Lafayette-based LHC Group (Nasdaq: LHCG) has entered into a joint venture agreement with Irving, Texas-based Christus Health to take over the operations of 21 services locations, including home health agencies, hospice program, community-based home care services, inpatient hospice and long-term acute-care hospitals (LTACHs).
Christus Health is an international Catholic, faith-based, not-for-profit health system that operates more than 600 services and facilities, including 60 hospitals and long-term care facilities, more than 400 clinics and outpatient centers, and dozens of other health ministries and ventures.
In the joint venture, LHC Group will acquire a majority ownership in Christus’ locations, which are across four states. LHC Group did not disclose what percentage majority stake it would hold, nor the purchase price of the deal, which is anticipated to be completed by the end of the third quarter of 2017. Annualized revenue from the deal is expected to reach approximately $80 million for LHC Group, though it will not materially affect its 2017 diluted earnings per share.
The facilities include seven home health agencies; five hospice programs; two community-based home care services; one inpatient hospice unit; and six LTACHs, and they will operate under their existing names. The relationship between LHC Group and Christus has potential to grow, as well, according to Keith G. Myers, chairman and CEO of LHC Group.
“With Christus, it’s 21 locations we are taking over, but the vision is much greater,” Myers told Home Health Care News. “Hospitals see the incredible value of home health and view it as indispensable for their strategy preparing for value-based purchasing models. In the case of Christus, population health is part of their daily language and home health is a critical component of that. This transaction is exciting for our company, but I’m excited for what it means for the industry.”
What the joint venture could signal, Myers said, is that major hospital and health systems are continually willing and desire to partner with home health care agencies to boost outcomes and perform high quality care as new payment models come down the pike.
LHC Group, a company well-known for its joint venture approach to strategic growth, actually began its relationship with Christus Health a while back. LHC Group had three separate joint venture location with Christus in Texas prior to the 21-location deal announced Tuesday, with partnerships in Texarkana, Longview and Marshall, Texas, according to LHC Group.
“Christus health is a name widely known and respected throughout the heath care industry, and we could not be more proud to have them join us in our mission to expand quality health care services,” Myers said in a statement. “Like LHC Group, they have earned their reputation for quality through hard work, dedication to patients, and a commitment to the health of the communities they serve. Working together, we will bring that same level of service to even more people.”
As is typical under an LHC Group joint venture, employees of the Christus locations will be retained, but will transition to work for LHC Group, Myers said.
Executives are bullish on the home health industry’s potential to continue partnering with major health and hospital systems in the future. Myers recently stated LHC group could potentially double in size on its growth prospects—becoming a $2 billion revenue business. The majority of its ongoing deals are with hospitals and health systems, executives stated in June.
The news of the joint venture deal with Christus came on the eve of the company’s scheduled quarterly earnings call for the second quarter of 2017.
Written by Amy Baxter