True to its word, BrightStar Care is investing in company-owned locations with the acquisition of eight agencies in Florida and Alabama.
The eight locations will now operate as BrightStar-owned agencies, marking the largest purchase the company has made since launching the corporate-owned focus program in February.
Over the past few months, BrightStar Care has committed to buying back agencies and operating them in-house. The eight locations — which will be run by former franchisee David Strassburg — will expand the company’s corporate-owned footprint.
BrightStar Care now has 13 company-owned locations across the country.
“Through BrightStar Owned, we are tactically evolving our model to a format where company-owned locations will provide innovation centers for value-based purchasing arrangements, AI and other technology advancements,” Shelly Sun, founder and CEO of BrightStar Care, said in a press release. “We designed BrightStar Owned to align with where the industry is heading and to deliver on our brand mission. BrightStar Owned will expand our reach, make home care more attainable, and increase the client populations we can serve across a diverse payer mix.”
BrightStar Care is a Chicago-based home care and medical staffing franchise. Today, it has more than 365 locally owned and operated locations in the U.S. The company also has senior living locations as part of its network.
Typically when franchises buy back agencies, the purpose is to use those locations as testing sites. Sun has been vocal on her belief that home care providers need to engage with Medicare Advantage (MA) plans in order to keep driving client growth in the future, which will be part of the mission at corporate-owned locations. n.
BrightStar Care got its start with a handful of company-owned locations in 2002. In fact, the company didn’t open its first franchise location until 2006.
“We’re leaning very heavily into Medicare Advantage,” Sun told Home Health Care News in May. “I think that’s going to be a big change in how home care must evolve over the next three to five years. We’ve benefited over the last 10 years, up until the change in Medicare Advantage, from consumers just coming to you through marketing or through hospital discharge, right? If 7 out of 10 new Medicare enrollees are enrolling in Medicare Advantage, and 50% of Medicare, will be Medicare Advantage in the next 10 years, well, that means that every single enrollee that is accessing their benefits is going to start with hours of personal care being paid through the Medicare Advantage plan. Only those additional hours beyond that will be private pay.”
BrightStar Care brings in about $700 million in system-wide sales, and the ROI on company-owned locations compared to franchise locations has historically been similar.
Because Sun knows that MA will be a bigger payer in the near future, BrightStar is comfortable and able to accept the lower-margin business.
“We evaluate businesses based upon the dollars rather than the percentages, so while margins overall may come down as we expand our Medicare Advantage volume, the overall dollars will go up — both top line and bottom line,” Sun said.
In Alabama and Florida, Strassburg will lead operations and has had his title changed from owner to vice president. All eight locations specialize in pediatric care and accept Medicaid referrals as well.
“With BrightStar Owned, we have the ability to integrate effectively, learn, document and take risks without compromising the quality of our care,” Strassburg said in a press release. “We will now be able to dream bigger and evolve our operations because we will have far greater resources and expertise to do so.”
With the new acquisitions in the books, BrightStar Care is on its way to meet its goal of owning roughly 20 company-owned locations by the end of 2023.