$1.6 Billion Acquisition Hinges on Acute, Post-Acute Coordination

If home health providers needed any more proof that acute and post-acute providers are becoming more aligned, they received it in the form of a blockbuster acquisition announced Tuesday.

TeamHealth Holdings Inc. (NYSE: TMH) is buying IPC Healthcare Inc. (Nasdaq: IPCM) in the all-cash deal with an enterprise value of $1.6 billion, or $80.25 per share, the companies announced Tuesday. This is a premium of about 37% on IPC’s price as of the market close on Monday.

The equity portion of the transaction is valued at $1.4 billion, according to calculations from Reuters based on IPC shares outstanding as of June 30.


The Knoxville, Tennessee-based TeamHealth is a leading provider of outsourced staffing for U.S. hospitals, with more than 14,000 affiliated health care professionals in fields ranging from emergency medicine to anesthesia. Its staffing and management services are utilized by about 1,000 hospitals, clinics and physician groups in 47 states.

IPC operates on a similar model, but is known especially for its strong post-acute presence. More than 1,900 post-acute facilities—including assisted living and skilled nursing facilities—are working with IPC for outsourced clinicians, a spokesman for the company told SHN.

Information was not immediately available on how many assisted living versus other post-acute settings IPC clinicians practice in, the spokesman said.


The acquisition was driven by the growing importance of post-acute services in the evolving health care landscape, TeamHealth President and CEO Mike Snow emphasized in a prepared statement.

“Through this combination, TeamHealth will be better positioned to capitalize on key trends as the U.S. health care industry moves toward value based reimbursement with an increased focus on post-acute care and services,” Snow said. “Together with IPC Healthcare, we will create an industry leader in the hospital based and post-acute settings with an expanded network of services and solutions that will better support TeamHealth’s affiliated clinicians and hospital partners and drive long-term shareholder value.”

A variety of these value based reimbursement policies, many related to the Affordable Care Act, are more closely tying hospitals’ Medicare payments to how well they coordinate care with post-acute providers. In one recent example, the Centers for Medicare & Medicaid Services announced that it will tie some hospitals’ payments to how well they work with home health, inpatient rehab providers and others involved in joint replacements.

TeamHealth is betting that it will be better positioned as a provider of outsourced clinicians if it has a strong, unified platform of both acute and post-acute professionals.

TeamHealth and IPC provider groups already have been participating in one of these initiatives—Bundled Payments for Care Improvement. Phase II of the initiative began July 1, 2015. The IPC and TeamHealth groups are managing a combined $2 billion of Medicare spend, trying to leverage technology, infrastructure and post-acute expertise to achieve cost savings, the companies stated.

Hospitals increasingly have been turning to companies like TeamHealth to bring on board physicians with a specialty in hospital medicine—so-called “hospitalists.” The practice also has made its way into senior care settings. In skilled nursing facilities, these dedicated clinicians who often are outsourced are sometimes called “SNFists.”

There are a variety of reasons behind the decision to outsource, including cost considerations. IPC clinicians receive training and the company also offers information technology and management support systems to the facilities it serves in order to reduce costs while improving quality.

The acquisition also was attractive due to the operational overlap between TeamHealth and IPC. Within three years, TeamHealth expects to realize at least $60 million of combined cost and identified revenue synergies.

The boards of both organizations have approved the deal, which is expected to close in the fourth quarter of this year.

Written by Tim Mullaney

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