LHC Group’s JV Strategy Drives Organic Growth, Relationships With Innovative Payers

LHC Group (Nasdaq: LHCG) has long been known for its joint venture strategy, in which it teams up with hospitals and health systems to take over operations of their home health units — but those partnerships go beyond just a pure expansion strategy for the Lafayette, Louisiana-based company.

JV partnerships have been key to helping fuel LHC Group’s organic growth, as well as fast-tracking its participation in innovative payment models, CFO Josh Proffitt said during a Thursday presentation at the 2019 Baird Global Healthcare Conference in New York.

“Many times when you go into [that JV] relationship, a lot of their volume in home health is coming just from the hospital, and they’ve not gone out and grown in the marketplace very much,” Proffitt said. “Year one, we get the operations where they need to be, we get the clinical delivery model where it needs to be, [as well as] the quality scores [and] the patient satisfaction scores, so we can go earn that business.”


To date, LHC Group has more than 350 hospital and health system partners, the most recent of which is Louisville, Kentucky-based Norton Healthcare. That agreement was finalized and effective Sept. 1, according to a press release announcing the news.

The two organizations will share ownership of Caregivers Health Network, a home health provider serving the Louisville area, which will be renamed Norton Home Health. Norton Healthcare — a hospital and health system with more than 250 locations in Kentucky and Indiana — will purchase a minority interest in the agency.

The deal comes during a busy 2019 filled with JV activity for LHC Group, which is one of the largest home health companies in the country. Other big-name partners added this year include Unity Health and Geisinger Home Health and Hospice.


Meanwhile, on the organic growth front, LHC Group is currently reaping the benefits of JVs from years past, Proffitt said. Specifically, he called out system-wide JVs with Brentwood, Tennessee‎-based LifePoint Health System and Irving, Texas-based Christus Health, both of which were formed in 2017.

LifePoint has about 90 locations in 22 states, while Christus has more than 600 facilities across four states and four countries.

“Those are a real engine of organic growth in years two, three [and] four, following the joint venture,” Proffitt said, also acknowledging similar potential for Geisinger and Norton.

LHC Group recently touted its strong organic growth in its second quarter 2019 financial results, released in August. Excluding Almost Family locations, in which the company is still implementing changes following its 2018 merger, LHC Group saw 9.1% organic growth in home health admissions and 6.6% organic growth in home health revenue. The company also logged 9.6% organic growth in hospice admissions.

On top of organic growth, Proffitt also credited LHC Group’s JV partnerships with helping the company get ahead when it comes to participating in innovative payment models.

“We have hospital and health system partners that may have already had their seat at the table or gotten there quicker with the payer, and have a capitated arrangement or an at-risk arrangement — like Ochsner [Health System] does with Humana in metro New Orleans — that we’re now able to contract under and get some shared savings,” Proffitt said.

Proffitt also pointed to Geisinger, which has its own health plan, as another example.

“I think both of those engines are a byproduct of the JV strategy and are going to really help us accelerate this new reimbursement model.”

Finally, in terms of growth, Proffitt expressed interest in growing LHC Group’s hospice and home- and community-based service lines in a “meaningful way” in the years to come.

Companies featured in this article:

, , , , , , , ,