In summer, hardly a week went by where Choice Health at Home wasn’t in the headlines.
Founded in 2007 by David Jackson, a licensed physical therapist, Choice is a home health, hospice and rehabilitation services provider with dozens of locations in Texas, Oklahoma and a couple of other states. Eventually, the plan is to build density across the entire Southwest, Jackson told Home Health Care News.
“We want to be a business that scales across the Southwestern United States, from our current footprint all the way to Southern California,” he said. “That’s our goal.”
Typically, the Tyler, Texas-based Choice was in the news for that very reason: its fast-paced dealmaking activity.
In early June, for example, Jackson and his team acquired Angelic Hospice and Restore Home Health, two Oklahoma-based post-acute care organizations. Choice acquired Home Therapy of Austin around that time as well.
The company was back on the M&A trail less than two months later, when it acquired Alpha Home Health and Hospice in July. The transaction marked Choice’s fourth acquisition of 2021.
Despite staffing pressures that can sometimes get in the way of growth for home health operators like Choice, Jackon expects to have another busy dealmaking year in 2022. That’s partly because of the two private equity commitments Choice landed in 2021, but also because of key policy changes on tap.
“We’re a very balanced organization. And in 2022, in the home health space, we’ll have a significant focus on M&A,” Jackson said. “Again, we’re focused on Southwestern geography, really from the state of Louisiana to Southern California. We have a great deal of interest.”
‘A significant opportunity’
The first three quarters of this year saw at least 109 home health, hospice and home care transactions completed, according to M&A advisory firm Mertz Taggart. Many of those deals were driven by PE-backed buyers looking to add scale to relatively small in-home care businesses with high upside.
Choice Health at Home was having dealmaking success already, but it, too, has turned to PE to help accelerate growth.
Dallas-based Coltala Holdings acquired a stake in Choice in June, just before the provider’s purchase of Alpha Home Health and Hospice. Another Dallas-based firm, Trive Capital, announced a partnership with Choice in September.
Trive’s partnership doubled down on an initial investment made in 2020.
Ralph Manning and Edward Crawford, Coltala’s CEO and president, respectively, told HHCN during a recent Disrupt conversation that it was Jackson’s clinical background that drew them to Choice.
“He had the vision, he knew what to do, and he knew how to do it,” Manning said. “But in order to get there faster and not let the opportunity outpace him, he needed capital.”
Generally speaking, Jackson anticipates plenty of room for Choice to grow moving forward, especially if the now finalized expansion of the Home Health Value-Based Purchasing (HHVBP) Model intensifies consolidation. Being a clinician-led organization gives Choice a major advantage in a value-based care world, he noted.
“We’re really excited about value-based purchasing,” Jackson said. “We see it as a significant opportunity. It’s a direction that the industry is excited about going, too, I believe.”
The U.S. Centers for Medicare & Medicaid Services (CMS) finalized the HHVBP expansion on Nov. 2. The first performance year under the nationwide rollout will be 2023, with home health providers exposed to a 5% upward or downward payment adjustment starting in 2025.
Due to its geographic footprint, Choice did not have to participate in the nine-state HHVBP demonstration that began in 2016. But Jackson is confident about his company’s ability to adapt.
“We’re definitely driven around delivering value for our patients,” he explained. “The concepts for our staff are not new. It’s just now they’ll be rewarded when they create that opportunity for the patient to improve.”
Solving the staffing problem
The shortage of health care workers in the U.S. is probably the one thing that can stifle Choice’s growth.
At the moment, there are more projected job openings for home health aides in the next decade than for any other occupation. Additionally, almost half of nurses are at least “somewhat likely” to leave their post in the next two years, according to a recent ShiftMed survey.
Even large, publicly traded companies like Encompass Health (NYSE: EHC) and Amedisys Inc. (Nasdaq: AMED) are battling through industry-wide staffing shortages.
“The challenge right now is staffing,” Jackson said. “I think that’s on the tip of everyone’s tongue. I’m probably asked a staffing question at least once a week.”
To grow amid workforce shortages, Choice is touting the clinical roots of its leadership team. The company is also leaning into the natural flexibility of the home health setting — something that in-patient settings certainly lack.
Choice has around 800 or so health care employees on staff.
“When you’re trying to scale a business through M&A or organic growth, the nurses are often the limiting factor,” Jackson said. “It’s very, very important that you not only acquire a business, but that you work very diligently to integrate the culture. That’s what’s caused our success to this point. We cannot lose sight of the fact we’ve been a clinician-led organization for more than a decade.”
Choice is likewise investing in technology, specifically tools that can help stretch clinical bandwidth. The provider, for instance, recently invested in a remote patient monitoring platform that has about 1,000 patients on service.
“What COVID taught us was that if you don’t have the ability to monitor your patient remotely and communicate via telehealth, then you can be at a disadvantage,” Jackson said.
In some ways, health care providers are facing the same issues as vehicle manufacturers: figuring out how to get the most out of a very limited resource.
“We need to be smarter with this precious resource that is energy, so we started developing these energy-efficient vehicles,” Jackson said. “We need to always be smarter with this precious resource that is [clinical talent].”