How LHC Group Became a ‘Custom Builder’ of In-Home Health Care Partnerships

LHC Group Inc. (Nasdaq: LHCG) has become known for its aggressive joint venture strategy over the years. But like any relationship, healthy JVs require ingenuity, commitment and compromise — otherwise, they risk going bad.

For the Lafayette, Louisiana-based LHC Group, a key secret to success has also been its “all health care is local,” community-first mentality.

A home health, hospice and personal care services provider, LHC Group currently operates in 35 states and Washington, D.C. Since establishing its first JV partnership in 1998 with Opelousas General Hospital, the company has become the preferred in-home health care partner for nearly 400 leading hospitals across the U.S.

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Despite having a prolific JV network, LHC Group views each individual deal differently. In fact, it actively steers away from a one-size-fits-all approach, according to Keith Myers, LHC Group’s chairman and CEO.

“We now refer to ourselves as a ‘custom builder’ of in-home health care services partnerships, because no two of our hospital partnerships are exactly alike, in truth,” Myers said during a panel discussion at the 2020 Home Health Care News FUTURE conference. “Today, we have 387 hospitals across the country that we partner with.”

Those sentiments go back to LHC Group’s community-specific approach to each JV. In many ways, that philosophy is has roots that go back to that 1998 partnership with Opelousas General Hospital, where Myers’ wife, Ginger, had worked as a nurse.

“I think the real key to success is being able to realize that all health care is local and [creating] a model that works for that community, rather than to think that you’re such an expert in everything,” Myers said.

One health system that knows about LHC Group’s JV strategy firsthand is Brentwood, Tennessee-based LifePoint Health, an owner and operator of 88 community-based hospitals in 29 states. In addition to its community-based hospitals, LifePoint Health also owns post-acute assets, including physician clinics, ambulatory assets and freestanding emergency departments.

LifePoint Health first announced a JV relationship with LHC Group in 2016, with the partnership officially coming together at the beginning of 2017. Since then, both organizations have seen the partnership grow significantly.

“It started with 20 home health agencies in 10 hospice locations, and that has grown through other developments, other acquisitions, to include now more than 49 home health and hospice locations around the country,” David Dill, president and CEO of LifePoint Health, said at FUTURE. “So, [it hasn’t] quite doubled over the last three years — but pretty close.”

For LifePoint Health, the strategic motivation behind forming a JV with an in-home care provider was a changing health care landscape that was pushing the delivery of care further and further into the home.

“Post-acute services have never been more important than they are today,” Dill said. “And I probably would have said the same thing back in 2017, as we continued to see a shift in how care is being delivered, and how patients and families want to have their care delivered. There was no question that more and more business would ultimately move to a setting like a home health agency.”

LHC Group’s community-focused strategy made the company an attractive JV partner and a natural fit, according to Dill.

While LHC Group has formed a large number of JV partnerships over the years, the company doesn’t enter into these deals lightly. In fact, many of LHC Group’s JV partnerships are the result of conversations that went on for a significant period of time, before the company even reached the table and negotiated a deal.

“Naturally, we go in and first meet with the leadership at the local hospital or system,” Myers said. “We discuss what their needs are. We tell them what our capabilities are, but we really try to focus on their needs. That need is usually home health, but sometimes home health is not first, and we’ll play whatever role they need us to play, letting that relationship develop over time.”

These initial conversations are often born out of the relationships that LHC Group has formed with hospital associations, as well as recommendations from hospitals the company is currently partnered with.

Aside from LifePoint Health’s JV partnership with LHC Group, the company has a number of partnerships with large, academic medical centers and large not-for-profit systems.

When forming these sorts of partnerships, Dill believes it’s important for each party to have a shared definition of what success looks like, as well as clearly defined roles, responsibilities and cadence of communication.

It’s also important to be adaptable, according to Myers.

“I think of a hospital joint venture partnership, in many ways, like a marriage,” he said. “You have a plan upfront, but things change. We have hospital partners that go through capital raises, sales, all kinds of things. We’ve had to essentially tear up the first agreement and come up with a new agreement that meets whatever their needs are at that time.”

Amid increasing changes and regulation in the home health space, Myers thinks it’s likely that there will still be a number of home health and hospital JV partnerships in the years to come.

“I have an obvious bias, but I think we’re going to see more of them,” he said. “There are high-quality people in … the home health departments of our joint venture partners when we arrive. I think what we provide is more up to date, cutting edge support for them, because this industry is changing so fast.”

Likewise, Dill stresses that the sort of partnership LifePoint Health has with LHC Group allows them to focus on their side of the business.

“I think about the changes that Keith and the home health business had to navigate through just over the last two or three years,” he said. “If we were trying to do this on [our] own, there’s absolutely no way our organization could have given the time and attention to training, education, oversight, and in a highly regulated business. We couldn’t have done that on our own.”

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