As the health care industry continues to move toward value-based payment, at-home care providers have more opportunity to shine than ever before — with players across the continuum taking notice. Leveraging unique data and capitalizing on differentiators are key to catching the attention of potential partners, experts say.
In 2018, mergers and acquisitions within the home health care and hospice sectors reached record highs, with a total of 82 deals closed, according to Norwalk, Connecticut-based market intelligence firm Irving Levin & Associates. Meanwhile, payment reform, technology and data are also driving a spike in partnership and joint venture activity for post-acute care providers.
“We have customers that are doing upwards of 300 of these different joint ventures,” Scott Pattillo, chief strategy officer of Homecare Homebase, said. “And if you’ve seen one, you’ve seen one. They all look different.”
Pattillo’s remarks came as he moderated a panel discussion on the future of joint ventures and partnerships during Home Health Care News’ Capital + Strategy Forum in Washington, D.C., on April 10.
Panelists included Kerin Zuger, vice president of business development and strategic partnerships at Right at Home, and Joel Theisen, CEO of Lifesprk and Homespire.
Omaha, Nebraska-based Right at Home is a home care franchise network with nearly 500 U.S. locations. While the company provides some medical home health services, private-pay non-medical home care is are the company’s primary service offering.
Last year, Right at Home entered a preferred partnership with Kindred at Home, the largest home health provider in the country, now owned by Humana Inc. (NYSE: HUM) and two private equity firms.
Edina, Minnesota-based Lifesprk is an in-home care provider with a whole-person focus. In 2018, the company entered into a joint venture with Utah-based health system Intermountain Healthcare, which is made up of 22 hospitals, more than 180 clinics and its own health insurance plan, SelectHealth.
The result of the JV is Homespire, which is aimed at tackling activities of daily living (ADLs) and social determinants of health to reduce hospital admission rates.
Value for value
While several home-based care providers are interested in entering into partnerships and joint ventures, doing so can be easier said than done.
“I’ve beat my head against the wall many times for not getting those partners, so I’ve learned a lot of things over the years,” Theisen told forum attendees.
Ultimately, data helped Lifesprk catch Intermountain’s attention. While the home care industry is often plagued by a lack of data, caregivers at Lifesprk have been collecting patient data around social determinants of health and risk stratification for about three years, Theisen said.
“If we didn’t have that social determinant data they really loved … we wouldn’t be at the table,” he said. “You have to have value for value. If you don’t have that data, I’d start getting that.”
Beyond collecting data, Lifesprk also leveraged its existing partnerships to appeal to Intermountain. Specifically, the company touted its established ecosystem and data from partners.
A year after its creation, Homespire is already yielding impressive results. Client hospitalization rates and emergency room utilization have reduced by about 40% to 50%, Theisen said. Patients’ social determinant scores have also drastically improved.
Staying in one swim lane
With less data than Lifesprk, Right at Home took a different approach to win its partnership with Kindred at Home, Zuger said.
“What I would have said 18 months ago is, ‘Kindred (at Home) is going to want data,’” Zuger said. “You know what? They don’t care. They have their own data.”
In fact, accessing Kindred’s data is one of the biggest benefits Right at Home sees from the partnership, Zuger said. From her perspective, honing Right at Home’s unique offerings and filling service gaps was key.
“We need to stay in our swim lane,” Zuger said. “We need to figure out what we’re really, really good at and capitalize on that. … The thing that I think we need to be more careful of is that we don’t go after everything that’s out there — not every shiny new object. ”
Despite being presented with partnership opportunities frequently, Right at Home is selective in which opportunities it pursues, Zuger told forum attendees. In fact, the franchise network says no to “almost everything.”
Broadly, the organizations the company does partner with must align with Right at Home culturally and complement its service offerings — as the franchise does in return.
“If we can figure out a way to excel at interoperability, communication, technology and deliver on care and recognize that we all have a swim lane and we all have a place … that’s where the big results come through,” Zuger said.
Risk and reward
While both Right at Home and Lifesprk have similar goals — to treat patients where they want to be treated while filling gaps in the continuum of care and drastically reducing health care costs — the companies are taking different steps to achieve them.
For example, Theisen is going all-in when it comes to Medicare Advantage (MA).
The Centers for Medicare & Medicaid Services (CMS) recently widened the scope of supplemental benefits MA plans can offer, giving them permission to cover benefits that “have a reasonable expectation of improving or maintaining the health or overall function” of beneficiaries with chronic conditions.
“Personally I’m willing to bet everything I’ve got — every asset I own — on that game and I am doing that actually,” Theisen said.
Lifesprk will soon announce a full-risk Medicare Advantage deal with one of the top three payers in its home state of Minnesota, he said.
“I think this is our time to drive the experience, not let the experience fall on us,” Theisen said. “We can define the game because we’re the closest to the client”
Meanwhile, Zuger is more cautious.
“It’s a little bit early for us to be able to tell if we’re going to dive into [the MA] space,” she said. “We’re certainly all about a healthy business mix and a healthy mix of who’s reimbursing us and that sort of thing, but we also are in an industry and system where we don’t have the kind of flexibility to be able to take on the type of risk that [Theisen] is taking on.”