Referral sources are the lifeblood of home-based care companies. Even with payment and staffing headwinds, solid referral source relationships offer a path to sustainability for providers.

At Avid Health at Home, there are a number of elements that go into its referral source strategy. The company prioritizes routine communication, and personalizing outreach.

“No two referral sources and no two payers are exactly the same, and so you’re really getting to know the people who send you cases, and making sure that you adjust your communication style to fit their needs and preference on how they’re learning about your business,” Avid Health at Home CEO Jennifer Lentz told Home Health Care News.

Avid Health at Home is a home care platform backed by the private equity firm Havencrest Capital Management. It has made a handful of acquisitions over the last year, and is a rapidly growing company.

Feedback is another important element of Avid Health at Home’s strategy, according to Lentz.

“You can only get better, improve and grow, if you’re able to understand exactly how you’re being perceived out into the community,” she said. “We established channels for routine feedback from our referral sources and our payers, so we can address any concerns more timely, like we would with our clients and employees for their satisfaction scores.”

Avid Health at Home’s referral sources come by way of word of mouth, partnerships in the community and payer sources.

American Advantage Home Care, too, is a company that understands the importance of strong relationships with referral sources. Since CEO Cleamon Moorer Jr. purchased the company in 2019, referrals helped the company beef up its census.

Based in Dearborn, Michigan, American Advantage Home Care provides skilled nursing, rehab and specialty care services. Currently, the company serves four counties in the Southeast Michigan area and has a census of 200 patients.

Roughly 70% of American Advantage Home Care’s referrals are hospital discharges, according to Moorer. The company’s referrals also come through local physicians and word of mouth.

As part of its referral strengthening strategy, American Advantage Home Care has positioned itself as a solutions provider for case managers and discharge planners.

“Not only being able to help them with their outbound referrals for patients that we could accept, but going a step further and tactically looking to help them source other providers in the event that we could not take on their patient,” Moorer told HHCN. “Some of those other providers could be, for example, infusion services for a patient that needs a round of antibiotics, or even an inpatient facility in the event that a patient needs physical therapy or rehabilitation.”

The idea behind being a solutions provider means going beyond the transactional nature of referral source relationships.

“How can you transform the experience for not only the patient, their family, but the discharge planner or caseworker that’s trying to get a patient taken care of,” Moorer said.

For Friendly Faces Senior Care, a Houston, Texas-based home care provider that specializes in delivering care to patients living with Alzheimer’s and dementia, consistency is key.

“It’s all about being consistent,” Friendly Faces Senior Care CEO Qiana James told HHCN. “There are so many other home care providers, the minute you leave, three or four more will show up behind you, so I’ve taught my team to be consistent when it comes to follow ups.”

When looking at areas that home care and home health providers considered top growth opportunities for 2024, 33.1% of home care providers and 16.8% of home health providers identified strengthening relationships with referral sources as the No. 1 opportunity, according to data from Activated Insights.

As a result of Avid Health at Home’s strategy, the company has seen a significant uptick in organic growth, paired with its growth through acquisition.

Similarly, American Advantage Home Care has seen consistent success by focusing on referral relationships.

“We look at growth from the standpoint of patient retention and not only new patient acquisition,” Moorer said. “It appears that many agencies want to focus on more — more growth, more patients, more regions, more revenue — but if you really drill down to saying, I want to do more and be more for the patients that I serve and the stakeholders in the community that I’m in, then it sort of bends you more toward the quality conversation and being more reliable.”

Ultimately, Moorer believes that home-based care leaders should cement themselves as part of the overall ecosystem for health care.

“You want to position yourself and position your agency as a vital part of a larger ecosystem, and that requires referrals and cross referrals from other types of organizations,” he said.

The post Better Referral Source Relationships Kickstart Growth For Home-Based Care Providers appeared first on Home Health Care News.

Avid Health at Home is a home care platform backed by Havencrest Capital. The company believes that demonstrating its value through data could be what puts it in the right positions with MA plans.

In the meantime, the company has also been bullish about forming partnerships with hospital systems, ACOs and other home-based care providers.

Avid Health at Home has also been active on the M&A front, completing multiple acquisitions last year.

Home Health Care News recently caught up with Avid Health at Home CEO Jennifer Lentz at the Capital + Strategy conference. During the conversation, she touched on the importance of payer diversification, reaching seniors who fall in the middle of home care affordability, MA and more.

Can you talk a little bit about the payment structure at Avid Health at Home?

We’re doing Medicaid, VA, government contract waiver programs, and private pay. And we’re probably close to about 50-50. Medicaid government and then private pay.

Given that Avid Health at Home is 50-50, can you talk about how important is payer diversification at your company?

It’s a priority. We spent a lot of time with our operators, looking at, ‘You’re about 85% Medicaid and 15% contract. Let’s talk about how we’re going to grow private-pay in your market. Let’s talk about where you can see some traction and different referral sources.’ Then we do the opposite in our heavy private-pay offices.

I think the demographics within each physical location can probably shape the payer mix, but VA is everywhere. We have a lot of opportunities with supplemental staffing, home health, hospice, assisted living facilities. We work really hard to make sure that we keep diversity. It’s a priority for us not to put all our eggs in one basket.

What are the biggest challenges in home-based care right now? How is your company navigating those?

I’ll answer this with a little bit more of a forward-thinking approach.

My struggle right now is that you are either wealthy enough to pay for care on your own or you’re on some sort of government payer.

How do we support the people who call us and don’t fall into either of those buckets? You get tons of that outreach — people looking for mom, dad, grandma, grandpa. We’re not seeing that type of access through Medicare Advantage, and as a non-certified provider, Medicare fee-for-service is, obviously, not part of the benefit.

How do we enable ourselves to support these people who can’t really afford our private-pay rates? We’re looking to really identify how we can show value in the Medicare savings. We’re leveraging our dual eligibles with our Medicaid cost, and we’re looking at our private-pay. We’re focusing, truly, on how we help avoid hospitalizations, how we help avoid falls, and more, so we can demonstrate to the Medicare partners — this is the value we add. I know we can be considered expensive because we’re not an episodic event or long-term care service and support, but how do we help you understand that we can benefit the health care continuum?

Can you speak about what the response has been to Avid Health at Home demonstrating that value?

It’s been a little eye opening from both sides of the table. Medicare Advantage plans are getting it now.

That said, I haven’t seen a tremendous amount of traction with getting those contracts fully executed, and getting into that space yet. I also don’t necessarily think our market share is high enough yet because we’re still pretty young, but it’s definitely being built into our core DNA to make sure that we can scale in those different avenues.

Aside from Medicare Advantage, is the company going after things like hospital partnerships or working with other providers?

I think the ACOs are another great opportunity to kind of show value, or demonstrate your ability to really care for somebody with a holistic approach. Communication and data points are critical, but we’re definitely seeing hospital systems talk to us. We do a lot with home health and hospice that are trying to take on risk for the bundled payment.

Our approach is helping people understand our value in a partnership. We’re getting more traction there, I just think Medicare Advantage is such a bear. It’s so big. We find local hospital system contracts much more attainable. I think leveraging that success and experience is going to help us get into the big market.

Are there other areas of home-based care that Avid Health at Home is making a strong effort to move into this year?

Yes, nursing and infusion. We operate in North Carolina, and they have the private duty nursing program, which is pretty robust. With our level of licensure in that state, we’re able to do LPN, RN, staffing, med management, and we can do infusion services. We have a little bit more of a clinical component to that. In Illinois, we’re doing more nursing services there as well.

When you’re looking at long-term needs, home health does a fantastic job of doing the post-acute, but we are the pre-acute. People have nursing needs, med needs and all kinds of things before and after they go into the hospital. We’re trying to round out our service delivery model to be inclusive of that.

In what ways is your company embracing technology to improve your business, either internally or for your customers?

Right now, our focus is making everything connect. From the moment we were created, it’s been all about how our systems integrate and how they talk. Every single thing is a data point, and everything has to be extracted, and everything has to be coded and created into something that is digestible. That’s been our first big tackle into tech — how do you make all your systems communicate, and then how do we extract whatever we need? Our CTO was fantastic at this.

Our caregivers all have apps, and they all chat and they have communication back to the office, which is great. I think the next wave is how do we incorporate the patient? How do we get their family members more involved? We have a patient portal, I don’t see high levels of engagement. I think it’s a lot for them, so how do we make it digestible for them? How do we talk to a daughter who lives in Michigan about what’s going on with mom at home in North Carolina? Those types of things are probably our next wave of how we would incorporate tech.

What are your company’s growth plans for the future?

We have two de novos, one in each state, launching this year, which I’m very excited about. There’s nothing like building something from the ground up. We have a pretty decent M&A pipeline that we’re really honing in on both within Illinois and North Carolina. We’re also, hopefully, expanding into a third state shortly.

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The rising costs of home care were a trend in 2022 and 2023. They will remain one in 2024, and could finally come to a head.

That’s only one trend, of many, that will impact home care providers in the new year.

But it alone will also lead to other trends, such as increased M&A, adoption of future-facing technologies like AI, and further investment in tangential service lines and alternative payer sources outside of private pay. 

Below are all of the home care trends HHCN believes should be on providers’ radar in 2024.

Curious what we predicted for last year? Revisit our 2023 trends here.

Client retention, length of stay will become a major issue

Home care providers are regularly seeing the costs of providing home care services rise. With that, billing rates are also rising for Americans in need of care.

Over the past few years, those rates have risen anywhere from 20% to 40% – and sometimes more – based on the market. The most wealthy Americans will still pay for the hours they need, or their family members need.

But less well-off families will begin to look elsewhere for care, or at least cut down the hours of home care they’re willing to pay for.

Only 14% of American seniors can afford to pay for home care out of pocket, according to a recent analysis conducted by the Joint Center for Housing Studies of Harvard University. Again, based on the market, that number can dip far lower.

For home care providers primarily dealing in private pay, this will create burdensome volatility and unpredictability for their businesses. Those long-term clients that make the whole ship sail may be no longer, or at least few and far between.

“If anything goes wrong in the home, they’re canceling services,” Daniel Gottschalk, the co-CEO of Family Tree Private Care, told HHCN in December. “They’re going to find alternative options.”

That could affect retention, too. Caregivers that don’t have steady schedules or steady clients may jump ship, looking for more sustainable work elsewhere.

Home care providers will continue to diversify, whether that be in Medicaid or Medicare Advantage

Providers will react in a few ways to shortened client length of stays and rising costs.

First, they will do what they can to keep rates down.

“[Cost of care] has really increased,” The LTM Group CEO David Kerns told HHCN, referring to his company’s private-pay business in October. “But we’ve tried not to increase prices too much, just because you have to be hyper-aware of that access to care.”

Eventually, that will no longer be a viable option, however. Home care providers – in addition to making the aforementioned investments into operational efficiency – will either become companies tailored to the uber wealthy or, alternatively, look to diversify their businesses.

That’s already materialized. More home-based care providers are turning toward Medicaid, which has surprisingly become a steadying force.

Some are still interested in expanding Medicare Advantage (MA) business, though that has led to mixed results. MA plans make it tough for providers to have the steady stream of business that private pay once afforded, and that Medicaid home- and community-based services (HCBS) still does afford.

In 2024, providers will opt for one of a few different roads due to billing rates. But they will not stand pat.

“We’ve probably reached the tipping point of what consumers can actually bear, before they can just say, ‘Hey, enough’s enough, I can’t afford this option anymore,’” Gottschalk said.

Last year, HHCN predicted that billing rates would level off. That hasn’t quite happened. Instead of waiting for that leveling off, providers have begun to insulate themselves from the risk, and will continue to do so in 2024.

Providers will race to add tangential aging-in-place services

Home care providers are no longer just focusing on their core services. Instead, providers have increasingly found new ways to expand their offerings. It’s likely that this trend will continue in 2024.

Best of Care, a Quincy, Massachusetts-based personal home care agency, acquired the move management company Moving Mentor Inc. last year. One of the driving forces behind the purchase was synergistic opportunities between move management and home care.

“Moving Mentor is in people’s homes for significant periods of time, and working with clients and families who are in either a moment of crisis or a vulnerable position,” Best of Care CEO Kevin Smith previously told HHCN. “That’s usually the same starting point of entry for home care. There’s been some kind of key event or change in a person’s condition, or status that warrants some sort of an intervention. In the same way that Moving Mentor gets involved in people’s homes and their lives, so does Best of Care.”

Last year also saw another home care company, Executive Home Care Holdings LLC, acquire Grasons Co., an estate sales and business liquidation service. The deal brought together Executive Home Care, Assisted Living Locators and Grasons, and subsequently created Evive Brands LLC.

“With Evive Brands, we get a very similar customer and demographic,” Executive Home Care CEO Tim Hadley previously told HHCN. “You have complementary services across the different brands, so as we look to add additional brands under the umbrella, and be able to provide different benefits and services to our existing customers, we’re looking for things that complement one another.”

Providers will find ways to more seamlessly and strategically integrate AI

Though some home care providers have been early adopters, there was a while when Artificial Intelligence seemed like more pie-in-the-sky than a practical solution.

This has begun to shift of late, and it’s likely that more providers will find ways to incorporate AI into their strategy this year.

Providers are already using AI solutions for things like home-monitoring technology, virtual assistants and marketing solutions. Companies like Home Helpers are even using AI to identify expansion opportunities.

“We use AI in our franchise-development process around identifying potential new franchisees, and doing some specific psychographic targeting,” Home Helpers President and CEO Emma Dickison said during a HHCN webinar last year. “Internally, for the team, where we see the biggest lift with AI … is in the marketing department. I think it’s going to spill into how we can document care logs. There are just so many applications.”

One other thing to look out for in 2024: home care companies leveraging AI to finally figure out schedule optimization.

Home care will see a more active year for M&A activity, with a few big names coming to market and PE coming off the sidelines

It wasn’t too long ago when home-based care M&A activity from strategic buyers and private investors alike reached record levels, propelled by the COVID-19 pandemic and the already present shift away from facility-based care. Home care dealmaking was especially hot.

During the 15-month period from the start of Q4 2020 through the end of 2021, there were nearly 100 transactions for businesses in the home care space, according to data from M&A advisory firm Mertz Taggart. But the following 15-month period paled in comparison, with around 60 home care transactions tracked by Mertz Taggart.

HHCN expects home care M&A activity to rebound in 2024 for multiple reasons.

For starters, the slowdown in 2022 and early 2023 was partly driven by the macroeconomic factors that caused normally aggressive buyers to deploy capital more conservatively. Those factors included the rising cost of capital and inflation.

“Stubborn inflation, high interest rates, geopolitical and economic uncertainty, and labor shortages exacted a toll on private equity markets in 2023, and health care private equity was not immune,” Bain & Company’s health care PE team wrote in a recent dealmaking outlook report.

Federal Reserve leaders recently suggested that benchmark interest rates could get cut three times in 2024, so some of those headwinds may be mitigated in the not-too-distant future. Additionally, as Bain & Company pointed out in its report, the valuation gap between buyers and sellers is starting to lessen, which could further pave the way for more home care transactions this year.

“Buyers and sellers have a vested interest in bridging valuation gaps to make 2024 a year for catching up,” Bain’s PE team noted.

What’s more, HHCN predicts private equity to return to home care dealmaking because of a simple reality: firms need to use the money that’s in their investment funds – and few business segments have as strong long-term tailwinds as home care.

To some extent, home care M&A has already shown signs of bouncing back.

Best of Care recently announced the purchase of Barton’s Angels, and Care Advantage has gotten back to its M&A ways. HouseWorks has executed a bevy of deals, too, with no signs of slowing down.

Home care M&A increasing in 2024 is a relatively safe prediction. To go a little bit further out on a limb, HHCN expects multiple big-name franchise companies to also come to market, with their PE sponsors’ windows nearing an expected close.

Some well-known names are already shopping themselves around, sources have told HHCN.

Home-based care companies will pick a lane between home health care, home care

Around the country, home-based care companies are facing critical decisions in defining their focus within the health care landscape. As the industry continues to evolve, agencies who provide both home health and non-medical home care are slowly starting to choose just one lane.

One of the reasons agencies have done that is because of simple business priorities. If home health reimbursements are healthy enough to offload home care expenses in a transaction, we are starting to see companies pull the trigger on those deals.

As was the case with Well Care Health, a North Carolina-based home health and hospice company. In 2023, Well Care sold one of its three core segments — non-medical home care — to the Chicago-based home care company Avid Health at Home.

Home care made up 7% of Well Care Health’s total business, its CEO Zac Long said at the time of the transaction.

Recent shifts in regulatory dynamics within the health care sector also play a factor in these changes. With its home care services offloaded, Well Care has said it will emphasize the strategic advantage of a refined service portfolio and focus on areas with growth potential within home health and hospice.

A similar move was made when Amedisys Inc. (Nasdaq: AMED) divested its personal care division to HouseWorks in February.

Amedisys leaders have said they fully support home care and see value in the model moving forward, but the decision to focus more on home health and its other offerings was — in hindsight — a preview of what’s to come in the industry.

“We continue to believe in the need for, and the importance of personal care services, as a key piece of whole person care,” former Amedisys CEO Paul Kusserow said at the time. “As such, we are committed to continuing to push to grow the utilization of our personal care network. Our commitment is to contract and build networks with personal care at this point — not to own it.”

The home care assets mentioned above, which were offloaded, now have the ability to join platforms that are laser focused on personal home care. That, alone, could be a boost for the caregivers and back-office staff within these organizations.

More regulation coming to home care

In the short-term, the Centers for Medicare & Medicaid Services (CMS) will make a decision on the “80/20 rule,” which would require that at least 80% of Medicaid dollars paid to HCBS providers go toward worker compensation.

That rule is likely to be finalized, but HHCN expects it to be less harsh – likely with a lower threshold – when it is.

Meanwhile, the Federal Trade Commission’s (FTC) proposal to ban non-compete agreements could also be finalized in 2024. That could have major ramifications for the home care industry, where non-solicit agreements are especially popular.

Ultimately, it’s likely that – just as it is now – certain states will be more stringent on non-competes compared to others.

At the same time, the finalized version of the 80/20 rule will make some HCBS markets look much more grim than others.

That will lead to home care providers regrettably picking their spots when it comes to expansion. Some providers may even exit markets, following the old adage: “No margin, no mission.”

Additional contributions from HHCN reporter Joyce Famakinwa, HHCN reporter Patrick Filbin and HHCN Managing Editor Bob Holly.

The post Top Home Care Trends For 2024 appeared first on Home Health Care News.

Home care providers looking to grow need to follow meticulous planning and have realistic goals. Failure to follow that guidance could mean serious operational challenges down the road.

During the public health emergency, when more attention was being paid to alternative settings for long-term care, the home care industry saw record-breaking volume and valuations.

Seeing an opportunity for rapid growth, some providers started to scale at a rate that — in certain cases — was too aggresive.

Others have found a happy medium, the ability to grow quickly without sacrificing operational steadiness.

“There’s nothing wrong with staying a small agency,” Chris Dobbin, president and CEO of Nova Leap, told Home Health Care News. “But for those that truly want to grow, I think you have to determine what that means for your company. As an owner, you have to determine first what your vision for the company is.”

The Halifax, Nova Scotia-based Nova Leap deals exclusively in private-pay home care. It operates in 10 states, as well as its home province in Canada.

When Dobbin started the company in 2016, annual revenue clocked in at $40,000. Six years later, in 2022, that number was $28 million.

Nova Leap completed at least eight acquisitions from the start of 2017 through June of 2019, making it one of the more aggressive individual home care buyers at the time. On average, Nova Leap made about four acquisitions per year up until 2021.

The company’s growth strategy was simple: focus on smaller, high-quality deals with vetted providers.

“M&A, as a strategy, is inherently risky,” Dobbin said. “We’ve been careful not to take on deals that are too big for us given our size. Generally speaking, as you grow, you can take on bigger deals because the risk profile remains similar.”

Regardless of the risk profile, providers can often overlook the integration process when trying to grow too quickly.

“I think the biggest lesson that a lot of these folks have learned is that we can underestimate the integration piece,” Mertz Taggart Managing Partner Cory Mertz told HHCN. “It starts with culture, and there needs to be alignment there. I think the providers that have had issues have done too many deals, too fast, and they didn’t have the resources to properly integrate.”

While Nova Leap continued its accelerated growth strategy, Dobbin never felt like the plan was too much, too soon.

One of the reasons was because of the due diligence he and the rest of his staff did before making those deals.

“For us, when we’re looking at these companies, we want to understand who is in the office, what does their operating team looks like, and what will the core team be once an owner who is looking to retire is no longer there?” Dobbin said. “That’s all really important to us because we look to elevate somebody within that office to take on more of a leadership role. I’d say we do that about 75% of the time.”

The success Nova Leap has been able to have is, in large part, due to the relationships that are built before a deal is made.

“One of the barriers that we often see is the owners of these businesses are often so far down in the weeds to where it doesn’t allow for a situation for them to grow beyond their current location,” Dobbin said. “For owners that can delegate more responsibility to assistant staff and start thinking more strategically about the business — I think those owners have a greater chance of expansion.”

Beginning the growth process

Other providers in the earlier stages of their growth journeys are finding similar success with Nova Leap’s general growth principles.

“We are about to hit seven months since we launched,” Avid Health at Home CEO Jen Lentz told HHCN. “In those seven months, we’ve completed and fully integrated three acquisitions to create the baseline that is Avid. That, of course, came with the trials and tribulations of quick growth. However, I think what made us very successful is that going into closing that first acquisition in May, we had a baseline of where we knew everything needed to feed into.”

The Havencrest Capital Management-backed Avid Health at Home was unveiled in early August. It was created in conjunction with Havencrest’s acquisition of For Papa’s Sake Home Care, which is a personal home care provider in the Chicagoland area.

Avid’s growth plan has been aggressive from the outset. In early October, it acquired Well Care Health’s personal care business. In late October, it acquired Independence 4 Seniors, a home care agency based in the Chicagoland area.

Lentz said one of the main focuses has been to effectively merge policies and procedures in a way that’s organized and feasible for everyone involved.

“Things like our EHR, payroll system, back office procedures, our own operational manuals, job descriptions and expectations for data,” she said. “All of that was outlined before we closed. When we were going through this quick roll-up, what made it successful was that we were able to gather this information and put it into our process, which made it very easy to transition the employees — both field and admin — into a new day-to-day operating model.”

Home care, Lentz reiterated, is a direct care business made up mostly of caregivers.

“Putting employees first is probably the biggest part of our culture that we prioritize,” Lentz said. “We are really focused on putting our employees first because, without them, there is no growth and there is nothing to manage. It’s nerve-wracking enough to change jobs. To change jobs where it wasn’t you who made the decision but somebody else — in this case your employer — it’s scary. So we really focused on making sure that that was something that we could mitigate and support our employees through three different types of transitions.”

Looking ahead

Nova Leap made three acquisitions in two weeks at the end of December in 2021. Since then, it has yet to make another acquisition.

In the time since, Dobbin said the lack of dealmaking has been an asset.

“Because of the impact that COVID had on our business, we ended up focusing on the business and working on operations as opposed to M&A,” Dobbin said. “That focus on operations has been extremely valuable to us. It’s allowed us to produce — from a financial perspective — record results. We’re just coming off of two of our best quarters and we have no long-term debt.”

After a relatively quiet two years, Dobbin said the plan for 2024 is to get back into the M&A game and close on a few deals in the next year.

As for Avid, the plan is to keep the foot on the gas pedal in the near future.

“I love that no matter how much you plan, you always get that unexpected twist at the end [of a deal],” Lentz said. “It keeps it exciting. From an investor perspective, we’re still on the right track of supporting the home care industry, trying to really thrive in being a disruptor in the sense of how we provide services, how we expect to be contracted, how we expect to be reimbursed and ultimately how we as an employer should be expected to pay our caregivers. So it’s all positive.”

The post The M&A Balancing Act: The Risks Of Lightning-Fast Home Care Growth And How Operators Can Avoid Overwhelming Their Business appeared first on Home Health Care News.

Gentiva officially acquires ProMedica’s home health, palliative and hospice business

Gentiva has closed on its $710 million deal for ProMedica’s home health, palliative and hospice business.

The deal was first announced in February.

Now that it is finalized, the Atlanta-based Gentiva will boost its location count from 380 to 500, and its patient census by about 9,000. 

“This is a significant milestone because we believe this transaction will benefit the patients and families in our care and are enthusiastic about welcoming the talented caregivers at ProMedica into the Gentiva family,” Gentiva CEO David Causby said in a statement. “As a combined company, we plan to increase the number of caregivers and provide greater access to our care offering to more patients in the communities we serve.”

Gentiva was formed out of the hospice and personal care assets of Kindred at Home, which were divested by Humana Inc. (NYSE: HUM). The company is backed by Clayton, Dubilier & Rice. Causby is the former CEO of Kindred at Home.

As part of the deal, 4,000 ProMedica associates will join Gentiva.

Most of ProMedica’s hospice locations will rebrand to the Heartland Hospice brand by year’s end, according to the release. Home care locations, on the other hand, will rebrand to Heartland Home Health in early 2024.

ProMedica’s palliative care business will operate under Gentiva’s Empatia Palliative Care brand.

Avid Health at Home acquires Independence 4 Seniors

The Havencrest Capital Management-backed Avid Health at Home has delivered on another acquisition, its second in just one month.

In early October, it acquired Well Care Health’s personal care business. In late October, it acquired Independence 4 Seniors, a home care agency based in the Chicagoland area.

“With three acquisitions in the last six months, Avid is showing strong momentum,” Havencrest Managing Partner Christopher W. Kersey said in a statement. “Avid’s team continues to successfully identify and integrate strategic acquisitions in attractive markets.”

Avid Health at Home originally kicked things off with the acquisition of the Chicago-based For Papa’s Sake Home Care. Since then, it has been busy expanding across the country. But the Independence 4 Seniors deal bolsters its already strong Chicago presence.

“I4S will allow Avid to further establish its footprint in the Chicago market and provide critical density as we grow our patient population,” Avid Health at Home CEO Jen Lentz said in a statement. “We are very excited to partner with home care providers that share our passion for quality care and improving patients’ lives.”

Honor Health Network acquires Nightingale

Honor Health Network – a portfolio company of Webster Equity Partners – has acquired the home care provider Nightingale.

Based in Georgia, Nightingale offers personal home care, skilled nursing, infusion and pharmacy services across 11 locations.

On Honor Health Network’s end, it provides home- and community-based services, primarily in the Northeast. The company also provides skilled nursing, physical therapy and speech therapy in Massachusetts, New York, Pennsylvania, New Jersey, Maryland and Washington, D.C. 

The Pennant Group continues on M&A trail

The Pennant Group (Nasdaq: PNTG) has acquired Guardian Hospice and Guardian Hospice of Oklahoma, the company announced.

Guardian provides hospice care throughout both Texas and Oklahoma.

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

Based in Eagle, Idaho, Pennant is a holding company of independent operating subsidiaries, including 102 home health and hospice agencies and 51 senior living communities.

“Guardian has a long standing and deep connection in the communities it serves, and we are honored to carry on this legacy of quality care,” Pennant President and COO John Gochnour said in a statement. “We are grateful for the trust and welcome that has been extended to us by the wonderful Guardian team of skilled clinicians and compassionate caregivers. We are thrilled to partner with them in delivering life-changing hospice services to residents of these Northern Texas and Southern Oklahoma communities.”

KeyBank backs Innovive Health

KeyBank has agreed to back the Massachusetts-based in-home care provider Innovive Health.

The deal comes with a “multi-million” funding package, Innovive Health CFO Anthony Loumidis told Modern Healthcare.

“KeyBank is going to be sitting at the table with me, going over the financials of the company that we are going to be acquiring and getting comfortable with the risk,” Loumidis said. “That says a lot about how KeyBank supports growing healthcare companies like ours.”

Innovive recently expanded services into Colorado. The company offers services to those with complex health needs, including behavioral health conditions.

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For Well Care Health, it’s an opportunity to capitalize off of the demand for its well-established home care footprint, while also focusing on a new strategic direction moving forward.

“There’s a couple of drivers behind [the move],” Well Care Health CEO Zac Long told Home Health Care News. “I think this is such a positive step for both Well Care Health and for our home care team. On the Well Care side, it allows us to more deeply focus on our core service lines of certified home health and certified hospice. We see a tremendous amount of opportunity to grow responsibly through those two operating divisions.”

The Wilmington, North Carolina-based Well Care Health provides home health and hospice care to over 4,000 patients via its over 600 employees. It operates across 40 counties in North Carolina and South Carolina. The home care segment represented about 7% of its overall net revenue.

The two companies will continue to work closely with each other during and after the handoff, meaning Well Care won’t be losing the clinical value of home care for patients in its markets. All of Well Care Health’s employees are being retained by Avid Heath at Home.

On its end, Avid Health at Home is a new home care platform backed by Havencrest Capital. The company first kicked things off with the acquisition of the Chicago-based For Papa’s Sake Home Care. Its CEO, Jen Lentz, told HHCN in August that the company was primed and ready for immediate and significant expansion – specifically in the Midwest, Mid-Atlantic and Mountain West. 

Since May, it has closed on three acquisitions. Overall, Avid Health at Home is providing personal care and private-duty nursing services across seven locations in the Chicagoland area and North Carolina.

“Knowing Well Care’s reputation for being a best-in-class provider was what initially attracted us to the opportunity,” Lentz told HHCN in an email. “When we really got going in the process, it became evident how strong the culture was. Zac and the Long family have built an incredible organization, and we are thankful they chose us to be stewards of the home care business after 35 years.”

Lentz previously told HHCN that Havencrest Capital – where she also serves as an operating partner – ultimately decided to go the platform route because it wanted the home care enterprise to be data-driven and technology-enabled. Ultimately, Havencrest believed rolling up smaller acquisition targets was the easier way to achieve that vision.

“The Well Care team is packed with talented clinicians and operators, and we are confident that we have acquired a group that can carry out Avid’s mission to be a data driven, tech-enabled home care company,” Lentz said.

Long added that he is happy that the home care team can now join an organization that is “fully dedicated and focused on home care services.”

“As we were evaluating the opportunity, we felt like that focus and that dedicated service model will be instrumental in allowing them to unlock their potential and their continued growth in home care,” he said.

Well Care Health wants to be on the cutting edge of the payment shift in home health care, moving more toward value- and risk-based contracting with payers.

“We’re really excited to deepen our focus on not only home health and hospice, but also our strategic priorities, which include improved payer relationships, value-based care positioning and taking a major step forward in terms of our hospice service line,” Long said.

As for Avid Health at Home, it plans to continue to be highly acquisitive over the next year.

“Avid’s near-term pipeline is full of some great companies both within our current footprint and in new markets in our existing states,” Lentz said. “As we look ahead to 2024, Avid will be expanding its operations into new states through additional M&A.”

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On the buyer side, that due diligence includes checks around financials, compliance and a whole lot of other numbers.

But one factor that can fly under the radar is employee tenure.

“Tenure is a very important factor in our decision-making process as we evaluate potential partners to become part of our Help at Home family,” Rich Tinsley, chief development officer of Help at Home, told Home Health Care News. “We value long-tenured employees at every level of an organization. Tenure definitely makes the acquisition more attractive to us.”

Home-based care leaders told HHCN that a company’s workforce — and collective experience and dedication — is playing an even larger role these days in M&A.

Employee tenure – both at the caregiver and back-office level – can be an indicator of a company’s stability, resilience and positive culture.

Based in Chicago, Help at Home has more than 180 branch locations across 12 states. It provides personal care services to more than 66,000 clients via more than 53,000 caregivers.

“Our company has an average client and caregiver relationship of 4-plus years, which is reflective of the importance that we place on tenure,” Tinsley said. “We focus on like-minded organizations that place the same amount of importance we do on supporting the caregiver. It’s a win-win at the end of the day, when you have purpose-driven and supported caregivers doing their very best to care for their clients.”

Culture isn’t something that is necessarily quantifiable, however. That’s what makes M&A deals so risky in certain situations. Tenure, however, can be a data point for buyers to look into.

“Strong tenure is an indication that there is a strong culture,” Kris Novak, managing director of home health, hospice, home care and pediatrics at The Braff Group, told HHCN. “It tells me that your staff is dedicated and committed. If they’ve stayed for a long time, clearly they’re aligned on what the mission of the organization is. Given what we do in home care, home health, hospice, pediatrics — the greatest asset is the people.”

The Braff Group is an M&A advisory firm that specializes in senior care dealmaking.

Before joining the firm earlier this year, Novak was the vice president of mergers and acquisitions at the Baton Rouge, Louisiana-based Amedisys Inc. (Nasdaq: AMED).

With his background, Novak has intimate experience talking to providers about culture and quantifying the value of a well-run organization. If the people are staying on longer more often than not, that could lead to growth and is a very attractive attribute for a buyer.

“If you have employees saying that they feel like they have meaningful work, are being developed and feel appreciated — in this labor environment — that’s critical,” Novak said. “The demand for services right now is clearly very strong. All organizations are struggling from a labor perspective and so that’s your biggest lever for organic growth: having clinicians that can take care of more patients.”

Good culture fit

Tinsley said that in his experience, tenure and compliance track records are two good indicators that caregivers and care supervisors will remain with Help at Home beyond an acquisition.

“That’s key for us,” he said. “We want to manage the cultural integration strategy so that it ensures a smooth transition from the two cultures to one cohesive culture that enables our employees to thrive. We believe that the caregiver-first mindset is the key to success. If that is woven into the company’s culture, it’s a great match for us.”

There is so much unknown that goes into deals. So, if a buyer can feel more confident in the culture fit before a deal is finalized, it makes a world of difference.

“When I get a deal book and an [agency] is highlighting how long their employees have been there, I immediately think, ‘This sounds like I’m going to be stepping into something that has a recipe for success,’” Avid Health at Home CEO Jen Lentz told HHCN. “Any company who values their length of employment — whether it’s office or field staff — means that they are looking at culture and that people want to stay there.”

Avid Health at Home is a home care platform created in conjunction with the acquisition of For Papa’s Sake Home Care by private equity firm Havencrest Capital Management.

Improved outcomes

Tenure isn’t just about retention, it’s also about the care that’s being provided.

“There’s always been a correlation between tenured staff and the quality of patient care that’s delivered,” Novak said. “Obviously there’s efficiency there because they’ve done it for a long time and they’re able to be really productive from a financial perspective. But even more importantly, typically a tenured clinician is providing excellent care. That’s going to lead to higher STAR ratings and better patient satisfaction.”

With all of those elements coming together, providers are able to tell better stories to referral sources, Novak added.

The importance of tenure is different based on the organization and based on the type of worker, too.

“Caregivers and the supervisors at the branch levels — those who touch the clients — are most important in smaller acquisitions,” Tinsley said. “As prospective acquisitions get larger, the branch administration and regional leadership tenure start to play a larger factor in a successful change management execution.”

That’s why, for providers looking to sell in the near- or long-term, it’s important to keep track of tenure and be as self-aware as possible about delegation and the hierarchy.

The post Why Employee Tenure Can Make Or Break A Home-Based Care Deal appeared first on Home Health Care News.

Generally, healthy relationships – ones where there’s “give and take” – lead to growth and success. Poor relationships between those two parties, on the other hand, tend to lead to undesirable outcomes.

“Private equity has a really powerful place within our space to offer some assets to an organization like mine,” Family Resource Home Care CEO Jeff Wiberg said on a panel at Home Health Care News’ FUTURE conference last month. “PE has allowed us to have plenty of dry powder to be able to continue to do what we want to be able to do.”

Backed by Great Point Partners, Family Resource Home Care is one of the largest independent personal care companies in the Pacific Northwest. The company’s services include personal care, medication management, meal preparation, housekeeping, companionship, dementia support and end-of-life, transitional and respite care.

Over the past few years, Family Resource Home Care has continued to expand its geographic footprint across the Pacific Northwest.

Most recently, the company acquired Companion Care Inc., a home care agency that bolstered Family Resource Home Care’s footprint to seven locations in the Puget Sound region and to 29 total across Idaho, Oregon and Washington.

Wiberg has a unique perspective on the relationship between agency and PE firm. He’s worked in PE and is now at the helm of a growing provider.

“My honest experience has been that you’re constantly having to re-educate the private equity team to make sure that they understand that — in spite of the fact that they think they know how to run a business — really the expertise is still with the executive team,” Wiberg said. “So you have to manage through that dynamic a bit.”

Someone else who has toed that line delicately as of late is Jen Lentz, an operating partner of Havencrest Capital Management and the CEO of its new home care platform, Avid Health at Home.

“I’m an operator by trade,” Lentz said during the panel. “When you start thinking about looking at private equity, … it is so important to take a step back, know your own limits and know what you can really offer before finding a true partner.”

Havencrest Capital Management is a health care-focused private equity fund with about $600 million of assets under management. The company’s strategic approach is to partner with founder-owned health care companies with EBITDA between $3 million and $15 million.

Because of her background in home care – she was previously at Premier Home Health Care – Lentz said she has developed a knack for knowing who she wants to be in business with from the jump.

“I had met a lot of folks in that space in my former life and I would know from the start that this was somebody that I could work with,” Lentz said. “It’s not for the faint of heart. It’s very entertaining. And it’s a lot of fun because you do have the ability to have a thesis, have a strategy and then go execute it. Whether that’s through interior investment or an aggressive M&A rollup, it’s a lot of fun.”

Getting PE backing

There’s a push and pull that exists in PE firm-agency relationships. It’s up to both sides to agree on a long-term strategy and to have an open dialogue throughout the process, before and after an investment.

It’s also important for both sides to have realistic expectations.

“Eighteen months ago, we would come into these conversations where maybe someone sold too late or had an inflated view of what we thought they might be,” Will Davis, regional director of origination at The Riverside Company, said during the panel. “If we had proposed things like earnouts, or some sort of a structured scenario which reduced their upfront proceeds, we got thrown out of the room. But the market has moderated a bit and the buyers and sellers are coming a bit closer together.”

Riverside’s portfolio includes Best Life Brands, a holding company for home-based care franchise companies like ComForCare and Boost Home Healthcare.

Davis said Riverside is actively looking for more partners and that it has capital to deploy. Provider leadership being willing to wait on their earnings tends to help the dealmaking process, he said.

“In some cases, the sellers and their advisors are suggesting those structured scenarios before we are, which is good,” Davis said. “I think because of that, we’ll see an uptick in activity, and a steady rate environment is going to help that. I think we have a better sense of rates being in a narrower range, and that will help those using leverage coming in.”

Backended earnings requires a successful relationship while the PE firm is involved, though.

Productive relationships are what gets both parties from the start line to the finish.

“I think the juice is worth the squeeze,” Wiberg said. “There’s a lot of expertise in financial analytics, KPI analytics and so forth. You’re equipping yourself to make more informed choices. I mentioned the dry powder and having the ability to continue to grow — that’s nice to have, but partnering is not for the faint of heart. There’s a lot of rigor involved. If you’re ready for that rigor, then it can be very beneficial. If you’re not, it can drive you insane.”

The post What Makes A PE Firm-Home Care Provider Relationship Successful appeared first on Home Health Care News.

The company was first unveiled in early August. It was created in conjunction with Havencrest’s acquisition of For Papa’s Sake Home Care, which is a personal home care provider in the Chicagoland area.

Avid Health at Home is an example of a platform creation, an increasingly popular way for private equity companies to get into home-based care without significant risk.

Tabbed to lead Avid Health at Home is Havencrest Operating Partner Jennifer Lentz, who will serve as Avid Health at Home’s CEO. Lentz was a longtime veteran of Premier Home Health Care Services, where she worked her way up to COO.

“I just believe home care has got such a tremendous future in U.S. health care delivery,” Lentz told Home Health Care News. “It feels fantastic to be able to lead a team of qualified, amazing individuals that I am starting to get to know really well. I’m excited about the opportunity and really thrilled to continue to take care of our seniors.”

While Havencrest did look at larger companies to acquire as the foundation of the new venture, For Papa’s Home Care ultimately made the most sense given its size and quality, Lentz told Home Health Care News.

“What we found was that it would be harder to go in and really change [things], when it comes to being tech-enabled, when it comes to best practices and policies,” she said. “We weren’t really too excited about some of the things we had looked at. So we opted to pivot and go for the platform, looking for smaller, quality agencies – that really have a unique perspective on the communities that they serve – to bring them up into the larger entity.”

Part of the reasoning behind acquiring a smaller agency at first, and then expanding, is that Lentz and her team did want to build a new type of home care provider.

They want Avid Health at Home to be tech- and data-driven, first and foremost.

“Data transmission from the home being first and foremost,” Lentz said. “We want to be really looking at what’s happening with our clients in their homes, and then be able to leverage that.”

In the future, the company wants to work with home health and hospice providers to help curb readmissions and ED utilization.

Proving its capabilities – for provider and payer partnerships – is front of mind from Day One, Lentz said.

Next, however, is M&A. The company is looking to “aggressively roll up acquisitions.” Those transactions could take place anywhere – but sights are set on the Midwest, Mid-Atlantic and Mountain West regions.

Another consideration is the self-directed or family caregiver model that’s gaining more popularity in the U.S. Lentz sees that as an area that home care providers will have to be proficient in moving forward.

“I think it’s critical for a home care company to consider it as a revenue stream, and as a part of your service delivery model,” she said. “You have to be both, you have to be able to balance out, because people are going to need you whether you have an agency staff member or whether you’re helping to support a family member under the Medicaid program.”

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Private equity investment remains down in health care services. But the firms active in home-based care will likely have a major impact on the industry in the near future.

The decisions those firms make – while entering or exiting – will have a lasting impact.

In the second quarter, there were 164 PE deals across health care services in the U.S., which is the lowest mark since the second quarter of 2020, according to PitchBook’s health care services report, released this week.

“It was a bigger drop than expected in terms of deal activity,” Rebecca Springer, lead health care analyst at PitchBook, told me. “I thought that we had probably hit close to the bottom in Q1, but then we dropped over 20%.”

Private equity dealmaking has been affected by higher inflation and the subsequent higher interest rates. While inflation is easing, interest rates have not yet followed.

Because of that, the home care, home health and hospice M&A environment has been affected in multiple ways. Some of the dominoes have already fallen, while others could fall any time now.

Firstly, different types of transactions are getting done. Private equity firms are opting to go ahead with “platform deals” to get into home-based care.

At the same time, there are multiple, massive PE investments that have nearly run their course. When they officially do – and PE firms exit their current positions – the home health market could look a lot different.

In this week’s members-only, exclusive HHCN+ Update, I break down the macro PE trends – and explain how they could shake up the broader home-based care market for years to come.

PE dominoes waiting to fall

There are multiple large PE investments that have nearly run their course.

– Elara Caring is backed by Blue Wolf Capital Partners and Kelso & Company, the latter of which joined in 2018.

– Advent International acquired AccentCare in May of 2019.

– Looking further down the road, The Vistria Group and Centerbridge Partners backed the large home- and community-based services provider Help at Home in October of 2020.

– Wellspring Capital Management acquired Interim HealthCare’s parent company – Caring Brands International – in October of 2021.

All of these companies are top home-based care providers in the country.

It’s likely Blue Wolf Capital Partners and Kelso & Company are looking to exit their investment in Elara Caring sooner rather than later.

“The bank loan market is slowly improving, but it’s still a shadow of what it previously was,” Springer said. “There needs to be better access to finance some of those bigger deals. Also, the health of those older platforms is going to be pretty varied. Some are in a good position to exit; some are really not, given the current interest rate environment.”

While they have to eventually exit their investments, those PE firms also have to do so at an advantageous time, Springer said.

“I would expect that those that are not in such a good position are going to be holding on for longer,” she said. “Then, once platforms start trading, sponsors are going to be looking at what else is in the market and trying to time exits. They’re already working with multiples that are a couple turns lower than what they would have gotten in previous years.”

If they hold on too long, though, they run the risk of hurting both their internal rate of return and their fundraising on future deals.

An extension is usually available at the end of an investment, but lenders generally don’t like to see that extension realized.

“In the past couple of years, continuation funds have primarily been used for really good assets, strong assets that they want to hold onto and continue growing,” Springer said. “But in times past, … they were used to hold onto assets that have really underperformed. Generally, lenders don’t like that, and aren’t going to be supportive. But technically, it’s something you can do.”

In the end, this puts PE firms in a precarious position. AccentCare and Elara Caring are two large, solid home-based care companies.

The largest independent home health companies have been dropping like flies over the last couple of years. Humana Inc. (NYSE: HUM) acquired Kindred at Home. UnitedHealth Group’s (NYSE: UNH) Optum acquired LHC Group and is now in the process of acquiring Amedisys Inc. (Nasdaq: AMED).

Enhabit Inc. (NYSE: EHAB) announced last week that it was exploring the launch of a strategic alternatives process, which could ultimately end up in a sale.

If Enhabit is on the market, there could be one fewer buyer around to bid on the likes of Elara Caring or AccentCare. If it’s not another private equity group coming into the mix to buy those assets, it could be a managed care company.

Managed care companies – like Humana and UnitedHealth Group – have become a new group of buyers for home health assets in the last half decade.

“I think, for most private equity firms, they’re an exit opportunity,” Springer said. “Vertical payer-provider integration is not just Optum, it’s everyone. It’s just the direction that the industry is going. So, private equity has to focus on building assets that are attractive to those buyers.”

More managed care involvement in home health care specifically could cause trouble. If payers have significant in-house capabilities, they may be less likely to bend the knee and increase rates for small- to mid-sized providers.

At the same time, some home health insiders have suggested that managed care companies becoming aligned with industry advocacy efforts could be of benefit in the future.

Smaller ‘platform deals’

Despite a dip in activity, PE firms are continuing to invest in home-based care, albeit in a slightly different way.

A couple have already launched their own “platform companies,” which tend to be cheaper and less risky investments.

Havencrest Capital Management officially launched Avid Health at Home last week, and Waud Capital recently put $100 million behind the post-acute veteran Steve Jakubcanin to do the same.

“For as long as platform trades are quiet, this is one of the primary ways that firms are going to be deploying capital in this market,” Springer said.

PE firms continuing to take advantage of this opportunity would prove that it’s the macro headwinds – and not necessarily the micro ones within home health or home care – that are affecting deal flow.

The first and second quarters have also been relatively quiet in the home care, home health and hospice markets from an M&A perspective.

“There are advantages of small platform creation,” Springer said. “It can be a proprietary deal sourcing process, so you can get a better entry multiple. The group is not already leveraged, so you’re not dealing with that issue in the high rate environment. You can start out with low leverage and position it to be able to grow pretty significantly. And, it’s just less capital to deploy in a slightly riskier environment.”

As for Avid Health at Home, it’s starting local in Chicago. It launched in tandem with Havencrest’s acquisition of For Papa’s Sake Home Care, but plans to scale quickly – in the Midwest, in the Mid-Atlantic and in the Mountain West geographies.

Avid Health at Home CEO Jen Lentz told me that Havencrest did look at more “sizable” deals at first, but ultimately felt like going that route would be more complicated.

“What we found was that it would be harder to go in and really change [things], when it comes to being tech-enabled, when it comes to best practices and policies,” she said. “We weren’t really too excited about some of the things we had looked at. So we opted to pivot and go for the platform, looking for smaller, quality agencies – that really have a unique perspective on the communities that they serve – to bring them up into the larger entity.”

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