Private Equity Eyes Home Health Care as Top 2014 Investment

Home health care is listed among the top areas for private equity investment in 2014 in a Beckers Hospital Review article on trends for 19 niche investment areas in the health care space.

“While the overall volume of transactions in 2013 declined from 2012, there was significant growth in certain sub sectors of healthcare,” says Beckers.  

One such sub sector is home healthcare, which continues to see “substantial” growth because of its role as a lower-cost alternative to hospitals and nursing homes, especially as the baby boomer generation ages, the article says. 


Spending among home health care agencies had a projected 5.1% growth to $77.8 billion in 2012, and future growth is not expected to slow. 

“Although this sector is currently fragmented, with the majority of agencies having only been in the business for roughly five years, greater franchising can be expected in the future,” says Beckers. 

Still, the sector is not without headwinds, especially as the Affordable Care Act calls for a base rate reduction starting in 2014 and extending for four years with a maximum cumulative reduction of about 7%. Despite the cut, home health care agencies with larger footprints are still expected to realize profit margins. 


However, because of the industry’s rapid growth, the Centers for Medicare and Medicaid Services has been monitoring home health care for fraud and abuse, Beckers notes.

“While investment opportunities are currently fragmented, continued growth and franchising could lead to more desirable investment opportunities,” the article says. 

Other health care areas for private equity investment include hospice, skilled nursing facilities, health information technology, and hospital and health systems. 

Read the full list of trends for 19 niche investment areas. 

Written by Alyssa Gerace