Almost Family Eyeing Managed Care, JV Opportunities
After completing the nation’s largest public home health-hospital joint venture, Almost Family (Nasdaq: AFAM) is focused on growth and opportunities in alternative payment models.
Last year, Louisville-based Almost Family, one of the nation’s largest home health care providers, formed a joint venture with Community Health Systems (NYSE: CYH) and created the nation’s largest public home health-hospital deal of its kind.
Since announcing the deal, the home health provider has been attracting more attention from other health and hospital systems, according to Steve Guenthner, President of AFAM.*
“CHS (Community Health Systems) is the most transformative thing that has happened to us in a long time,” Guenthner said during the Jefferies Healthcare Conference on Tuesday.
With a sticker price of $128 million for an 80% equity interest in the home health business of CHS, Almost Family is working on developing all its service lines—home health, hospice and personal care services—with more CHS locations.
“Projecting forward, the development plans with CHS are quasi-organic,” he said. “There are opportunities [to add more home health locations]—some will be acquisitions, some will be startups.”
The joint venture thrust Almost Family into the spotlight, and the company is planning to capitalize on the health system and hospital trend.
“We’re focused on growth,” Guenthner said of the company’s priorities. “When we think of growth through acquisitions and joint ventures, we look at free-standing acquisitions that are not affiliated with hospitals within the 19 states that are certificate of need states. Looking at all states, our first choice is to do joint ventures with hospitals and health systems. That’s our niche.”
Within these joint ventures, the company looks to expand its service lines with the health system brand, operating under the health system’s name.
“All our employees wear their name badges, but they are our employees,” Guenthner explained.
The Future of Financing
With more interest in the space, the future of home health is potentially up for grabs. While Guenthner sees the benefits of partnering with hospitals and health systems, the company is likely to continue standing on its own.
“I don’t think any of the strategies are necessarily better than the other,” Guenthner said. “It’s a market where all boats are going to rise. Payers, health systems, referral sources and even patients are seeing the value of home health and the common sense for caring for people at home. Everybody is benefiting from that.”
Beyond its joint ventures, Almost Family see more opportunities within managed care, with home health care gaining more market share from skilled nursing facilities (SNFs) and IRFs. However, the company is preparing itself to be an attractive partner whether managed care will continue to become more dominant in state coverage or not.
“We don’t know where financing is going, if managed care will take over the world [or not],” said Guenthner. “We do know that they will want a solid home health provider, and we’re building the platforms for no matter where the patient goes.”
*Editor’s Note: This story has been corrected from a previous version. AFAM Present Steve Guenther made these remarks, not AFAM CEO Bill Yarmuth or Amedisys CEO Paul Kusserow as previously stated.
Written by Amy Baxter