Amedisys Looks to Pull Away from the Home Health Pack with ‘No Brainer’ Contessa Deal

Aging-in-place company Amedisys Inc. (Nasdaq: AMED) on Wednesday announced plans to acquire hospital-at-home pioneer Contessa Health for $250 million.

From a nuts-and-bolts perspective, the deal — expected to close later this summer — makes a ton of sense for Amedisys.

Among the strategic benefits, for example, it gives the Baton Rouge, Louisiana-based company an unprecedented range of in-home care capabilities, adding acute-level care to its existing mix of home health, hospice and personal care services. In addition to expanding its in-home care continuum, Contessa comes with turn-key partnerships with highly regarded health systems and ample experience operating in the world of risk, something Amedisys has long prioritized. 


Yet from a broader, more long-term view, the deal was about so much more, Amedisys CEO and Chairman Paul Kusserow told Home Health Care News.

“We’re taking home health to new places,” Kusserow said. “That’s always been our ambition. I know it seems a little arrogant, but I believe this acquisition shows how we’re continuing to find new places to drive care in the home, to drive aging in place. We’re continuing to lead in that effort.”

Today’s home health landscape remains highly fragmented, with the top 10 companies accounting for slightly more than 25% of the national market share. While they’ve all taken different paths to becoming home health giants, their overall business models sometimes look similar, defined by a focus on the three traditional in-home care service lines.


With Contessa under its roof acting as a unique business segment, Amedisys instantly pulls away from the contemporary home health pack, Kusserow explained.

Additionally, by adding hospital-at-home, SNF-at-home and palliative care programs to its bag of in-home care tricks, Amedisys simultaneously grows its total addressable market from about $44 billion to $73 billion.

“As we dug into this, I saw a really comprehensive, thoughtful business that took risk and cared for higher-acuity patients,” Kusserow said. “And it’s able to expand our market in ways that I don’t think we could get to, nor do I think the rest of the industry could get to, within the next four or five years.”

In many ways, the same could be said for what Amedisys does for the Nashville, Tennessee-based Contessa.

When Contessa launched in 2015, there were plenty of individual hospital-at-home programs, but few up-and-coming companies that specialized in acute care in the home. That’s mostly still true, with Contessa, Medically Home and DispatchHealth often viewed as the de facto market leaders.

But health care entrepreneurs and others have increasingly shifted their focus to the hospital-at-home space as a result of the COVID-19 pandemic, meaning the current field may soon become crowded.

Once its deal with Amedisys is finalized, Contessa will be in a class of its own, Travis Messina, the company’s founder and CEO, told HHCN.

“We’ve heard a pretty consistent message from health system executives, that they’re growing wary of having a partner for home health, a different partner for hospital-at-home, a different partner for et cetera, et cetera,” Messina said. “The partnership and company, once the deal is closed, will be able to provide the full continuum of services in the home. I think that continuity is something that’s highly attractive to those executives.”

How it came together

Deals can sometimes come together in a few months. In a sense, Amedisys’ agreement to acquire Contessa came together over several years.

Prior to taking over the CEO role at Amedisys in 2014, Kusserow had held various leadership roles at Alignment Healthcare Inc. (Nasdaq: ALHC) and Humana Inc. (NYSE: HUM). His previous experience also included time with the Ziegler HealthVest Fund, San Ysidro Capital Partners, Roaring Mountain and Tenet Healthcare Corporation (NYSE: THC).

At one point, Kusserow was even involved with building Clinically Home, an early adopter of the hospital-at-home program.

“It was always an idea I really loved,” he recalled.

In those pre-Amedisys days, Kusserow and Messina had crossed paths on numerous occasions, with the former taking an interest in the latter’s developing career. When the time came for Kusserow to move on from Clinically Home, he attempted to bring in Messina to help guide the company — but was ultimately rejected.

“It’s actually a funny story,” Kusserow told HHCN. “When Travis first started out, I thought, ‘Wow. Smart guy. Why don’t we give him a chance?’ And he turned me down.”

Clearly, Messina had his own hospital-at-home ambitions. He formed Contessa after serving as chief investment officer of Martin Ventures, growing it from a small startup to a home-based care innovator with seven major health system partnerships and about 140 employees — raising tens of millions of dollars in the process.

While Contessa was doing well before the pandemic, the spotlight on home-based care placed “a lot of increased focus” on its model, Messina said. The U.S. Centers for Medicare & Medicaid Services (CMS) “Acute Hospital Care at Home” waiver accelerated interest as well.

As of June 28, CMS had approved 68 health systems and 142 hospitals in 32 states to participate in the hospital-at-home initiative, publicly available data shows.

With more momentum than ever, Messina and his team began thinking about Contessa’s next chapter.

“We were actually going out and looking to private equity funds to be that partner for growth going into the future,” Messina said. “But after sitting down with the Amedisys team, … it made sense that this would enable hospital-at-home and SNF-at-home, allowing Contessa to succeed at its highest potential. The capabilities they bring from their experience of rendering care in the home — and the quality of the nurses that they bring into the home — is unmatched.”

The $250 million purchase price represents a multiple of 3.9 times 2022 revenue, according to Amedisys. Other tech-enabled health care services companies are trading at about 6 times 2022 revenue.

“It became clear that they were going out for another round of financing or potentially selling,” Kusserow said. “My team came to me and said that … if we’re going to walk the talk, we’ve got to get this company.”

“It was a no-brainer,” he added.

Strategic advantages

In Wednesday’s announcement, leaders from Amedisys and Contessa hammered home the transformational nature of their agreement.

There are, however, more immediate strategic advantages as well.

Amedisys currently delivers home health, hospice and personal care services across 39 states and Washington, D.C. It’s able to do so through its workforce of roughly 21,000 employees, the company’s lifeblood and greatest asset, according to Kusserow.

In recent years, Amedisys has invested heavily in recruiting and retention initiatives, which include the use of predictive analytics to track and prevent turnover. Acquiring Contessa would add to those efforts, as many clinicians seek to sharpen their skills through new care delivery models.

“Nurses are hard to find, particularly higher-level skilled nurses,” Kusserow said. “And they’re hard to keep. When we go into a marketplace, this gives nurses a chance to be at the vanguard of new types of care. It validates home health, too, for a lot of these folks.”

Contessa’s model likewise depends on highly skilled clinicians who are comfortable tackling an array of complex conditions in the home. But to grow beyond its current seven-state footprint, Contessa knew it needed to acquire more health care professionals.

Instead of diverting resources toward hiring, Contessa can now lean on Amedisys’ workforce, Messina noted. Besides fast-tracking growth, having a partner like Amedisys will go a long way toward reassuring physicians, he said.

“One of the most critical components of our model is to ensure that the physicians who are admitting patients to the program are comfortable with the nurses who are at the patient’s bedside,” Messina said. “If you don’t create that trust, there is no way you will drive adoption of the model.”

What’s more, teaming up with Contessa also gives Amedisys a strong foot in the door with health systems like Mount Sinai, Highmark Health and others.

“It brings us into a new audience with a new conversation, but with an established product that they value,” Kusserow said.

On top of all the aforementioned advantages, acquiring Contessa will also fuel admissions growth in the home health and hospice departments while giving Amedisys more firepower to establish risk-sharing arrangements.

“We believe that this is where the world’s moving,” Kusserow said. “And this is where we have to play.”

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