Private Equity Firm Acquires Hospice with High Nurse-Patient Ratio

An Ohio hospice led by a previous Kindred Healthcare (NYSE: KND) executive has been acquired by private equity firm Stonehenge Partners Inc. The firm says it is committed to keeping the hospice’s model of having lighter caseloads for its nurses than are standard in the industry.

Queen City and Capital City Hospice is headquartered in Columbus, and the company serves that city as well as Cincinnati and central Ohio. It has been acquired for an undisclosed amount by Stonehenge, which is also based in Columbus and targets equity and junior capital investments of between $5 million and $35 million. Its portfolio is primarily manufacturing but it has previously made an investment in home care franchise company Griswold.

The transaction was facilitated by boutique investment bank Footprint Capital, also headquartered in Columbus. The firm announced the deal in a website post on March 7.


Queen City and Capital City Hospice was in negotiations with a different PE suitor, but broke that off because the firm wanted to cut staff to increase profits, Columbus Business First reported last Friday.

The hospice sacrifices some margin because its nurses have caseloads of seven to eight patients rather than the industry median of 11 patients, Business First reported. Average hospice profit margins nationally are around 20%, while margins are less than 15% at Queen and Capital City Hospice. Stonehenge likes that approach and wants to keep the business model as the hospice expands to new markets, with a Dayton location already in the works.

As the U.S. health care system continues to evolve, Stonehenge believes that hospice will be a winner because it is a low-cost setting. In addition, the aging of the population will drive patient volumes.


“Even with potential pressure on Medicare, we think hospice will stay strong because hospice in the end saves money,” Stonehenge Managing Partner Andrew Bohutinsky told Business First. “They’re not in the hospital getting expensive treatments.”

Stonehenge had not responded to inquiries from Home Health Care News as of press time.

Currently, the company has 156 employees and the Dayton location is expected to add 75 more. Its president will remain Jim Vannelle, who was vice president of sales and marketing at Louisville-based Kindred from 2009 to 2014. Kindred is the nation’s largest home health provider and second-largest hospice provider, according to 2017 rankings from LexisNexis.

The mergers and acquisitions market for hospice is heating up, with strategic buyers as well as private equity seeing opportunity in end-of-life care. Some of the largest home care providers in the nation are targeting growth in hospice, including Dallas-based Encompass, Louisville-based ResCare and Frisco, Texas-based Addus HomeCare (Nasdaq: ADUS).

Written by Tim Mullaney

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