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Geriatric care managers. Care coordinators. Aging life care professionals. Care navigators. Whatever you want to call them, the experts trained and experienced at handling the care needs of aging adults are playing an increasingly important role in the home care industry.
To some extent, that’s simply true because older Americans are turning to home care more often. Today’s senior living with multiple chronic medical conditions and transportation challenges is far more likely to pick in-home care over moving into an assisted living community, for instance.
Yet “care management” is also playing a bigger part in the business of home care because of its ability to accelerate client growth and boost bottom-line revenues.
“I think we’re going to be talking a lot about care management in the next couple of years,” one home care CEO recently told me on background.
That comment definitely grabbed my attention. So much so, in fact, that I spent a fair amount of time tracking down several care management-related home care transactions from the past 18 months or so.
In November 2020, Los Angeles-based 24 Hour Home Care purchased Grace Care Management. The two companies had worked closely together before as partners, but 24 Hour Home Care saw an opportunity to expand its service mix and footprint via acquisition.
“But what we saw while helping was that they really have a patient-centered focus, and they also have a geriatric case manager — and we love that aspect,” Andy Matthews, VP of business development for 24 Hour Home Care, told Home Health Care News at the time. “That’s something that really adds a lot of value to our clients, that we can now provide. It really seemed like this was the obvious next step.”
In May 2021, Boston-based HouseWorks acquired Intervention Associates, a care management company that serves the Greater Philadelphia area. Strategically, HouseWorks viewed the move as a way to strengthen its ability to coordinate and deliver specialized services to its rapidly growing client base, CEO Michael Trigilio told HHCN.
“What we’ve seen is that the care is coordinated significantly better when you have these types of professionals involved when someone needs care in the home or goes through a major life-changing event,” Trigilio said after the deal was announced. “These individuals help us to reduce hospitalizations and guide families through many difficult decisions.”
Arosa additionally made a deal for a professional care management services provider at the start of last year.
And while it’s not a single transaction, the PE-backed Charter Healthcare Group has similarly talked about making care management a priority, even describing it as its “crown jewel.”
Home care gatekeepers
As fragmented as the home care market is, the geriatric care management space is even more so.
There are giant care management-type organizations like Optum and Magellan Healthcare out there, but the scope and focus of their business models are broader than “seniors looking to age in place.”
In contrast, the dedicated geriatric care management entities that intersect with home care are usually made up of a small but powerful group of trained gatekeepers, some of whom frequently have nursing backgrounds. Sometimes, a top geriatric care management business in a geographic market can even be a single senior care expert.
In addition to independent practices, care managers can also be found in hospitals, primary care offices, social service agencies and insurance companies. Overall, the number of care managers practicing in the United States appears to be on the rise, in particular in area agencies on aging (AAAs) as part of Medicaid home- and community-based services (HCBS) waiver programs, according to the American Society on Aging.
“It’s very rare when you get huge, huge care management businesses,” the same CEO told me. “These are all small consultant-like businesses. But if you think about what they’re doing, they’re moving around potentially $5 million to $10 million worth of home care every year.”
Kunu Kaushal, the founder and CEO of Senior Solutions Home, knew care management — or care coordination — was an essential part of home care success when he launched his Brentwood, Tennessee-based business about 11 years ago.
“There was a clear understanding of what geriatric care management does out in the community as a very formal service,” Kashual told me.
In home care, full-fledged care management service lines with dedicated professionals on staff aren’t inherently profitable by themselves. In his experience, care management lines are normally loss leaders or barely inch across the break-even mark, Kaushal noted.
Yet because of its ability to accelerate organic growth and find new clients, care management can have a multiplier effect on a home care provider’s bottom line. Kaushal — also the founder and advocate of the Independent Home Care Alliance — cited findings from a past study for context.
“A personal care company that had geriatric care management, either as a service or built in, they were typically 20% to 30% higher in revenues compared to those without it,” he explained. “The main reason is you had this geriatric care manager in house, and they were able to either get more hours from this client because they were able to explain all the needs and the challenges much more effectively, or they were able to take on more challenging clients because they had a professional on their team that the family felt comfortable with.”
The other home care CEO also emphasized that point.
A previous organization he worked for acquired a care management business in 2010 and saw its private-pay home care business grow “by double digits quarter after quarter for the next three years.”
‘Giving away services’ for free
From an M&A perspective, acquiring a care management business to boost organic growth can potentially be more affordable than purchasing a competing home care agency.
Despite the aforementioned advantages and recent dealmaking examples, some M&A experts aren’t noticing a clear uptick in care management transactions.
“Honestly, it’s not something that we are hearing one way or the other from clients who have been acquisitive. And as you know, we have been handling a lot of deals,” Les Levinson, the co-chair of the transactional health care practice at Robinson & Cole LLP, told me. “That’s not to say that it hasn’t gone into the mix of thinking as buyers are evaluating an acquisition opportunity.”
Beyond amplifying organic growth, geriatric care management lines can boost home care business another way: by monetizing a service an agency already offers.
In reality, most home care operators offer geriatric care management already, Kaushal said.
“There are … a majority of companies, through the nature of caregiving and just by being a personal care company, that are giving away care management,” he said. “A lot of care management is care coordination. It is understanding the individual. It is putting their care plan and care needs first, and then finding resources to solve it.”
As home care operators face staffing challenges and new costs associated with COVID-19, I believe the focus on “formalized” care management as a business will only increase moving forward.
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