Home-Based Care Providers In ‘Early Innings’ Of Value-Based Care, But The Game Is Moving Quickly

Home-based care dealmaking experts believe that value-based care will be an overarching theme in M&A over the course of the next few years.

They also believe that the shift to value-based care is still in the very early stages.

“I think it’s pretty clear that that’s where we have to go and that’s where payers tend to go,” Jed Chaney, principal with the health care group at the firm CLA, said on a panel at the Home Care Innovation + Investment Conference in Chicago Tuesday. “I’m thinking we’re in the third, maybe fourth inning of this, and it’s probably going to move very, very quickly.”


Buyers are becoming less interested in focusing growth on a single service line. Instead, they’re interested in many service lines, and building out fuller continuums.

“Consolidation across a single product line is not doing anything,” Dexter Braff, president of the M&A advisory firm The Braff Group, said during the panel. “Especially in light of the fact that most consolidators’ EBITDA margins are smaller than the companies that they acquire, so there are no efficiencies. The opportunity is in combining services under a capitated rate, and that’s where I think the M&A strategy is shifting in order to be able to accomplish that objective.”

Smaller providers are struggling to shift to value-based care, as they often don’t have the scale to make a meaningful impact on health plans’ membership or spend.


In order to take on a digestible amount of risk, small- and medium-sized providers should look to work with regional payers instead of national ones, Braff said.

“If you’re in Pittsburgh, everything is UPMC or Blue Cross Blue Shield,” Braff said. “If I could get those assembled services and go capitated with them, that’s great. I can’t do it in California, but I could be very successful on a regional basis and even on a local basis. The definition of where you have to be from a diverse care situation is dependent on where that reimbursement is coming from and what kind of concentration there is.”

Data continues to be a pillar of success for home care providers in value-based arrangements. It’s not as simple as collecting data, though.

It’s also about using it in a way that they can showcase to those health plans, Chaney said.

“I think the concept of having the data to show what kind of care you’re providing is so important,” Chaney said. “We see a lot of wraparound services around home infusion, palliative and personal care. I think one area that keeps on rising and rising is behavioral health care. As we navigate this new environment, it’s clear that behavioral health is tied to the outcome of the patient and I think that’s becoming more and more of a critical service.”

To start, Braff said providers need to be open-minded on their value-based care journeys.

They need to be willing to start small, but also to make mistakes.

“I would start organically on a small basis,” he said. “I would look for an opportunity to get a partner and get involved in some sort of at-risk model. But one where I’m not betting the farm, one where I can learn. It doesn’t matter if I lose money, because what I’m really going after is the work and figuring out how it’s done. If you start getting involved in some sort of full-risk model with a small piece of your business, you could figure out how it’s done, get better at it and then take more of a lead position down the line. I love companies that have 10% to 20% of their revenues at-risk. And buyers do too.”

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