What PE Firms Want Out Of Their Next Home-Based Care Targets

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Private equity (PE) firms still see home-based care as an investment area filled with opportunity.

That sustained interest is driven by patient preferences. But another driver is providers reaching out to – and seeking out – capital partners.

Last year, 37 of the 628 health care PE transactions that took place were home health and hospice deals, according to data from a Private Equity Stakeholder Project report.


What’s more, PE investors were involved in roughly 50% of home health deals in 2018 and 2019.

Overall, 2022 was the second highest year for PE investments in health care, in terms of disclosed deal value and count. The highest year was 2021.

One PE firm that’s had its eye on home-based care is TT Capital Partners. The Bloomington, Minnesota-based company is a health care-focused PE firm.


To date, TT Capital Partners has made 24 investments, 3 of which have been home health deals. The firms’ most recent investment was into King of Prussia, Pennsylvania-based InHome Therapy. The company provides staffing solutions to home health agencies for physical therapy, occupational therapy and speech therapy.

“The two dynamics that really led to our interest in the partnership was a real focus on labor shortage of clinicians,” Donnacha O’Sullivan, principal at TT Capital Partners, told Home Health Care News. “We like that InHome Therapy was best in class at recruiting and retaining therapists for home health agencies. We were also drawn to the therapy side of home health, as we were picking up feedback from health plans who were seeing a lot of value in relation to hospital days of care reduction.”

TT Capital Partners was also one of the earliest investors in Remedy Partners, which would later merge with Signify Health in 2019. CVS Health (NYSE: CVS) recently bought Signify Health for $8 billion.

“We just have a belief that a lot of patients, if they can, would like to receive their care in the home, which has a cost benefit as well,” O’Sullivan said.

InHome Therapy acts, in part, as a solution to staffing issues in home health care. But staffing issues overall remain one of the biggest reasons PE firms stay away from home-based care.

“There’s more demand for these clinicians than there is the supply of them,” O’Sullivan said.

Home health care’s changing reimbursement landscape may also give some PE investors pause.

“A lot of private equity firms are just a little bit more cautious when there are changes in the reimbursement, so I think there are some that might just be waiting to see what happens,” O’Sullivan said.

Other factors for PE

Another investor planting seeds in the home-based care space is One Equity Partners (OEP), a middle market PE firm with $10 billion in assets. The company is focused on the health care and technology sectors in the U.S. and Europe.

Inna Etinberg, managing director at OEP, believes that as care continues to shift from institutions into the home, the dollars will follow.

“The fragmented nature of the home health care sector means there are significant opportunities to create operating efficiencies through combinations where geographic density and labor management are keys to provide quality uninterrupted care to the patients,” she told HHCN. “Ultimately the same key factors are at the forefront of our investing thesis — improve patient care, improve patient outcomes and reduce patient costs. Each of those pillars stands to benefit from consolidation in the home health care segment.”

Companies that allow operators to more easily provide complex care in the home have been a main area of focus for OEP.

In 2022, OEP made a strategic investment in InfuCare RX, a provider of specialty infusion therapies in the home.

“We believe the care coordination model that InfuCare deploys is critical to ensure that patients are adhering to treatment regiments and are able to manage their chronic conditions outside a facility, which ultimately keeps costs down for the system,” Etinberg said.

Last year, the company also invested in ReactHealth, a manufacturer and distributor of CPAP machines, oxygen concentrators, sleep diagnostic solutions and cardiac monitoring devices.

OEP believes that one of the major factors driving deal flow is owners and operators seeking out PE partners.

“We’ve seen a number of owners and operators look to partner with PE in order to drive certain growth initiatives and expand via acquisition,” Etinberg said. “Many operators are looking for capital partners who can help provide financing for their initiatives, but also act as strategic partners who can help them think through the changing dynamics in home health care as broader care coordination, capitation and patient management become bigger conversations across the payor landscape.”

Looking ahead, OEP sees long-term value in throwing weight behind companies that manage populations in the home.

“As demographics continue to shift toward an aging population and a health care system that is understaffed from a labor perspective, we see value and opportunities in shifting dollars towards investments focused on managing populations in the home, whether it is through patient monitoring opportunities, better utilization and management of the labor, or technology innovations aimed at finding key indicators to keep hospitalizations and ER visits down,” Etinberg said.

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