Amedisys Inc. (Nasdaq: AMED) has been vocal about leaning into the opportunities that offering higher-acuity care in the home will bring.
That has also had an influence on the company’s M&A and JV strategies.
“Our acquisition of Contessa Health last year created the platform for us to directly offer those high-acuity services,” Kris Novak, vice president of mergers and acquisitions at Amedisys, told Home Health Care News. “One clear pivot would be that we may now have the opportunity to look at more strategic joint ventures than we would have in the past.”
For Amedisys, this means highly integrated, larger regional health systems.
As a company, Amedisys delivers a number of offerings, including home health, hospice, personal care and high-acuity care services. The company’s footprint includes 549 care centers in 38 states and the District of Columbia, and they provide care for more than 445,000 patients every year.
Leaning into those opportunities also means zeroing in on the JV relationships that Contessa has built, according to Novak.
Over the years, Contessa has formed JVs with organizations such as Highmark Health, Mount Sinai Health System, Marshfield Clinic Health System and others.
“That relationship with their joint venture partners — that does have some trickle-down effect, whereby we become a preferred provider on the home health and hospice side, which helps drive some organic growth for us as well,” he said.
Overall, Novak believes that having Contessa under Amedisys’ umbrella has worked to further set the company apart from the rest of the home-based care sector.
“I think we have established ourselves as the only organization that can really give that full suite of services in the home,” he said. “We are more expansive than maybe those traditional services that we think of around home care.”
Workforce shortage impact
Aside from high-acuity care opportunities, the home-based care workforce shortage is a factor that may influence Amedisys’ M&A pipeline in the future.
Similar to the company’s industry peers, Amedisys continues to see high demand for services. Despite this, the company doesn’t always have enough staff to keep up.
“We may look at acquiring like-minded, high-quality organizations in overlap areas just because we’ll need more clinical capacity in order to grow in those markets,” Novak said. “It’s sort of a, ‘If you build it, they will come’ analogy with our referral partners. Then it’s a matter of retention post-closing in those overlap scenarios which, frankly, we’ve shied away from historically. But I think we’re trying to take a little bit of a different viewpoint.”
Still, Novak stressed that Amedisys’ primary acquisition criteria is to continue moving into markets where the company doesn’t currently have a presence.
When determining potential acquisitions targets, Amedisys is looking at things like the size of individual locations, quality scores, how prepared the company is for the national expansion of the Home Health Value-Based Purchasing (HHVBP) Model and if the company’s culture aligns with its own.
Typically, though, it’s clinical and regulatory compliance issues that take theoretical deals off of the table.
Private equity interest
Outside of Amedisys business, Novak has noticed an uptick in private equity (PE) interest in the home-based care space, as many others have.
“We’ve seen more private equity interest when it comes to investing in a platform type of organization,” he said. “We’ve also seen interest from private equity-oriented groups that, frankly, have not made a lot of health care acquisitions historically. It’s great to see the interest in the space. A high tide raises all boats, so to speak, but that’s certainly propping up valuation. If I think back 8 or 10 years, we’ve not competed with this large of a group of potential buyers.”
Ultimately, Novak thinks this is an exciting time for home-based care.
“Expanding to provide additional clinical programming, whether that be through Contessa or other specialty programs that we developed for home health or hospice, you can see with the activity that’s out there that there’s a ton of interest,” he said. “I think there are a lot of smart people that acknowledge the value of care in the home, and I don’t just mean that from a financial perspective.”
Looking ahead, Novak hopes that this translates into permanent versions of the COVID-19-related waivers and flexibilities.
“Hopefully, some of the temporary programs that happened because of the public health emergency — reimbursement for telehealth or hospital-at-home — will be sticky because I think it’s the right thing for our country and for patients everywhere,” he said.
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