The Great Hospital/Home Health Divorce Movement
Hospitals Divesting Home Health Departments
Is this an early omen of two related trends? A number of hospitals are divesting their home health departments, while large health insurance companies are swallowing up large home health companies.
Beckers reported on October 23 that Providence Health plans to spin off its home-health services along with hospice and palliative care into a new joint venture that will be managed by Compassus, a for-profit, Tennessee-based provider of home care services in 30 states. The move will affect about 700 patients receiving care every day in Spokane County.
The Catholic not-for-profit health system’s agreement with Compassus will be known as “Providence at Home with Compassus.”
After a regulatory review, the deal is expected to close in early 2025. Providence and Compassus will each own a 50% stake. The new venture is part of a strategy to expand and improve home-based services, but also to cut costs. Providence, which operates Sacred Heart Medical Center and Holy Family Hospital in Spokane, declined to disclose the financial details of the joint venture.
LHC Group Was Not Enough
A news release that surfaced on October 25 said that UnitedHealth Group representatives are set to meet with Justice Department officials to make the case for the insurance giant’s acquisition of Amedisys to be approved. The meeting is often the last step before the Justice Department decides whether to file a lawsuit challenging an acquisition, according to the news outlet.
Amedisys operates more than 500 facilities in 37 states. Shareholders approved the acquisition in September 2023, but the deal has been held up by regulatory scrutiny. Justice Department officials are concerned the deal could increase prices for home health, according to Bloomberg.
If approved, this would be phase two of UnitedHealth’s historic foray into our sector. United acquired LHC Group, a home health provider with more than 900 locations, in February 2023. If UnitedHealth’s acquisition of Amedisys is approved, the company would own 10% of the entire home health market, with significant overlap between Amedisys and LHC acquisitions in some Southern states, according to Bloomberg.
Regulators could approve the deal with some changes to address competition concerns, Bloomberg reported. In August, Amedisys and UnitedHealth agreed to sell a reported 100 home health and hospice care centers to VitalCaring Group if the merger is approved.
Three or More is a Trend
UnitedHealth is not the only insurance company interested in owning home health agencies and hospices:
- Humana acquired Kindred, one of the nation’s largest HHAs, and rebranded it CenterWell Home Health. Today it operates more than 360 home health locations in 38 states. In 2023, the company said it would expand into in-home primary care in several states.
- In 2023, CVS Health acquired home health provider Signify Health for $8 billion. The company won a bidding war for Signify over UnitedHealth Group, Amazon and Option Care Health. Signify Health has more than 10,000 clinicians.
- Evernorth, Cigna’s health services arm, offers home health services with a staff of more than 430. In January, Cigna CEO David Cordani said home health was one area where it would focus on future acquisitions.
- In 2021, Centene sold its majority stake in home-based primary care provider U.S. Medical Management. Centene retained a minority stake in the company.
Our healthcare sector is changing as the entire U.S. healthcare scene changes. Next week we will delve further into the ramifications of the CMS 2025 final rule and of course the political events of this week.
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Tim@RowanResources.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
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.
, 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.
