Amedisys Inc. (Nasdaq: AMED), one of the nation’s largest home health care providers, is setting its sights on a big deal in the hospice space according to CEO Paul Kusserow.
After seeing strong gains in its hospice segment during the first quarter of the year, Baton Rouge-based Amedisys is hoping to find a bigger deal this year.
“We’re hopeful that we’ll get a deal done this year,” Kusserow said during a June 6 presentation at the Jefferies Healthcare Conference. “If we had a dollar, we’d first put it into hospice, second into personal care, and then third, based on what we’re seeing in the market, home health.”
And the company isn’t seeking a small transaction.
“We have learned though that small transactions can take just as much effort as a larger, more transformative deal,” Kusserow said. “We’re really trying to look for larger transactions that put our balance sheet to work.”
Though Amedisys is also hunting for personal care agencies to acquire, not all of those assets scale to the company’s desired level. Likewise, many potential home health assets are “are coming to market too early for the price the sellers want,” Kusserow said.
Additionally, Kusserow thinks that even as home health is gaining traction as an industry, it could still be gaining more market share from other facility-based settings. Specifically, he believes that skilled nursing facilities (SNFs) are getting roughly three times more volume than they should be from hospital discharges, he added.
“We believe that, as technology gets better, as monitoring, gets better, the more we train our employees on good care protocols…we can start to take share from SNFs or LTACS or other post-acute areas and then we can also prevent unnecessary hospitalizations,” he said
Consolidation and Risk
On the home health side of the business, Kusserow sees opportunities for Amedisys to take on more risk, particularly within managed care.
“In my experience when I was in the managed care business, the people who made money were the people who took risks,” Kusserow said. “And that’s what we’re looking for, is how can we start to take risks in keeping people in their homes?”
At the same time, home health seems to be experiencing more attention from major health and hospital systems as well as payers. At some point, one of these players could make a bid on a big home health provider like Amedisys.
“I think we’d be fooling ourselves to say that some of these folks wouldn’t try it,” he added.
When asked whether it would make sense for home health care providers like Amedisys to be rolled into larger health care entities like Humana, United, Aetna or DaVita, Kusserow replied that the company—and the industry—could better serve patients at home by being independent of other entities.
“I believe, basically, it’s better to be independent,” he said. “I think that way you can really focus on the home. I think there needs to be more alliances.”
Written by Tim Regan
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