Large Health System to Outsource Home Health and Hospice to Compassus

M&A

Bon Secours Mercy Health to Outsource Home Health and Hospice to Compassus

Bon Secours Mercy Health (BSMH), the fifth-largest Catholic health system in the U.S., and Compassus, a leading national provider of home-based health care services, announced on May 2 that they have signed an agreement to form a 50/50 joint venture partnership for BSMH home care and hospice. Under the agreement, Bon Secours will outsource to Compassus, who will manage operations for 10 home health agencies and 11 hospice operations spanning five states.

Under the agreement, BSMH will maintain ownership of its existing hospice house real estate assets in specific locations while Compassus will manage the operations. BSMH will work closely with Compassus to support the home health and hospice associates transferring to employment with Compassus. Under the joint venture, the team will continue to provide spiritually grounded care and will operate in accordance with Ethical and Religious Directives.

The agreement is subject to state and federal regulatory review and final diligence; however, the agreement formalizes the intent of both parties to move forward with the transition and integration.

About Compassus

Compassus provides home-based services including home health, infusion therapy, palliative and hospice care. The company’s more than 6,000 team members serve more than 100,000 patients annually across more than 250 locations in 29 states. This is not the company’s first joint venture. In 2020, Compassus became managing partner of Ascension at Home, a joint venture between Ascension and Compassus.

About Bon Secours Mercy Health

Bon Secours Mercy Health (BSMH) is one of the 20 largest health systems in the United States and the fifth-largest Catholic health system in the country. The ministry’s qualityBon Secours Compassus , compassionate care is provided by more than 60,000 associates serving communities in Florida, Kentucky, Maryland, New York, Ohio, South Carolina and Virginia, as well as throughout Ireland.

Bon Secours Mercy Health provides care for patients more than 11 million times annually through its network of more than 1,200 care sites, which includes 48 hospitals. In 2022, BSMH provided more than $600 million dollars in community investments across five states, ensuring that cost is not a barrier to health care for patients in need.

In addition to charity care, BSMH invests in programs that address chronic illness, affordable housing, access to healthy food, education and wellness programs, transportation, workforce development and other social determinants of health. The Mission of Bon Secours Mercy Health is to extend the compassionate ministry of Jesus by improving the health and well-being of its communities and bring good help to those in need, especially people who are poor, dying and underserved. https://bsmhealth.org/

©2024 by The Rowan Report, Peoria, AZ. All rights reserved. This article originally appeared in Healthcare at Home: The Rowan Report. One copy may be printed for personal use: further reproduction by permission only. editor@therowanreport.com

New Players in Home Care

Admin

By Kristin Rowan, Editor

Home care is no stranger to mergers and acquisitions. It seems there is news almost daily about companies joining forces or selling parts of their company to new entities. Notably, we reported just last week that Cigna has dropped its entire Medicare Advantage book of business. This week, we have two M&A stories to share with you.

Acquisition

Texas-based agency Angels of Care, previously of Varsity Healthcare Partners, has been bought by Nautic Partners, a private equity company. Angels of Care provides pediatric home health, including private duty and skilled nursing services, along with physical and speech therapy, and respite care. Angels of Care operates in seven states, up from two states prior to their partnership Varsity Healthcare Partners, and employs more than 2,000 nurses, physical therapists, and other service providers.

Nautic Partners, based in Providence, RI, is already a backer of VitalCaring Group, a similar agency with locations across the southern United States, Integrated Home Care Services, providers of DME, home care, and infusion services in Puerto Rico, almost 30 additional healthcare companies. Nautic is a middle-market firm founded in 1986. They specialize in healthcare, industrials, and services.

Partnership

CVS’ Aetna has partnered with Monogram Health to offer in-home care services to Medicare Advantage members with chronic kidney disease. Nurses from Monogram will provide in-home and virtual appointments to eligible members. The two companies will also reportedly work to get timely referrals for kidney transplant evaluations.

Monogram Health is a tech start-up for in-home kidney disease management. Their latest growth funding round garnered $375 million in new funding from health care companies and financial backers, including CVS. Monogram has raised a total of $557 million. Monogram operates by creating value-based care deals with health insurance plans and risk-bearing providers to manage chronic and end-stage renal diseases.

If this model sounds familiar to you, it might be because we wrote last week about Gentiva, which is partnering with risk-based providers to offer palliative care services with risk-sharing benefits on both sides. I expect this is not the last time we will hear/write about risk-sharing partnerships to pay for services that aren’t covered by health care plans.

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Kristin Rowan

Kristin Rowan has been working at Healthcare at Home: The Rowan Report since 2008. She has a master’s degree in business administration and marketing and runs Girard Marketing Group, a multi-faceted boutique marketing firm specializing in event planning, sales, and marketing strategy. She has recently taken on the role of Editor of The Rowan Report and will add her voice to current Home Care topics as well as marketing tips for home care agencies. Connect with Kristin directly kristin@girardmarketinggroup.com or www.girardmarketinggroup.com

©2024 by The Rowan Report, Peoria, AZ. All rights reserved. This article originally appeared in Healthcare at Home: The Rowan Report.homecaretechreport.com One copy may be printed for personal use: further reproduction by permission only. editor@homecaretechreport.com

Transformative Trends in Home Care: Strategies for Successful Business Sale

Admin

by Greg Schriber

In the dynamic landscapes of home health, home care, and hospice services, these industries are experiencing transformative trends, marked by evolving market changes and a surge in demand. Understanding these trends and strategically positioning one’s business for a lucrative sale is paramount. This article provides a detailed guide on understanding the current market landscape and optimizing business value for a successful sale.

Transformative Trends

The industry is witnessing a substantial increase in demand for home-based care services, primarily driven by an aging population and a growing preference for aging in place. This trend has been further propelled by the COVID-19 pandemic, as more families are opting for home care to mitigate the exposure risks associated with institutional settings. Additionally, the advent of technological advancements such as telehealth and health informatics is revolutionizing the way services are delivered, enhancing patient outcomes and operational efficiency. Embracing these innovative solutions is imperative to maintain competitiveness and address the changing needs of clients. The industry is also navigating through shifts in regulatory frameworks, emphasizing quality of care through value-based care models and patient satisfaction. Adherence to new regulations and standards is crucial to sustain the business and avoid penalties. Furthermore, the market is undergoing consolidation, with larger entities acquiring smaller providers to diversify their service offerings and extend their geographic reach. This trend poses both challenges and opportunities for business owners contemplating a sale.

Strategic Positioning for SaleTransformative Trends For Sale

To position a business attractively for sale, optimizing operational efficiency is crucial. Streamlining operations and minimizing overhead costs not only enhance profitability but also make the  business more appealing to potential buyers. Implementing industry best practices and leveraging technology can significantly elevate operational efficiency and service quality. Diversifying service offerings is another strategic move, as it can expand the customer base and open up new revenue streams. Providing a range of specialized and complementary services positions the business as a comprehensive solution, attracting acquirers. Building and maintaining a strong brand reputation through exemplary services, customer satisfaction, and community engagement is also vital. A reputable brand can draw in strategic buyers seeking market leadership. Investing in workforce development is equally important, as a skilled and stable workforce is a valuable asset that can influence business valuation positively. Maintaining financial health and accurate financial records is critical, as it demonstrates the business’s viability and can facilitate the due diligence process during the sale.

Managing the Sale Process

Seeking professional advice from industry experts, financial advisors, and legal counsel can offer invaluable insights and guidance throughout the sale process, aiding in accurate business valuation, negotiation of favorable terms, and navigation of legal intricacies. Negotiations require a strategic approach – understanding the buyer’s motivations, being transparent about expectations, and being willing to compromise can lead to a mutually beneficial agreement. Identifying a buyer whose vision aligns with that of the seller is essential to ensuring the continuity and growth of the business post-sale. Whether the buyer is a strategic entity looking to expand or a financial entity seeking investment opportunities, finding the right fit is crucial. Additionally, being well-prepared for the due diligence process can expedite the sale and reduce the risk of deal fallout. This includes organizing all necessary documents and addressing any potential issues beforehand. Developing a clear transition plan that involves open communication and support is essential to ensuring a successful handover and employee retention post-sale.

Positioning a healthcare business for sale is a multifaceted endeavor, involving operational optimization, brand enhancement, and meticulous strategic planning. By staying abreast of market trends, adopting best practices, and effectively navigating the sale process, business owners can maximize their business value and achieve a successful exit in this rapidly evolving industry. The journey extends beyond the sale; it’s about creating a legacy and ensuring the continued growth and service to the community under new ownership. By being proactive, strategic, and thoughtful, business owners can significantly impact the future of home-based care and improve countless lives.

Greg Schriber is the M&A Senior Advisor for American Healthcare Capital. To learn more about Transformative Trends, Greg can be reached at greg@ahcteam.com

©2023 by Rowan Consulting Associates, Inc., Colorado Springs, CO. All rights reserved. This article originally appeared in Home Care Technology: The Rowan Report. homecaretechreport.com One copy may be printed for personal use; further reproduction by permission only. editor@homecaretechreport.com

Should Insurance Companies Own Home Health Agencies?

Editorial

by Kristin Rowan, Editor

UnitedHealth Group Makes Bid to Buy Amedisys after Acquiring LHC Group

Amedisys is one of the leading providers of home health, hospice, and other healthcare at home services. It operates more than 500 locations in 37 states and the District of Columbia. After acquiring Contessa Health in 2021 for $250 million, Amedisys added hospital-at-home, SNF-at-home, and palliative care to its list of services.

Optum Outbids Option Care Health

In May of this year, Option Care Health and Amedisys issued joint statements announcing a merger of the two companies in an all stock-option bid. Option Care Health provides home and alternate site infusion services, while Amedisys provides home health, hospice, and high-acuity care. The merger was valued at $3.6 billion. It would have increased stockholder value, increased access to care across the United States, and created a network of more than 16,000 health care professionals, according to the joint statement.1

By June 26th, Option Care Health confirmed the termination of the merger and a $106 million termination payment from Amedisys, after Amedisys accepted an all-cash bid from UnitedHealth Group.2

UnitedHealth Expanding Service Options

UnitedHealth Group acquired LHC Group earlier this year for $5.4 billion.3  That acquisition folded LHC Group into UnitedHealth Group’s Optum. The acquisition came after increased demands for home care services. UnitedHealth Group considered this a move toward value-based care. The Federal Trade Commission stalled the merger with requests for additional details in mid-2022. Despite the FTC probe and a shareholder lawsuit, the deal was ultimately approved and the LHC Group delisted its stock on February 22.4

New Merger Faces Federal Scrutiny

Optum and Amedysis expected concerns over anti-trust issues surrounding the merger, according to a joint statement from the two groups. The Department of Justice recently asked for more information.5  The request will push back the timeline for the merger. Amedisys believes there is little geographic overlap between Amedisys and LHC Group and that the scrutiny is a result of other UnitedHealth Group acquisitions.

Optum Amedysis

Optum Remains Optimistic

In a press release about the merger, Optum CEO Patrick Conway, M.D. said, “Amedisys’ commitment to quality and care innovation within the home, and the patient-first culture of its people, combined with Optum’s deep value-based care expertise can drive meaningful improvement in the health outcomes and experiences of more patients at lower costs, leading to continued growth.”6

Even with the recent acquisitions and mergers, if this deal with Amedisys proceeds, Optum will have only a 10% market share across the U.S. For this reason, as well as the demand for home care far exceeding the supply, Optum believes this merger will be approved.

Opinion

Should a company that brokers health insurance also be allowed to be the provider of care? In this author’s experience, job-based healthcare insurance does not come with many options. There may be different levels of care to fit your budget, but the insurance company is already chosen by the employer. This means that employees and their families choose to have health insurance or not but cannot choose the insurance company.

Home Care, Hospice, Post-Acute Care, Palliative Care, and other in-home services are very personal. The company you choose and the care provider you get have to fit your needs and personality and there is a high level of trust needed to allow a stranger into your home when you are in a vulnerable state. If the insurance company is also providing the care, the option to find a care provider that suits the level of trust needed almost disappears.

Oversight

In 2021, President Joe Biden signed an executive order for more vigorous oversight of the healthcare market. Mergers and acquisitions are being scrutinized more heavily to preclude monopolies of care. The FTC and DOJ, in response to this executive order, have proposed updates to antitrust guidelines that will make healthcare mergers and acquisitions more difficult.7

Medicare Advantage

Medicare beneficiaries enrolled in Medicare Advantage has now reached 50%, making insurance companies more involved in senior care than ever before.8  Insurance companies only recently increased the percentage of revenue spent on patient care to 80%, up from as low as 50% before 2010.9  Given these facts, it may be worth questioning whether the insurance companies have too much control over care now, and if the acquisition of care providers by insurance providers should be eliminated completely to avoid a complete takeover of healthcare by insurance companies that already focus more on profit than people.

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Kristin Rowan, Editor
Kristin Rowan, Editor

Kristin Rowan has been working at Healthcare at Home: The Rowan Report since 2008. She has a master’s degree in business administration and marketing and runs Girard Marketing Group, a multi-faceted boutique marketing firm specializing in event planning, sales, and marketing strategy. She has recently taken on the role of Editor of The Rowan Report and will add her voice to current Home Care topics as well as marketing tips for home care agencies. Connect with Kristin directly kristin@girardmarketinggroup.com or www.girardmarketinggroup.com

©2024 by The Rowan Report, Peoria, AZ. All rights reserved. This article originally appeared in Healthcare at Home: The Rowan Report. One copy may be printed for personal use: further reproduction by permission only. editor@therowanreport.com