PE-Backed Synergy HomeCare Sees Medicare Advantage as ‘Huge Opportunity’

Policymakers may have opened the door for home care-focused supplemental benefits under Medicare Advantage (MA), but many plans are still scrambling to figure out how to incorporate them. One home care company, Synergy HomeCare, has taken an active roll in the creation of these MA plans.

Founded in 1999, Synergy is a Gilbert, Arizona-based non-medical home care franchise that offers companionship services, in addition to personal assistance, housekeeping, live-in care and 24-hour home care services. The company operates throughout the U.S., serving roughly 25,000 clients and employing about 20,000 people.

Last year, Synergy brought in around $160 million in annual revenue. For the last 10 years, the company has grown at an average rate of 20% year over year.

Advertisement

And all of that has been organic growth, according to Peter Tourian, CEO of Synergy.

“The driver for this industry is organic growth, and for Synergy Homecare specifically, it’s from name recognition, branding and relationships that the franchisees’ have with their local partners, referral sources, facilities and word of mouth,” he said.

Even with Synergy’s current success, the company is still excited about new growth avenues in the future — Medicare Advantage being a big one.

In April 2018, CMS announced that it would allow certain non-medical in-home care services as supplemental benefits for 2019 MA plans. This April, CMS announced that MA plans in 2020 could cover any in-home care services and supports that realistically improve the health of individuals with chronic conditions.

“This is an exciting time for the entire industry, and not just for service providers but for the actual Medicare Advantage members that are out there,” Tourian said. “Now we have a huge opportunity. There are approximately 2,700 health plans out there nationally, and now they are starting to put pen to paper and thinking about how to put all of this together.”

Despite the announcement from CMS, MA plans have been slow to offer home care-focused supplemental benefits. At the beginning of 2019, only 3% of MA plans offered in-home support services, according to AARP.

“2019 came out pretty quickly, and a lot of them are still trying to understand what’s going on, what non-medical home care is and how it can help their members,” Tourian said.

Synergy itself has made impressive inroads on the MA front. The company currently services three plans — both national and regional — in eight states, and the company has even higher hopes for the opportunity 2021 could bring.

Tourian declined to name the specific MA plans Synergy is working with.

For now, the company has done a lot by way of infrastructure.

Tourian and his team of subject matter experts talk with the plans regarding the services, as well as helping them build it.

“Here’s what’s interesting: A lot of the plans are still just starting to understand our industry,” he said. “A lot of them are not familiar with non-medical [home care] because it has never been part of Medicare at all. Medicaid has worked with non-medical home care, but Medicare has been hands-off. We are the experts at what we do, so a lot of the plans that we are talking to are asking us to build the plan for them.”

For Synergy, this means building the plan of care, building out the hours needed, building out the services needed for various members and addressing fall prevention plus safety in the home. It also means becoming a solution to address social isolation and hospital readmission prevention while further supporting individuals with chronic illness.

“We recognize that one challenge in plans launching new benefits is the time it takes to outline product development, so we can take their goals and develop a product plan that is implementable and scalable,” Tourian said. “We help develop plans based on needs.”

Of course, Synergy isn’t just focused on MA.

A partnership with private equity company NexPhase has also played a role in the growth of their business.

“I made the decision to partner with a private equity company [in April 2018] and this has been instrumental in our growth,” Tourian said. “When you partner with a good private equity company, they will bring the resources, the connections, the capital, the expertise and knowledge to the table.”

The partnership brought on NexPhase operating partner, Barbara B. Hill, as a chairperson of the board at Synergy.

“She’s been a CEO of major health plans and health care companies for the last 40 years,” Tourian said. “She here to help advise, help strategize, to help create the vision and execution for, as an example Medicare Advantage. [For example, If I need to] vet all of the various insurance providers that are out there for services based on the growth that we have. I can turn to my team and private equity company.”

NexPhase Capital is an operationally focused private equity firm targeting entrepreneur-owned, lower middle-market companies. NexPhase advises $1.2 billion of private equity capital, including through a strategic sub-advising relationship with Moelis Asset Management.

Companies featured in this article:

,