The home health and hospice industries are expected to see significantly more mergers and acquisitions in 2019 than in years past. The growing popularity of lower-cost, value-based care and other factors are largely to thank.
That’s according to Norwalk, Connecticut-based market intelligence firm Irving Levin & Associates, which collects and studies M&A data.
The boom comes after a record breaking 2018, when the sector closed 82 deals — the most in recent history. Before that, 2014 held the record with 81 home health and hospice deals.
In many ways, this year’s growth continues trends set forth last year.
“Consolidation is driving the recent activity in this market, despite reimbursement and regulatory headwinds,” Lisa Phillips, editor of The HealthCare M&A Report, which publishes the data, said in a statement late last year. “As health systems seek to drive down costs, we expect more to turn to home health care and hospice agencies over traditional post-acute settings like skilled nursing facilities or long-term acute care facilities.”
Continuing another trend from quarters past, private equity groups continue to be active buyers in the sector in the first month of 2019. Of the four deals announced since Jan. 1, three are from private equity sponsors or their platform companies, according to Irving Levin & Associates.
Two of those deals came from Bain Capital Double Impact, which entered the home care space late last year when it acquired and combined regional health care companies Arosa and LivHome to create a national in-home care provider.
Earlier this month, the resultant company, Arosa+LivHome, bought Grayslake, Illinois-based Partners in Senior Care, a home care company with a caregiver retention rate about half the national average.
Also this month, Bain Capital Double Impact acquired HealthDrive from Riverside Partners. It offers dentistry, optometry, podiatry and audiology services to seniors in care facilities.
Joint ventures between not-for-profit health systems and for profit operators is another trend that continues to grow. The sector has seen it already this year with the one of Michigan’s largest health systems and a national provider of post-acute solutions.
Nonprofit system Beaumont Health sold 90% of its home health and hospice business to Alternate Solutions Health Network to create Beaumont Home Health and Hospice. The new joint venture began operating Jan. 1, with the goal being to serve a growing need for home health and hospice services in southeast Michigan.
The JV will serve roughly 16,000 patients there, John Kerndl, executive vice president and CFO of Beaumont, previously told Home Health Care News.