To remain competitive in today’s post-acute care landscape, a number of previously one-dimensional companies have evolved into “one-stop shops,” or integrated businesses that offer an array of complementary services.
Wilmington, North Carolina-based Well Care Health is the perfect example of that trend.
Founded in 1987 by Tanya and Wayne Long, Well Care Health started out as a privately owned, Medicaid-licensed home care agency. The company — which currently operates in about 45 counties in North and South Carolina — added Medicare-certified home health services under its umbrella years later with the purchase of New Hanover Home Health.
Well Care Health has now rolled out a hospice service line as well, CEO Zac Long told Home Health Care News. In addition to his role as CEO, Long also serves as Well Care Health’s general counsel.
“We’re very excited about opening that service line,” said Long, who took over as CEO in 2017 following the passing of his father, Wayne. “We’ve been working very hard and recruited a great hospice team that’s building out that line in our Triad branch, based in Davie County.”
Overall, Well Care Health has more than 900 employees who care for upwards of 5,000 patients. The company is forecasting a 2019 revenue north of $75 million.
He noted, however, those projections could quickly change due to unforeseen challenges. This year, challenges include Hurricane Dorian, which battered the North Carolina coast last week, bringing heavy rain, high winds and destructive tornadoes.
“We work really hard to be prepared [in disaster situations],” Long said. “The name of the game is being proactive and prepared. We try to do a great job with communication, not only with staff but with patients, making sure all their needs are being met proactively and that they’re not in an unsafe home environment.”
The ‘one-stop-shop’ model
Home-based care providers of all shapes and sizes have similarly strived to build integrated care models over the past several years.
The largest include LHC Group Inc. (Nasdaq: LHCG), Addus HomeCare Corp. (Nasdaq: ADUS) and Amedisys Inc. (Nasdaq: AMED), the latter of which has regularly touted plans to aggressively grow its hospice business following the announcement of its $340 million Compassionate Care Hospice deal in October 2018.
“We are really going to feed the beast in hospice,” Amedisys CEO and President Paul Kusserow said during a presentation at the RBC Capital Markets Global Healthcare Conference in May. “Right now from an M&A perspective — where we should be focusing on de novos, on tuck-ins, on deals, on integrations — we are pushing hospice.”
Generally, there are several reasons post-acute care companies are trying to diversify their services.
For starters, being able to take care of patients as they age — from a “pre-acute” basis to end-of-life-care — finally has appeal to potential payer and health system partners thanks to value-based care mechanisms and improved data collection. Providers have tried to build integrated models in the past, but ultimately found little appetite on the market, Les Levinson, co-chair of the health care transactions practice at legal firm Robinson & Cole LLP told HHCN.
“For somebody who’s been in the space a long time, this trend is very interesting,” Levinson said. “Twenty or so years ago, you had one-stop-shop models that people were trying to promote, pitching to managed care companies. But the market just wasn’t quite in tune enough to make that succeed.”
Additionally, becoming a one-stop-shop also allows businesses to diversify their revenue, an especially important strategy for home health providers facing the Patient-Driven Groupings Model (PDGM), a possible phase-out of Requests for Anticipated Payments (RAPs), the Review Choice Demonstration (RCD) and an onslaught of other regulatory volleys.
PDGM alone, in fact, may come with a more than 8% behavioral adjustment component, placing a severe financial burden on several home health agencies. That paired with a phasing out of RAPs could put more than 30% of existing agencies out of businesses in 2020, sources previously told HHCN.
“In light of all the challenges, revenue diversification is certainly wise,” Levinson said. “Hospice has been strong over the last number of years, whether you look at the valuations or M&A activity in the space. There’s definitely a feeling it has been more protected.”
For the most part, hospice outlook has actually been “rosy.”
“We wanted to bulk up on hospice, which has a very near-term, rosy regulatory future, so we believe this should offset any of the PDGM chop that could occur,” Kusserow told HHCN in October 2018.
Well Care Health’s plans
Broadly, Well Care Health’s revenue mix includes Medicare, Medicaid, private pay and commercial insurance, according to Long. Currently, the vast majority of its business is in the certified home health space.
Although Well Care Health is particularly bullish on hospice, home health will remain an extremely important part of its business plan moving forward, he said. The same holds true for home care, which will always play a major role in Well Care Health’s strategy.
“I’m very bullish on post-acute care, especially home-based care,” Long said. “I think we’re in the early innings of realizing the opportunities that these care settings can play in terms of the larger care ecosystem.”
So far, Well Care Health has had ample success growing its home health operations.
When the company acquired an agency in Raleigh around 2012, it grew the agency’s relatively small patient census to more than 1,700. More recently, when Well Care Health acquired another home health agency in Davie County three years ago, it also grew that agency’s similarly small patient census to over 800.
“We share the optimism for hospice and think it’s an incredible opportunity due to the value of the service for patients and their families — and we continue to see a lot of very attractive tailwinds for that industry,” Long said. “But we still see a number of growth opportunities in front of us in terms of home health and home care.”
On a high level, PDGM will force Well Care Health to boost its back-office efficiency and clinical programs, according to Long.
Innovating ‘across all fronts’
Apart from expanding into hospice and preparing for PDGM, Well Care Health is also focused on maintaining its relationships with partners and exploring all sorts of technological innovation.
As one of the larger independent home-based care organizations in the Carolinas, Well Care Health already has several hospitals and accountable care organization (ACO) partners, Long said, though he declined to name specific partners.
“Our sweet spot is partnering with large health systems across our service area to be an extension of their care teams and what they’re trying to accomplish from a population health standpoint,” he said.
Meanwhile, when it comes to technology initiatives, Well Care Health currently runs a telehealth program by working with Health Recovery Solutions (HRS). HRS recently announced it raised another $10 million in Series B funds, bringing its total funding raised to $16 million since launching.
“We’re pushing the envelope of care innovation,” Long said.