Great Lakes Caring, National Home Health Care and Jordan Health Services are combining in a three-way merger, becoming one of the largest providers of home-based care in the United States. The company will have 221 locations across 15 states, serving about 63,000 patients each day and employing more than 31,000 people.
Private equity firms Blue Wolf Capital Partners and Kelso & Company will own the combined entity, the firms announced Tuesday. In 2016, Blue Wolf acquired Great Lakes and National Home Health Care. Now, the firm is partnering with Kelso to acquire Jordan Health Services for an undisclosed sum, in a deal expected to close in May of this year, Blue Wolf Principal Jeremy Kogler told Home Health Care News.
Going forward, the three care providers will operate as a single entity, and current National Home Health Care CEO G. Scott Herman will serve as overall enterprise CEO. Herman previously was with Jordan Health Services, joining as president in 2013 and becoming CEO in 2015. He left Jordan last July.
Adam Nielsen will transition from CEO of Great Lakes Caring to CEO of home health and hospice for the merged company; Jeffrey Fisher, CEO of Jordan Health Services, will become chief development officer.
Branding for the combined entity is currently being evaluated, and each company will retain its existing name for the time being, Kogler said.
“We certainly think there’s value in the various brands that exist today, but [there’s also] value in having a national brand presence, which is what we’re seeking to build,” he said.
Combining the three companies makes sense in part because their footprints do not significantly overlap. Cromwell, Connecticut-based National Home Health has a strong presence throughout the Northeast. Most locations for Jackson, Michigan-based Great Lakes Caring are in the Midwest. Jordan is based in Dallas and operates in Texas, Oklahoma, Arkansas and Louisiana.
Herman is currently working out of Dallas, and as the merger proceeds, a decision will be made as to where his primary base will be going forward. A consulting firm and strategic partners are assisting with integration logistics, including staffing at the corporate level. Any decisions with regard to the workforce will be shared internally first, Herman said.
The transaction should be a boon to the company’s caregivers, however, giving them more opportunity for advancement and greater flexibility in terms of places to work, both Herman and Great Lakes’ Nielsen told HHCN.
“Generally everyone’s pretty excited about the opportunity,” Nielsen said, of the reaction at Great Lakes.
Uninterrupted patient care is the top goal for the integration, both Herman and Nielsen emphasized.
Building a full continuum
Expanding into new markets will be a goal going forward but so will building out the continuum of care in existing markets. Offering the full continuum of in-home personal care, skilled home health and hospice is a key strategic play for the company.
Historically, National Home Health Care has focused on Medicaid-reimbursed personal care while Great Lakes has focused on Medicare-reimbursed home health and hospice. Jordan has expertise across the board.
Great Lakes, Jordan and National Home Health have several common systems and technology platforms. Leveraging these technologies to collect patient data, analyze it, and use predictive analytics to offer more proactive care is both a tremendous opportunity and one of the largest challenges facing the new combined company.
“The data mining capability of an organization with our size…allows us to begin to track trends and enables us to know where patients are going, to predict outcomes,” Herman said.
This, in turn, allows for early interventions to maintain wellness and prevent costly transfers to inpatient care, or to appropriately transition individuals to other care settings.
The company has already gathered data showing that patients who start by receiving personal care and then move through the continuum have lower rates of emergent care and re-hospitalization than those who do not receive the full complement of services. The plan is to release these findings as the companies come together, Herman said.
Other providers have also seen a need to build out a more extensive care continuum, driving consolidation in the industry.
For example, Encompass Health (NYSE: EHC) wants to have both inpatient rehabilitation facilities and home health locations in markets it serves. Addus HomeCare (Nasdaq: ADUS) and ResCare are seeking to add hospice to their extensive personal care networks. Home health giant Amedisys (Nasdaq: AMED) has made a big play to add personal care. And by merging with Almost Family, LHC Group (Nasdaq: LHCG) added a significant number of personal care locations to its existing home health and hospice offering.
These moves are driven in large part by the growth of Medicare Advantage and managed Medicaid, as well as “value-based” Medicare payment models that reward providers and payors for managing costs while maintaining clinical excellence. Two achieve these goals, payors are looking for high-performing post-acute and senior care partners with the scale to serve beneficiary populations.
Demonstrating the extent to which insurers have started to value home-based care, Medicare Advantage heavyweight Humana is in the process of acquiring a 40% stake in the home care arm of Kindred Healthcare (NYSE: KND), the largest home health and hospice provider in the nation.
The pressure to be able to work with managed care payors ratcheted up again just this week, with the news that insurers will be able to offer non-skilled in-home care as a Medicare Advantage benefit starting in 2019. This further solidifies the importance of offering personal care as well as skilled home health and hospice, Kogler and Herman emphasized.
By putting together this three-way merger, Blue Wolf and Kelso have created a provider with the scale and services to be competitive with publicly traded players in the space, as they vie for managed care business. The newly created company has about the same number of locations as Encompass, for instance, which was ranked the third-largest provider nationally by market share in 2017.
For Herman, the vision is to create something of a virtuous circle, with more innovative and data-driven care benefiting payors, providers, investors and—not to be overlooked—the large and growing number of people receiving care in the home.
“Innovation must occur in this space, it occurs as a result of investment, and investment occurs as we prove we can generate returns,” he said.
Written by Tim Mullaney