Financial terms are not being disclosed.

The deal expands WellSky’s investment in hospice and offers an entry point into other markets Consolo specializes in, such as palliative care, adult day care and memory care. Previously known as Mediware, WellSky is creating a large platform of technologies and services with a focus on the post-acute market, including home health. Its PE backer TPG also is part owner of Kindred at Home, the nation’s largest home health provider.

Lenexa, Kansas-based WellSky pursued Lexington, Kentucky-based Consolo because of the pair’s similarities in terms of technology and culture, WellSky CEO Bill Miller told Home Health Care News in an email.

“We’re both originators of high quality, web-based EHR platforms, we’re both at the forefront of technology in this space, and we’re both dedicated to innovation that empowers better care,” Miller said. “We’re incredibly excited that acquiring Consolo expands our investment in hospice technology, while also adding solutions for the palliative care, adult day care, and memory care markets.”

Consolo is WellSky’s fifth strategic acquisition in the space this year. Others include MEDTranDirect, Rock-Pond, BlueStrata and Fazzi Associates, a firm that provides consulting and other services to more than 1,400 home health and hospice industries across the U.S.

“Several of our acquisitions in 2018 added both depth and breadth to WellSky’s suite of post-acute care offerings,” Miller said. “Now together, WellSky and Consolo are two industry innovators sharing knowledge, expertise, and technology to deliver the most comprehensive solutions across post-acute care.”

The pairing will also help post-acute care providers fulfill regulatory demands and meet patient needs, according to a release announcing the deal.

Looking ahead, WellSky doesn’t have any plans to slow its home care and hospice growth, Miller said.

“As we look forward to 2019, we will continue to actively seek out opportunities to provide solutions that better serve even more settings of care,” Miller said. “At the same time, we will continue identifying new opportunities to ensure our customers’ success.”

Written by Bailey Bryant

The post WellSky Targets Hospice, Palliative Care With Fifth Acquisition of 2018 appeared first on Home Health Care News.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

How did Arosa+LivHome come up?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Written by Robert Holly

The post CEO Plots Strategy for Arosa+LivHome, Bain’s Impact Investment in Home Care appeared first on Home Health Care News.

The deal should help TEAM expand geographically and service-wise, and will yield liquidity to Advantage’s founder, who is retiring. Financial terms were not disclosed.

Prior to this transaction, Advantage In-Home Services was part of St. Louis-based Advantage Nursing Services Inc., which provides a variety of services in Missouri and Illinois. Advantage’s overall staff includes more than 1,300 nurses, home health aides and personal care attendants who log more than 1.4 million care hours a year serving more than 1,250 clients.

TEAM is facilitator of caregiver support for people with disabilities and the elderly that operates in 20 states. It is a portfolio company of Alpine Investors, a San Francisco-based private equity firm that specializes in majority buy-outs of founder-owned businesses and corporate carve-outs. The firm has more than $1.3 billion of assets under management, including Optima Healthcare Solutions, a major software provider for post-acute health care companies.

Ziegler, a Chicago-based specialty investment bank, helped advise Advantage on the partnership.

“Advantage has built a well-earned reputation for best-in-class service within Missouri and Illinois,” Chris Hendrickson, Managing Director in Ziegler’s Corporate Finance Healthcare practice, said. “Its array of services, often provided by family caregivers, help clients achieve their personal goals through supportive care that promotes greater independence and choice. The partnership with TEAM, which has demonstrated success with the self-directed model across multiple states, provides a tremendous opportunity to further scale the business and Ziegler is thrilled to have represented Advantage in this transaction.”

Both John Bosen, President of Advantage, and Josh Greenberg, CEO of TEAM, lauded the partnership as an opportunity to improve more lives through quality care.

“This link in service and philosophy drives us and gives me great confidence in our ability to expand the collective impact we can have on the communities we serve,” Bosen said.

This is just the latest deal in a current wave of private equity investment in the home care sector — a trend that has raised some concerns but is bringing an influx of capital to the industry. PE firms are attracted to home care given demographic trends and find the private-pay and franchise models appealing, as they limit government reimbursement risk and align with other industries that have heavy PE backing, such as home cleaning and other consumer services.

*Editor’s Note: A previous version of this story stated that Advantage Nursing Services had been acquired by Alpine Investors. The article has been corrected to reflect that only the In-Home and Consumer Directed Services entities of Advantage were involved in this transaction. HHCN regrets the error.

Written by Bailey Bryant

The post [CORRECTED] PE Firm Alpine Investors Adds Advantage In-Home Services to its Portfolio appeared first on Home Health Care News.

The negotiations are in early stages, WSJ reported, citing unnamed sources who are familiar with the matter. Neither Humana nor Walgreens immediately responded to requests for comment from Home Health Care News.

Louisville, Kentucky-based Humana has been pursuing a strategy of gaining more ownership over various parts of the health care continuum. Earlier this year, the insurance giant completed separate deals giving it equity stakes in Kindred at Home and Curo Health Services, two of the largest U.S. providers of home health and hospice services, respectively.

Additionally, Humana this year launched a collaboration with Walgreens. This involves providing primary care — with a focus on seniors — in two Walgreens locations in the Kansas City, Missouri, area. Ultimately, Kindred at Home could play a role in this Walgreens initiative as well, Humana CFO Brian Kane said in September.

In making these moves, a major goal for Humana is to better manage care services for its large number of Medicare Advantage beneficiaries, helping these seniors maintain wellness while keeping costs down.

Humana and Walgreens are also facing competitive pressures.

Walgreens rival CVS is reportedly close to finalizing a $69 billion acquisition of Humana competitor Aetna. These companies are looking to further drive the ongoing trend of moving health care out of expensive inpatient settings and more toward home- and community-based settings — including CVS pharmacies.

In addition to the back-and-forth chess moves from Walgreens and CVS, e-commerce behemoth Amazon has also been making moves to enter the pharmacy space, creating even more incentive for established players to protect their market positions.

Currently, Humana and Walgreens are talking about expanding their existing partnership beyond Kansas City, perhaps even nationwide, according to the Wall Street Journal.

The talks are “wide-ranging,” however, and could include cross shareholdings. Such a move could lead to similar benefits as a merger but at a lower cost, and provide more incentive for the two companies to “make their partnership work,” the WSJ reported.

Earlier this year, there were rumors that Walmart — which is a major pharmacy operator in addition to being a retail powerhouse — was in talks to acquire Humana. Those negotiations appear to have fizzled.

Written by Tim Mullaney

The post Humana, Walgreens Rumored to be Considering Equity Stakes in Each Other appeared first on Home Health Care News.

Help Unlimited is partnering with technology-driven home care company Honor to provide more reliable and transparent care for aging adults in a well-known California county.

San Francisco-based Honor — backed by $150 million in venture capital since launching in  2015 — is a non-medical home care company that provides care to clients in California, Texas and New Mexico. As a company, Honor partners with local home care agencies to manage their scheduling, payroll and other back-office logistics, while also sharing from its large pool of care professionals.

Santa Barbara, California-based Help Unlimited is also a provider of non-medical services. The company offers transportation, daily care, post-hospital recuperation and dementia care services out of its two offices in Santa Barbara and Ventura County.

The partnership, announced Tuesday, will allow Help Unlimited to provide more care for its clients within Santa Barbara County. By 2060, the Santa Barbara County population aged 65 and over is projected to grow over 100% — compared to 28% growth across all age brackets, according to data from the Santa Barbara County Association of Governments.

“We’ve seen an uptick in demand for in-home care driven by an aging population, needed support for dementia care as well as older adults wanting to remain in their own homes for as long as possible,” Gayle Bertsch, owner and founder of Help Unlimited, said in a press release. “We knew we needed to take an innovative approach to make our overall quality of care we’re known for. Partnering with Honor will allow us to positively impact and care for even more families in our community.”

Honor handles all caregiver recruiting, wage and hour, and industry compliance for its partners.

Foundation Management Services Joins AccentCare

Denton, Texas-based Foundation Management Services (FMS) has joined AccentCare Inc. The companies announced the move at the end of August.

AccentCare, which has completed several acquisitions recently, provides post-acute health care services, as well as specialized care management prior to acute episodes. Throughout its operations, the provider employs over 23,000 professionals in more than 190 locations across 14 states.

A recent acquisition has reportedly made AccentCare’s Texas branch the largest home health, hospice and personal care provider in the state.

FMS is a home care management services firm that offers a variety of resources for home health and hospice agencies, including educational workshops and support products.

“We are excited to welcome FMS as an expansion of our service lines,” Steve Rodgers, AccentCare CEO, said in a press release.

FMS will maintain its brand, staff and continue to serve its 1,500 customers with its tools and training.

National Nursing & Rehab Completes Sale of Home Health to Regency IHS Home Care Services, LLC

Corpus Christi, Texas-based National Nursing & Rehab Inc. has sold its adult home health business to Regency IHS Home Care Services. The deal was announced last week.

National was founded in 1996 and is one of the top providers of Medicare focused home health services in South Texas, according to the company. It operates additional offices in San Antonio, Houston and Dallas.

“We are excited to announce the acquisition of our Medicare home health programs by Regency IHS Home Care Services, LLC,” Steve Wallace, CEO of National, said in a press release. “National’s strong leadership team and quality clinical programs are well positioned to be a valued partner to Regency’s experienced post-acute health care team.”

The financial terms of the deal were not disclosed.

TRPN Direct Pay Inc. Acquires Devon Health Services

TRPN Direct Pay ha acquired Devon Health Services, adding to their cost containment program.

Las Vegas-based TRPN Direct Pay is a claims payment process that incorporates multiple existing technologies of medical claims review, payment and administration. TPRN’s network is made up of 1.5 million provider locations including 5,000 hospitals and 100,000 ancillary facilities. The network includes home health, acute care hospitals and urgent care clinics.

King of Prussia, Pennsylvania-based Devon Health Services is a provider organization network that offers managed care solutions to employer groups, third party administrators and insurance carriers in Pennsylvania, New Jersey and Delaware. Devon was formerly known as Americare Health Services, the company changed its name in 1997.

Financial terms of the acquisition were not disclosed.

Written by Kaitlyn Mattson

The post M&A and Financing Newsflash: Honor Partners with Help Unlimited, FMS Joins AccentCare appeared first on Home Health Care News.

PE Hub cited “people familiar with the matter” in its article. Onex had not responded to requests for comment from Home Health Care News as of press time.

Toronto-based Onex was founded in 1984 and currently has about $33 billion of assets under management. The company first invested in Louisville-based ResCare in 2004. Onex bought out the remainder of the home care provider in a deal that valued ResCare at about $384 million in 2010.

Last month, ResCare announced its rebranding as BrightSpring. The new corporate identity comes during a period of change for the organization.

In 2016, Jon Rousseau became the company’s CEO, following the 21-year tenure of Ralph Gronefeld Jr. Additional executive hires have since been made, as the company is undertaking an effort to position itself as a preferred partner for managed care organizations by offering a more complete continuum of care with a strong technology infrastructure.

BrightSpring already has significant scale and diverse service lines. Its large home care division provides services mostly to Medicaid beneficiaries. It also derives about 10% of its revenue from serving non-senior clients and patients, including through a neuro therapy arm. Overall, the company assists about 60,000 people daily across more than 40 states.

This is not the first time that sale rumors have swirled. In 2014, Onex was exploring a potential $1 billion sale of ResCare, Reuters reported at the time.

Should a sale take place now, BrightSpring would join other large in-home care providers to go through a recent change of ownership. The nation’s largest home health provider, Kindred at Home, was acquired last year by insurance giant Humana (NYSE: HUM) and two private equity firms. Earlier this year, three large providers merged to become Elara Caring. And two of the largest publicly traded home health companies, Almost Family and LHC Group (Nasdaq: LHCG), also recently combined.

Written by Tim Mullaney

The post PE Firm Onex Reportedly Exploring Sale of BrightSpring, Formerly ResCare appeared first on Home Health Care News.

Space filling quickly – request your invite today

Home Health Care News (HHCN) is hosting the inaugural Capital + Strategy Forum on April 10, 2019, in Washington, D.C.. This full-day event attracts home care, hospice, private duty, investment bankers, insurance industry and health system executives looking to acquire actionable intelligence on how to drive organizational growth and stay on top of sector evolutions.

The conference agenda covers the changing dynamics and innovations propelling change in the home care and hospice sectors. Speakers will tackle industry disruption, joint ventures, sales and marketing tactics, M&A, new operating models and much more. View the conference agenda here.

Given venue capacity and the desire to create an intimate atmosphere, the Capital + Strategy Forum is by invitation only. You can request an invitation and find out more details on this event.

Visit strategy.homehealthcarenews.com

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“[Best Buy] has recently been investing in health-related initiatives focused on the aging population that have included the participation of several of the nation’s leading health care providers and insurers,” the company stated in a press release issued Wednesday. “The acquisition of GreatCall will augment Best Buy’s existing efforts in the health space, help bring compelling solutions to more customers, and help fuel Best Buy’s further growth in the consumer and commercial markets.”

One such initiative is Best Buy’s “Assured Living” program, announced in the fall of 2017. In this program, a consumer purchases a suite of products that can support aging in place, such as motion sensors for beds and doors, Wi-Fi enabled doorbell cameras and smart thermostats that can pair with smartphones. Geek Squad workers install the devices in a customer’s home.

In the Denver area, the technology is used in tandem with a wellness coach sponsored by insurer UnitedHealthcare.

The GreatCall deal won’t close for several weeks, but Best Buy is interested in continuing GreatCall’s existing sales channels, which include selling directly to consumers as well as to businesses, Best Buy Senior Communications Director Jeff Shelman told Home Health Care News in an email.

GreatCall touts how monitoring products can help health care providers prevent hospitalizations and increase seniors’ independence. The company’s focus on the end consumer makes it an attractive partner to health care providers, CEO and President David Inns told Senior Housing News—the sister publication of Home Health Care News—in 2015.

“One of the big things we always see is people coming forward with cool technology solving the problems of the senior living facility or home health agency or family caregiver, but any technology that has come from the top-down as opposed from the customer forward is seriously at risk of not having any kind of impact,” Inns said. “If it’s not a solution that has first and foremost considered the needs of the older consumer, so they’ll engage and use these technologies daily and hourly, it will absolutely fail.”

Currently, GreatCall has annual revenue in excess of $300 million. It was formed in 2006 and was acquired last year by private equity firm GTCR.

GreatCall has grown in recent years through acquiring some other technology companies serving the senior living space, including Lively and Healthsense.

“We know technology can improve the quality of life of the aging population and those who care for them,” said Hubert Joly, chairman and CEO of Best Buy, in Wednesday’s press release. “Now, we have a great opportunity to serve the needs of these customers by combining GreatCall’s expertise with Best Buy’s unique merchandising, marketing, sales and services capabilities. We look forward to working closely with David and his management team and are excited by the opportunities we have in the health space and the strengths we can bring to bear in this area, especially our experience with technology and serving customers in their home.”

GreatCall will maintain its current headquarters in San Diego, and Inns will stay on as CEO.

Best Buy expects the acquisition to be accretive to earnings by fiscal year 2021.

Written by Tim Mullaney

The post Best Buy Continues Senior Tech Push with $800M GreatCall Acquisition appeared first on Home Health Care News.

The integration of Almost Family is proceeding smoothly, joint venture and acquisition activity is favorable, and forthcoming regulatory changes should not cause major disruptions, they said Thursday during an earnings call.

On April 1, LHC Group closed on its merger with Almost Family, becoming the second-largest home health provider in the nation. Based in Lafayette, Louisiana, the combined company operates about 575 home health locations and 109 hospice locations.

The new, larger LHC Group posted second-quarter 2018 net service revenue of $502 million. Given the merger with Almost Family, this was a year-over-year increase of 95%.

The company’s organic growth in home health revenue was 9%.

The $502 million in revenue was “a bit light” of expectations, William Blair analyst Matt Larew stated in a note on the earnings. However, LHC’s adjusted earnings per share of $0.84 beat expectations. Larew described the earnings report overall as a “positive update.”

New joint ventures

In conjunction with the quarterly earnings, LHC Group announced the finalization of two joint venture agreements. LHC Group has long pursued hospital and health system joint ventures, with about 310 home health, hospice and personal care JV locations under LHC Group management.

The company is purchasing a majority ownership of St. Mary’s Hospice of northern Nevada, which serves the Reno market. The move should result in about $4.9 million in annualized revenue, according to the company.

The second JV is with Capital Region Home Health, which is affiliated with University of Missouri Health Care in Jefferson City. This transaction should result in annualized revenue of about $1.6 million.

Going forward, the deal pipeline is “robust,” and includes freestanding opportunities as well as further joint ventures with hospitals and health systems, CFO Josh Proffitt said.

The JV possibilities run the gamut from individual hospitals with $2 million to $10 million in annual home health and hospice revenue to systems that have between $15 million and $50 million in revenue, he said.

Expansion could also come through the existing joint venture with LifePoint Health, noted CEO Keith Myers (pictured above). In 2016, LHC Group struck this JV to share ownership and governance of LifePoint’s 20 home health and 10 hospice locations, as well as all future acquisitions.

Brentwood, Tennessee-based LifePoint encompasses hospitals, physician practices, post-acute facilities and other operations across 22 states. In late July, it was acquired by Apollo Global Management for about $5.6 billion and is set to merge with Apollo-owned RCCH HealthCare Partners. Also based in Brentwood, RCCH operates 16 regional health systems in 12 states. On a pro forma basis, the combined company would have had 2017 revenues of more than $8 billion.

“LifePoint’s footprint will likely expand even more, and we anticipate for that to result in great opportunities to expand our very strong growth-oriented partnership,” Myers said.

Prepping for PDGM

Myers noted that he had spent the day prior to the earnings call meeting with federal government officials in Baltimore and Washington, D.C. Based on these meetings, Myers is confident that home health providers’ input will lead to improvements in the Patient-Driven Grouping Model (PDGM), a proposed Medicare home health payment framework slated to take effect in 2020.

The switch to PDGM was mandated by the Bipartisan Budget Act of 2018, which passed in February.

In April, the Centers for Medicare & Medicaid Services (CMS) released details of the model, which includes a switch from 60-day to 30-day payment periods, as well as changes related to therapy billing. Congress mandated that PDGM be budget neutral, meaning that it should not decrease reimbursements to providers. Congress also mandated that the reform start on Jan. 1, 2020.

Like other home health industry leaders, Myers singled out budget neutrality as a plus while noting several questions and concerns with PDGM. LHC Group is preparing formal comments that it will submit to CMS before the agency issues the final rule on PDGM, which is expected in November.

“I’m encouraged with the tone and dialogue we’re having with CMS and HHS,” Myers said. “I think they genuinely are listening to us at a level that wasn’t there 10 years ago and maybe not five years ago. We really have a seat at the table.”

A legislative remedy would be “Plan B” if the final rule is not satisfactory, he said.

Draft legislation in the works primarily relates to clarifications regarding budget neutrality and the 30-day payment periods.

“We truly believe the intent [of budget neutrality] is to not adversely impact reimbursement to the extent that it would slow or interfere with momentum we have in moving patients downstream from more costly settings to home health,” Myers said. “But, as written, it could be interpreted as an aggregate cap on home health spending.”

Officials have assured him that capping Medicare home health reimbursements is not the intent, but the provider community wants that clarified, he emphasized.

Similarly, the legislation would clarify that 30-day episodes relate to payment but not certification. Changing the certification period from 60 days to 30 days would create administrative and cost burdens, as physicians would have to re-certify patients for home health more frequently.

If PDGM were to take effect today, as written, LHC Group has estimated that it would lead to about a 1.2% reduction in revenue. That would be offset by a mandated Medicare market basket increase in 2020, executives noted.

Other home health providers have suggested that PDGM’s negative impacts can be mitigated by changing referral patterns. For example, PDGM would reimburse at a higher rate for patients who receive home health services after a hospital stay, versus those that come from community-based settings.

LHC Group does not target patient groups based on the margin they generate, Myers said. His mentors warned him against this, saying that the government would inevitably identify these patient groups and re-balance payments accordingly.

So, the company does not have a lot of room to pivot from one group of patients to another, but it is also insulated from the risk of a sudden hit to reimbursements when payment changes do occur.

PDGM is not keeping Myers up at night, he said. Although it is “potentially disruptive,” he is confident in the company’s ability to roll with the punches.

“That’s what management is all about in this business,” he said. “You have to be ready for change and ready to adapt.”

AFAM integration

For 2018, LHC Group set a target of $8 million to $12 million in synergies from the Almost Family merger. The company is holding firm to the range, despite only realizing $2 million in synergies in Q2—a low number that “surprised” Larew.

Between $3 million and $4 million in synergies should be achieved in Q3, with an additional $4 million to $4.5 million in Q4, said Proffitt. To help support these figures, he noted that a “significant” number of back office team members were kept on to help with the transition, but were let go on June 29.

Related labor costs savings therefore already can be quantified for Q3.

Capital expenditures also have been higher than usual, due largely to technology investments related to the Almost Family merger. The run-rate for CapEx should fall back to about $3 million to $5 million for the remainder of the year, Proffitt said. The whole enterprise is on the Homecare Homebase platform, but all the locations are not yet on the same configuration of that product.

Organic revenue growth was flat in the Almost Family legacy locations for Q2, Baird analyst Matthew Gillmor pointed out in a note published after the earnings call. However, he was encouraged to hear a “clear strategy” articulated by LHC Group leadership to drive quality at these locations.

Part of that strategy has been adjusting Almost Family’s organizational structure related to its quality improvement teams, LHC Group President and COO Donald Stelly said on the call.

LHC management reaffirmed that the merger is on track to be 12% to 15% accretive this year.

Innovative payment models

Also in Q2, LHC Group hired Bruce Greenstein to become the company’s first chief innovation and technology officer. In this role, he will help drive growth through involvement in alternative payment models, with managed care partners, and via other value-based arrangements. The company’s innovations division, inherited from Almost Family, will be the hub for this activity.

Other large home health and hospice providers are also actively seeking deeper and more financially beneficial arrangements with Medicare Advantage plans and managed care organizations. The general concept is that by offering a full continuum of at-home care, these large providers can efficiently and effectively manage patient populations, keeping costs down and quality high.

Currently, LHC Group has a few value-based pilots in place, and sees these as a way to prove out the contributions that home health can make, leading to future growth.

“The receptiveness of the payers … is at a level we haven’t seen before,” Proffitt said.

LHCG shares were trading up 4.04% at market close on Thursday, at $93.58.

Written by Tim Mullaney

The post LHC Group Not Distressed by PDGM, Pleased with Almost Family Integration appeared first on Home Health Care News.

The merger, which closed in May, unites Jackson, Michigan-based Great Lakes Caring; Cromwell, Connecticut-based National Home Health Care; and Addison, Texas-based Jordan Health Services.

Backed by private equity firms Blue Wolf Capital Partners and Kelso & Company, the merged entity will will be based out of the former Jordan headquarters building, just north of Dallas.

Elara Caring serves more than 65,000 patients each day across 16 states, employs about 32,500 caregivers, and will have annual revenue in excess of $1 billion.

By way of comparison, the largest publicly traded home health provider, LHC Group (Nasdaq: LHCG), provides care across 37 states and had a patient census of about 92,500 people as of Dec. 31, 2017.

Initially, all providers affiliated with the three-way merger will keep their existing brand names at the local level but will be part of the “Elara Caring Network.” Over time, agencies will start take the Elara Caring name, but the process will be gradual and might not involve every location, said G. Scott Herman, CEO of Elara Caring.

“We want to be sensitive to legacy businesses and current local market trends,” Herman told Home Health Care News. “Our current line of thinking is that with our corporate brand, we can establish a culture throughout the whole organization regardless of whether a location takes that brand name.”

Elara is one of Jupiter’s moons, which has a unique orbit, according to a press release that the company issued Tuesday. The idea is that each patient and family has unique needs, and Elara Caring will meet those needs even when they do not match up with what is considered a “normal path.”

This idea is not only behind the Elara Caring rebrand but the organization’s mission, “Right Care, Right Time, Right Place.”

Offering personal care, skilled home health, hospice and behavioral health, Elara Caring does have the capacity to meet a variety of patient needs. Currently, about 50% of its revenue comes from its personal care business and the balance comes from the other three pieces, Herman said.

One goal moving forward is to build out the continuum of care in the various markets that the company serves, creating what it has dubbed a “caretinuum.” Currently, its footprint is concentrated in the Northeast, Midwest and Southwest, and acquisition activity will be primarily driven by creating the full “caretinuum” in these regions, according to Herman.

Already, there has been activity to this end in Missouri, and the Northeast is also being targeted for expansion, he said.

However, simply having the ability to provide different types of services is only one piece of the puzzle. Elara Caring also intends to leverage technology and data analytics to ensure that care is happening at the right time—ideally, in time to prevent a patient’s condition from worsening. This would allow more people to avoid the hospital or skilled nursing facility and remain at home, which is the place that the vast majority of seniors have identified as their preferred setting for care.

Already, Elara Caring is achieving success with this approach.

“By identifying patients that are about to have a problem and creating meaningful interventions, we double the amount of time patients in our personal care business stay at home,” Herman said, comparing this patient group with those who are not yet experiencing the full “caretinuum” model.

Overall, Elara Caring is challenging conventional wisdom that says an aging person with chronic conditions will experience an inevitable decline in health and progress in a linear way from less intensive to more intensive services. Rather, each patient has an individual health journey that can take unexpected turns, and Elara Caring believes it can start to predict changes in condition in time to prevent unwanted detours, or at least to respond in a more effective manner when changes do occur.

This value proposition may appeal to Medicare Advantage payers, health systems and other managed care entities that are seeking to efficiently manage costs and outcomes for patient populations. Indeed, Elara Caring is having productive discussions with these types of organizations, including all the large payers, Herman said.

Notably, the payers are interested in leveraging everything from Elara Caring’s personal care to its skilled home health capabilities, even looking at the potential for distributed home-care based networks.

“There’s a lot of movement out there with those plans,” Herman said.

Going forward, there is still some work to be done. Elara Caring has partnered with auditing and advisory firm KPMG on local-level integration. On the tech front, the company is close to having all of its personal care locations on a common platform, although it is too early to announce what platform specifically, Herman said. On the skilled home health and hospice side, Elara Caring uses the Homecare Homebase product, and also has a variety of programs to organize and analyze data.

While efforts to combine the companies are ongoing, Herman is pleased to note that the three-way integration is ahead of schedule.

“We’re moving forward well,” he said.

Written by Tim Mullaney

The post Jordan, Great Lakes, National Home Health Rebrand as Elara Caring appeared first on Home Health Care News.