industry, as they are basically the only pure home health and hospice player left on the public market. They are also one of the only large home-based care companies likely to sell in the year ahead.

The others that could sell include companies nearing the end of their private equity sponsorship, like Elara Caring or Help at Home, for example.

Help at Home, specifically, could reap the benefits of a couple of better-than-average years in the HCBS space, which is its bread and butter. A report surfaced in December suggesting that the PE firms The Vistria Group and Centerbridge Partners were weighing a Help at Home sale.

My guess would be that a sale wouldn’t go final until CMS finalized its “80-20” rule, which is likely to come to fruition in the spring.

There may not be a flurry of big-time deals in the next 12-18 months at the top, but the ones that are finalized will say a lot about their respective sectors within home-based care.

Middle market

M&A experts have repeatedly told me that there has never been a dip in demand for quality home-based care agencies over the last two years, despite a lull in activity.

In the next 12-18 months, that lasting demand will likely finally come to the surface in the middle of the home-based care market.

Think providers that have multiple locations covering a significant footprint in one state or more.

Most leaders I have spoken with over the last month expect for M&A in this area to pick up sooner rather than later. Nautic Partners helped kick things off with the acquisition of Texas-based Angels of Care this week.

“The big question mark right now is what multiples are going to look like,” VitalCaring President Luke James recently told me. “I think we’re going to see a couple of deals that reset the market, especially for sizable transactions.”

New Day Healthcare CEO G. Scott Herman told me in January that his company is not only expecting home health M&A to open up this year, but also banking on that for growth.

I cautiously expect the largest companies to revamp their M&A strategies, and I expect growing, regional providers like New Day to continue on their growth paths in this area of the market. That’s without even mentioning more robust PE activity.

The only question will be around how many quality targets are left. Herman also mentioned straying away from “fixer-uppers” moving forward.

Others have echoed that sentiment over recent years, suggesting that fixer-uppers are not worth the time, resources and effort at this stage of the game.

“We don’t want to do another fixer-upper, period,” Traditions Health CEO David Klementz told me last year.

Mom-and-pops, smaller providers

There are likely going to be a lot of fixer-uppers in this category over the next 12-18 months, even if they weren’t before. MA penetration, and fee-for-service rate reductions, will likely be too much for smaller providers to handle.

While smaller businesses do have the flexibility to change course quicker than larger organizations at times, they also don’t have the financial capacity to handle multiple blows over a five-year period.

That’s, essentially, what’s occurring with MA penetration and a less stable fee-for-service leg to stand on.

Now, the quality ones could obviously outlast that, and some backing provided by a PE firm or strategic could pay off if the bottom falls out of the middle market. In other words, if not much is left in the middle of the market, I believe small, quality agencies will begin to be bought up in bunches.

The ones that aren’t so lucky will still provide opportunities for the larger providers in it for the long haul, but mostly through the absorption of staff.

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Announced Tuesday, the firm is acquiring the McKinney, Texas-based Angels of Care from Varsity Healthcare Partners.

“I am extremely grateful to the entire VHP team for their extensive capital, operational and strategic support, which was instrumental in enhancing the growth and success of AOC during our partnership,” Angels of Care CEO Jessica Riggs said in a statement.

Angels of Care providers private-duty nursing, skilled nursing, respite care and a range of therapy services in the home to medically complex children and young adults. The company employs more than 2,000 private-duty nurses, skilled nurses, physical therapists, speech therapists, attendants and specialists.

Its footprint currently spans Texas, Colorado, North Carolina, South Carolina, Florida, Arizona and Pennsylvania. That reach grew from two states to seven states under Varsity Healthcare Partners’ watch, which began in 2019.

In comes Nautic Partners, which already has home health assets in its portfolio. It is one of the backers of the April Anthony-led VitalCaring, along with The Vistria Group.

Based in Providence, Rhode Island, Nautic Partners is a middle-market private equity firm with three major industry focuses, one of which is health care.

The company has historically invested in community-based health care providers, including those in behavioral health, primary care and post-acute management. It also backs Integrated Home Care Services (IHCS).

Private equity dealmaking has been slow in home-based care over the last couple of years, after a surge in 2020 and 2021. But most experts are expecting it to tick up in 2024, particularly if interest rates come down.

Terms of the Angels of Care deal were not disclosed. Angels of Care and Nautic Partners could not be reached for comment prior to the publishing of this story.

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Whether it’s because of their proven leadership teams looking to shake up the market or their roles in a jaw-dropping transaction, there are several home health providers that stand out among their peers in 2023.

And the moves that these companies – new players and established powerhouses alike – make over the next 6-12 months will define the home health industry’s post-PHE identity for years to come.

In this HHCN+ deep dive, Home Health Care News makes the case for why six companies, in particular, are “providers to watch” in 2023. Other characteristics that make the organizations worthy of extra attention include their cutting-edge joint ventures, atypical payer strategies and forward-looking care models.

Amedisys

Baton Rouge, Louisiana-based Amedisys Inc. (Nasdaq: AMED) was already a home health company to watch in 2023 due to its ongoing investments in higher-acuity care, its use of predictive analytics and its new CEO, Richard Ashworth, who took over the top job in April. The provider solidified that standing on May 3, however, when it revealed plans to merge with Option Care Health Inc. (Nasdaq: OPCH) in an all-stock deal valuing Amedisys at about $3.6 billion.

Ashworth offered numerous reasons as to why the deal makes sense for Amedisys during a conference call that afternoon. But “the bottom line,” he explained during the call, is that Amedisys sees “tremendous upside from joining with Option Care Health” for patients, clinicians, payers and shareholders.

“We are confident that combining our expertise with Option Care Health will accelerate our ability to deliver on our mission to provide excellent patient outcomes and our vision to provide more clinical services,” Ashworth said. “This transaction also reflects the strength of our business and the great potential of care delivery in the home.”

Amedisys and its team of over 12,000 clinicians provides home health, hospice and higher-acuity care services in the home across 511 locations. The company serves over 455,000 patients a year, with annual revenues upwards of $2.2 billion.

With 163 locations and a staff of over 4,500 clinicians, the Bannockburn, Illinois-based Option Care Health is one of the biggest providers of home and alternate-site infusion services in the country. It serves more than 265,000 patients per year, with annual revenues exceeding $3.9 billion.

The merger between Amedisys and Option Care Health is expected to close in the second half of 2023. There’s no reason to believe the transaction won’t cross the finish line, considering UnitedHealth Group Inc.’s (NYSE: UNH) successful acquisition of LHC Group Inc. (Nasdaq: LHCG) early this year.

Once that happens, the combined Amedisys-Option Care Health will have a complementary set of end-to-end clinical capabilities, from preventative and maintenance services such as home infusion on one side, to end-of-life services such as hospice care on the other. In between, there will be mobile labs and imaging services, home-based urgent care, traditional home health, palliative care and more.

Together, the pair project a $100 billion total addressable market, with additional whitespace opportunity.

“There are ways for us to become more efficient and effective in the way that we’re addressing the needs of patients in the home,” Option Care Health CEO John C. Rademacher said during a recent investor presentation. “That’s a benefit for the patient. That’s a benefit for the payer. That’s a benefit for us from a capacity standpoint and being able to leverage and utilize the model in new and more efficient ways.”

Leading up to the transaction’s completion, it will be interesting to see how the deal impacts the rest of the home health market. It could kickstart strategic buyers’ interest in home health companies, while also setting a new valuation floor for Amedisys’ peers exploring a similar sale or combination.

Once the Amedisys-Option Care health merger is finalized, it will serve as a large case study to see whether an end-to-end platform can gain an advantage with payers and within value-based contracting agreements.

It will also be worth watching to see what happens to the quality C-suite, back-office and clinical leaders Amedisys has developed over the years. There are often redundancies in such transactions, meaning some top-tier talent might soon be searching for their next opportunity.

Compassus

The Nashville, Tennessee-based home health provider Compassus is a provider to watch in 2023 for a variety of reasons.

For starters, the company is another example of a highly integrated home-based senior care provider that also offers hospice and palliative care services, in addition to infusion therapy and advanced care management. In the past, the organization has also touted its cross-continuum partnership with non-medical home care franchise Synergy HomeCare.

Compassus was founded as a mostly hospice-focused company in 2006, though some of its parts go back to 1979. Its breadth and depth of services has helped accelerate growth, with the provider now operating at least 200 locations across dozens of states while appearing on Inc. 5000’s list of fastest-growing U.S. companies in 2021, 2018 and 2017.

Much of that growth is tied to consistent de novo and acquisition movement, with the landscape ripe for further expansion this year.

And while it hasn’t been as promotional as some of its competitors, Compassus – a founding member of the Moving Health Home advocacy group – has also invested mightily in higher-acuity care models, with its “SNF at Home” program allowing patients to recover at home when they need a level of care that’s between ​​home health and an inpatient-facility stay.

“We’ve learned that we can use new tools and approaches to provide care in the home at a higher level of intensity, whether you think about skilled nursing care at home or hospital at home,” Compassus’ former CEO, Jim Deal, previously told HHCN.

Deal stepped down as CEO in January 2022, with DaVita Healthcare Partners veteran David Grams named his replacement.

Compassus is also worth following because of its two sponsors: private equity firm TowerBrook Capital Partners and health system Ascension Health. The pair acquired Compassus in 2019 at a valuation of $1 billion, according to PE Hub.

TowerBrook’s private equity funds invest in large and midsize companies across a range of sectors, both in the U.S. and Europe.

Meanwhile, with roughly $28 billion in 2022 revenue, Ascension Health is one of the largest nonprofit health systems in the nation. It offers home health services through its Compassus relationship under the branding of “Ascension at Home, Together with Compassus.”

Compassus remains firmly committed to building a platform capable of handling a variety of patients – and HHCN is eagerly waiting to see what it’ll do next.

“[What] we’ve learned in the past few years is we actually can do more clinically complex care at home,” Jennifer Hale, the VP of clinical quality and standards at Compassus, recently told HHCN.

“The burden on the provider community is to figure out how to close the gap between the things that are not necessarily considered part of health care, such as the social determinants, food security, access to medication, safety needs, mobility needs,” she continued. “Those things which make a person successful in their home.”

Frontpoint Health

Medicare Advantage (MA) now provides Medicare coverage for just over half of all eligible beneficiaries, according to U.S. Centers for Medicare & Medicaid Services (CMS) data. In January 2023, nearly 30.2 million beneficiaries were enrolled in an MA plan.

In comparison, less than one in five eligible beneficiaries were enrolled in MA in 2007. The staggering growth of Medicare Advantage, the private-plan alternative to traditional fee-for-service (FFS) Medicare, is linked to a number of factors, including the perks MA plans offer, lower out-of-pocket spending and an often easier consumer shopping experience.

Broadly, home health providers have historically skewed their payer mix more toward FFS Medicare, which tends to reimburse services at higher rates with less red tape. But as a bigger chunk of their patient population enters MA, providers have had to take more MA business to stay relevant.

This has led to financial losses and rocky MA relationships for many providers.

One emerging home health company, however, is basing its entire business model on Medicare Advantage. That’s Frontpoint Health, the Dallas, Texas-based provider backed by PE firms Cimarron Healthcare Capital and Tacoma Holdings.

“We want to approach home health and hospice in a different way,” Frontpoint CEO Brent Korte explained during an HHCN+ TALKS conversation.

HHCN photo HHCN photo

Currently, Frontpoint has three home health and hospice locations in the DFW market. Unlike other providers that have had to pivot to a heavier MA business mix on the fly, Korte and his team are investing in people, processes and technology to thrive from the get-go.

“Many organizations are stuck,” Korte, who in his last role helped turn around the struggling home health arm of a Washington-based health system, continued. “They’re so large, and their processes have worked so well for traditional Medicare. Then you introduce a plan where they’ll make 30% or 40% as much on each patient, [and] it’s probably inconceivable that they would be able to restructure in a way that will allow them to take MA patients. Providers are having to deal with that because they’re having to change mid-flight. Our win is in the way we execute.”

Matt Komenda, founder and managing partner at Tacoma Holdings, echoed those sentiments at the HHCN Capital+Strategy Conference.

“We’ve built a go-to market strategy around that [MA] payer, because we’re deep believers that this is one of the biggest structural trends in our lifetimes within health care, and that we can’t fight against it,” Komenda said.

Moving forward, Frontpoint will help determine whether specialized, hyper-focused MA home health providers can truly take off.

LHC Group

LHC Group was founded as a single-site home health agency in Louisiana in 1994 by the husband-and-wife duo Keith and Ginger Myers. In fairly short order, that agency grew into one of the industry’s superpowers, with an active joint venture strategy, strong de novo growth and robust M&A activity propelling it forward.

As of early 2022, the Lafayette, Louisiana-based company delivered home health, hospice and home- and community-based care in over three dozen states via 527 locations. It boasted 82 unique joint ventures in March 2022, collectively covering upwards of 435 hospitals.

In past years, LHC Group could have been a home health provider to watch for its JV success, its somewhat unheralded accountable care organization (ACO) management business or its own higher-acuity care capabilities.

But in 2023, it’s a provider to watch because it’s under new ownership.

We will learn from and build upon LHC’s capabilities, expanding the scope and acuity of the care we can provide in a patient’s home.

– Dirk McMahon, president and COO of UnitedHealth Group

UnitedHealth Group (NYSE: UNH) and subsidiary Optum closed a $5.4 billion deal to acquire LHC Group in February. The transaction agreement was initially announced in March 2022.

“Since our founding in 1994, ‘It’s all about helping people’ has been the core of our mission, and as part of the Optum team and its value-based capabilities, we will be able to expand our patient-centered mission and help drive best care practices across the country,” Keith Myers, LHC Group’s chairman and CEO, said at the time. “Working together as organizations committed to caring for the most vulnerable in society will help us more effectively and efficiently deliver high quality and increasingly value-based care in the home.”

UnitedHealth Group reported total consolidated revenues of $91.9 billion in the first quarter of this year, a 15% year-over-year increase. Optum reported $54 billion in revenue, good for 25% year-over-year growth.

Adding LHC Group allows UnitedHealth Group and Optum to shift more services into the home while gaining clearer insights on the lives they manage. Doing so likewise gives the overall organization more firepower in its value-based care campaign, in which it’s gaining ground.

In Q1 2023, Optum covered roughly 4 million lives in fully capitated models, according to UnitedHealth Group leadership. That’s about double the number of lives it covered in value-based care contracts toward the end of 2021.

Now, LHC Group and Optum just need to explore how to maximize the home health provider’s skillset – and how LHC Group fits alongside Optum’s other care delivery assets. Those assets include, for example, comprehensive, in-home medical care company Landmark, which Optum acquired in 2021. They also include the parts of what was once Prospero Health, another home-based care provider with a palliative care focus.

“LHC provides high-quality, compassionate home health, hospice and post-acute care services, with over 12 million patient encounters each year,” Dirk McMahon, president and COO of UnitedHealth Group, said during the company’s first-quarter earnings call. “We will learn from and build upon LHC’s capabilities, expanding the scope and acuity of the care we can provide in a patient’s home.”

Additionally, it’s important to note that the largest employer of physicians in the U.S. isn’t one of the major health systems or primary care groups. It’s Optum, which has over 70,000 employed or aligned physicians across more than 2,200 locations in 2023.

Traditions Health

Traditions Health is another home health company to watch in 2023. The Nashville-based provider offers home health, hospice and palliative care services to more than 25,000 patients a year across more than 130 locations in 18 states.

Among the reasons it’s worth following: its track record of strong inorganic and organic growth, plus its continued investment in palliative care.

“We shifted our focus and started looking at de novos, looking at markets that are underserved, looking at relationships with systems, looking at relationships with facilities,” Traditions CEO David Klementz explained during an HHCN+ TALKS conversation. “We also started looking at the expansion of our lines of business into markets where maybe we only have one of the three, or two of the three – filling out that line of service in every market for the full continuum in the home.”

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Backed by Dorilton Capital Advisors, Traditions has been among the more active acquirers at times. In March 2022, for example, the company acquired five hospice entities in California and Nevada.

Tri-locating home health, hospice and palliative care is at the top of Traditions’ 2023 priority list.

“You’ve heard me talk about us being a home health system, and operating like an acute care system, and being professionalized like an acute care system,” Klementz told HHCN after speaking on a panel at the Capital+Strategy Conference. “It’s my belief that if you have a home health system that has that sophistication, competency and discipline, that you’ll be an outlier in the space.”

Palliative care is likely to become a more important part of home health providers’ business mix in years to come, especially as FFS Medicare margins shrink. Palliative care can often serve as a glue to value-based care arrangements, and alternative payment models are opening more doors for steady reimbursement.

Providers such as Traditions investing in palliative care now will have a leg up once the service becomes more mainstream.

VitalCaring

VitalCaring is the new home health company led by industry veteran April Anthony and her experienced leadership team, which also includes President ​​Luke James, COO Chris Walker, Chief Clinical Officer Janice Riggins and CFO Jessica Vogt.

The Dallas-based provider is hiring aggressively, and it already has over 70 locations in six states, according to its website. More rapid growth is likely in store for VitalCaring, too.

“When we think about growth, it’s very much a three-pronged approach,” Anthony recently told HHCN. “We absolutely intend to be very active in the M&A space, we intend to be very intentional about our de novo expansion. And then we intend to be very honed in on true organic growth.”

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As most home health insiders know, Anthony is the former CEO and founder of Encompass Home Health & Hospice, which eventually became part of Encompass Health Corp. (NYSE: EHC) before later spinning off into Enhabit Inc. (NYSE: EHAB). Since launching that successful business, Anthony has cultivated a reputation as a forward-looking operator with a profound understanding of what it takes to run a home health organization – from coding intricacies and clinical practices, to Medicare payment policy and value-based care.

In 2023 and beyond, it will be worth watching to see whether Anthony can take VitalCaring to a similar level of success.

“It is definitely reinvigorating [to be back],” Anthony told HHCN.

It’s not just VitalCaring’s leadership team that’s of note, however. It also has two health care mavericks as its PE sponsors: The Vistria Group and Nautic Partners.

On its end, Vistria has helped grow home health and hospice businesses such as Agape Care, St. Croix Hospice, Help at Home and Mission Healthcare. Its other health care portfolio companies include behavioral health companies BHG, Beacon Specialized Living and Sandstone Care.

Nautic’s active health care portfolio includes Integrated Home Care Services on the home-based care front, with behavioral health investments Nystrom & Associates and Pyramid Healthcare. All Metro Health Care is a past investment.

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Private equity firm One Equity Partners (OEP) purchased All Metro in the transaction, taking over control of services at 10 branches in New York, 17 in Pennsylvania, two in New Jersey and two in Florida, according to a news release. Providence, Rhode Island-based Nautic originally acquired All Metro from Brown Brothers Harriman & Co. in September 2014, the Wall Street Journal reported.

“We are enthusiastic about the opportunity to support All Metro and its management team in this exciting new chapter for the company,” Brad Coppens, a managing director of OEP, said in a prepared statement. “Home care is entrenched as the care setting of choice for managed care organizations, states agencies and patients alike, and companies of scale like All Metro are uniquely positioned to deliver value.”

Based out of Valley Stream, New York, All Metro provides primarily non-skilled personal care services, including housekeeping, bathing and grooming for seniors and other high-need individuals. The company also participates in two specialty home care waiver programs in New York, which provide the necessary services required to allow nursing home eligible individuals and those with traumatic brain injuries to remain at home rather than in skilled nursing facilities, according to the release.

“We look forward to continuing our strong growth trajectory and program development in partnership with OEP and executing upon the numerous strategic opportunities in front of us,” All Metro’s President and CEO David Middleton said in the release.

Written by Kourtney Liepelt

The post Private Equity Firm Buys Home Care Agency All Metro appeared first on Home Health Care News.

Founded in 1955, All Metro provides home- and community-based services in New York, New Jersey and Florida as a licensed home care agency providing primarily non-skilled personal care aide services, including light housekeeping, homemaking, bathing and grooming to seniors and high needs individuals.

In addition to the company’s non-skilled aide services, All Metro is also a provider under two speciality home care waiver programs in the state of New York. These programs provide the necessary services required to allow nursing home eligible individuals, as well as individuals with traumatic brain injuries, to remain in the community.

Given the expected increase in demand for home care services driven by demographic trends, All Metro is “well-positioned” for further growth, said Nautic Managing Director Chris Crosby in a written statement.

“We believe that All Metro is well positioned to serve as a value-added provider in its core states due to its high quality reputation, its broad geographical footprint and its leading presence in the New York speciality waivers programs, which require a higher level of care,” Crosby said.

While the terms of the transaction were not disclosed, Nautic targets equity investments of $25 million to $75 million, representing majority ownership in niche businesses with strong market share and growth potential, along with identified value enhancement opportunities and strong management teams, according to a statement on the company’s webpage.

“We believe the long-term opportunity in our states is compelling and we look forward to working with Nautic to develop new programs to better serve our patients and payers,” said David Middleton, president and CEO of All Metro, in a statement. “Nautic’s strategic and financial resources will help position us to continue our historical growth trend while improving care for our patients.”

Written by Jason Oliva

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