LHC Group CEO: Almost Family Innovations Division a Merger Bonus

As LHC Group (Nasdaq: LHCG) continues to make inroads with partners in the shift to value-based care, a new business segment it is picking up in its merger with Almost Family (Nasdaq: AFAM) could accelerate the process.

Lafayette, Louisiana-based LHC Group is acquiring Louisville-based Almost Family in a $2.4 billion deal, and the emerging company will be the second largest home health care provider in the nation. When the transaction is complete—expected early in April—LHC Group will integrate Almost Family’s burgeoning innovations business segment.

“I’m excited about the impact that all of the existing capabilities in health care innovations will have on our ability to be more effective in a value-based purchasing environment,” LHC Group CEO Keith Myers told Home Health Care News.


Innovations gets results

Almost Family introduced its health care innovations segment and separated it from other operations and service lines as a way of driving competitiveness in the evolving health care landscape through investments and initiatives.

The division has since made several acquisitions, including an ACO enablement company, an in-home assessment company and an investment in population health analytics.


In 2017, the segment, dubbed HCI, made up 3% of Almost Family’s total revenue. It reported $9.3 million in net revenues in 2017, up 62.8% from 2016, according to Almost Family’s end-of-year earnings. A significant portion of that revenue stemmed from ownership in a care management company.

Managing care 

One of the strategic investments of HCI is Imperium, a company that provides care management for 30 accountable care organizations (ACOs) as of 2018. Working with the physicians in the ACOs to manage high-cost patients in lower-cost settings, Imperium shares in the savings that accrue to Medicare—$2.3 million in 2017 for services performed in 2016.

While the vertical is providing revenue, it also will help further LHC Group as the provider seeks to accelerate its managed care contracts, which Almost Family has also been eyeing over the last few years.

“When you participate in those [managed care plans], you need to be able to manage patients outside of FFS [Medicare fee-for-service], and in that HCI segment those capabilities exist,” Myers said. “If you really look at what Imperium does, they manage risk.”

Almost Family owns 72% of Imperium, which operates essentially a population health manager within ACOs, that manages populations at a lower cost with better outcomes, according to Myers.

“That same approach can be applied to managed care contracts,” Myers said.

Managed care currently has lower reimbursement rates for home health care compared to traditional FFS, but Myers anticipates LHC Group will be able to take on more risk-sharing opportunities down the road and negotiate with payers, particularly with the management capabilities to back up the care.

“We certainly want to focus on moving to value-based gains/risk contracts with managed care providers,” Myers said. “We want to be a partner instead of a vendor and share risk with them in all markets [we serve].”

However, LHC Group, which is well known for its joint venture strategy with hospitals and health systems, is still easing into becoming an entity bearing significant risk.

“I’ve been cautious about it,” Myers said. “It’s not our core competency. At our core, we are an operator that delivers high-quality care.”

Beyond the ACO management company, HCI has interests in Long Term Solutions (LTS), a company that performs in-home nursing assessments, and Ingenios Health Co., a provider of technology enabled in-home clinical assessment for Medicare Advantage, managed Medicaid and commercial exchange lives. Almost Family is also co-invested in Care Journey, a development-stage enterprise that work on technology-based tools for health systems.

As LHC Group and Almost Family integrate their operations, focus will remain on expanding core services—home health care, personal care and hospice—with innovative business streams as a bonus.

“We’ve had these companies going for a long time and there’s almost zero overlap—only 14 communities,” Myers explained. “The HCI segment for me was a big bonus. LHC was moving in that direction, but we’re going to get there much faster now  because of what is in place at HCI. The HCI segment at AFAM makes use ready to go to market on day one.”

Written by Amy Baxter

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