Home-Focused Health Care Organizations to Merge, Form New Enterprise with $300M in Gross Annual Revenue

Two Florida health systems, Empath Health and Stratum Health System, are merging. The two health care organizations revealed the news last week.

Stratum Health System is the network that oversees and supports both Approved Home Health and Avidity Home Health, two agencies with multiple locations in southwest Florida. Empath Health, which focuses on patients with advanced or chronic illnesses, also offers home health care as a part of its wide-ranging services.

As of now, there’s an anticipated integration date of January 2023. The goal of the merger is to increase the breadth and scale of the companies through a combination of the two, Rafael Sciullo, Empath Health’s president and CEO, told Home Health Care News.

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The new company would have estimated annual gross revenue of $300 million.

“Absolutely. Scale is a piece of this,” Sciullo said, specifically highlighting the need for scale in chronic care management. “When I’ve met with larger payers or been involved on a national level with [the Centers for Medicare & Medicaid Services] in many of the pilots they’re coming forward with, there is a lot of concern about the treatment of that patient beginning with chronic care.”

Empath’s health care capabilities paired with Stratum’s could put them in a position to be a company curbing that concern.

“Certainly with our focus on home health, with our focus on PACE (Programs of All-Inclusive Care for the Elderly), [with] our focus on HIV care,” Sciullo said. “There’s really an opportunity for us to [serve those patients]. And now because of the geographic coverage that we have, the concentration of the population and the amount of people we can touch, we certainly have the ability to do that in a very profound way.”

Additionally, the merger will allow the health care organizations to better offer the services to patients across the overall continuum of care.

More specifically, the services that the soon-to-be-merged company will feature are hospice, non-medical home care and home health services, plus physician services, palliative care, primary care and a PACE program. The combined enterprise will also have an HIV medical clinic.

The combined company will have about 2,000 employees and 4,000 volunteers. Empath Health’s Sciullo will be its initial CEO following the merger, with Stratum President and CEO Jonathan Fleece as president of the new entity.

Fleece is expected to succeed Sciullo as CEO after he retires in 2023, post-integration.

The new enterprise does not yet have a name, so the two companies will still operate under their own brand names for the time being.

“We experienced a lot of changes in the [health care] environment — with payers, with demands, with regulatory bodies, with competition — and we just felt it was absolutely critical thing to do for two leaders in not only advanced illness and terminal care, but also chronic care, to merge our resources to merge our expertise, our desire, our passion, and really create one entity for the future,” Sciullo said. “If we look across the continuum of care services and organizations under the integrated delivery system that Stratum and Empath will be bringing together, we will be serving approximately 15,000 lives on an annual basis.”

Stratum’s home-based care services account for about 800 lives served on a daily basis.

Apart from home health care, the merged enterprise will become one of the largest nonprofit hospice providers in the United States.

Additional reporting from Jim Parker

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