Private Equity, AI Likely To Power Home-Based Care in 2024

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Home-based care providers have been waiting for the other shoe to drop on dealmaking for a year now. As 2024 nears, that shoe may be finally landing.

And, in addition to M&A, genuine AI application in both home health care and home care appears to be right around the corner.

Those were two of my top takeaways from Aging Media Network’s Continuum conference this past week.


Senior care providers of all shapes and sizes gathered together Thursday, with topics covered including: dealmaking; AI; recruiting and retention; interoperability; new care models; better outcomes; payer-provider relationships; and much more.

In what seems to be a rare occurrence across industries, provider leaders actually explained how AI would be implemented at their organizations in the near-term future. Plus, venture capitalists and private equity players discussed what they’re looking for over the next 12 months.

AI will affect every industry in the long term. A dealmaking bump – particularly with PE getting off the sidelines – will affect the home-based care space in the short term, though.


I dive into those two topics and their importance in this week’s exclusive, members-only HHCN+ Update.

PE, you’re in

Compared to 2021, every home-based care dealmaking year looks slow. But 2023 has been particularly slow, and that’s largely because of PE firms’ unwillingness to get back in the game.

Over the last year, we’ve been hearing that – eventually – PE firms will kick their activity back into full gear. That has not been the case.

But even if interest rates go up once more, or stay where they’re at, PE firms will have to begin deploying capital at a greater rate very soon.

“Private equity is sitting on $900 billion that they need to spend,” Dexter Braff, the president of the M&A firm The Braff Group, said at Continuum. “That is a big problem for them. It’s a good problem, to some degree, but it’s use it or lose it. If they don’t invest that money, they have to return it.”

Through the first three quarters of 2023, PE deals in health care services were at their lowest point since 2017.

The third quarter only saw 25 home health, hospice and home care deals, according to The Braff Group’s data.

“We’re in a mixed bag as we go into 2024,” Braff said. “Overall, I think the markets are going to improve, mostly because PE has been on the sideline not for a year now, but 18 months. And that’s not their business; they have to buy. They have to. They may be kicking and screaming, but they will, and it will push the market back up.”

Valuations for home health, hospice and home care companies have also come down since the buying craze that defined 2021.

PE firms are wary because of the macroeconomic market, but, as Braff pointed out, valuations dipping means they could pay similar prices now for likesized sellers they bought in 2021.

He also pointed out that the demand for quality home-based care entities has never gone down, even over the past two years.

The New York City-based InTandem Capital is already heavily invested in home-based care – in HouseWorks, in Pediatric Home Service and in Providence Care.

But Brad Coppens, a senior partner there, further delved into what the firm would be looking for in the future.

“We have, quite frankly, long been disinterested in investing in the alphabet soup of post-acute and siloed approaches. That’s sort of a 1.0 model,” he said at Continuum. “Where we think the interesting thing to do is to evolve into a 2.0 model where you look at care coordination, care navigation, the closing of care gaps – that sort of thing.”

Coppens doesn’t speak for the entire PE community, but many providers have already begun to build out the entire continuum, so to speak, within the home. For instance, providers will have home care, home health and palliative care. In some instances, they will even go further, investing in higher-acuity models such as SNF at home and hospital at home.

AI utilization

AI coming to home-based care is not an interesting inevitability.

What’s more interesting, instead, is what use cases there will be for it.

“We can get really creative with some of the ways that we can combine these powerful technologies with our data,” Sarah Khalid, a data and intelligence product manager at AlayaCare, said at Continuum. “There’s a lot of creative and different use cases. I think, more and more, we’re going to start to see this being seamlessly integrated in the entire retention problem.”

Documentation is an area where some of the largest providers are beginning to implement AI.

But, if implemented correctly, retention seems to be the area where home-based care providers will benefit the most from AI – and in short order.

Volatile scheduling is the No. 1 reason why home health workers leave their jobs. Unpacking that problem can be a herculean task, however.

That’s, ideally, where AI comes in.

“It’s that scheduling piece,” Compassus COO Laura Templeton said at Continuum. “We’ve piloted several scheduling programs, where we are sending the right clinician, at the right time, to the right place. So, scheduling is one I can think of, for sure.”

Elsewhere in retention, AI models can help predict when an employee may be about to leave.

But that model can only be built for a home-based care company if they are tracking the correct data. For instance, the model needs to learn why people are leaving in the first place – through exit interviews – and when exactly they have left in the past.

Those may seem simple things to track, but having reliable data points in those areas can take years to compile.

“I often describe data as the clay,” Guillaume Vergnolle, a senior data scientist at AlayaCare, said at Continuum. “It’s your best material to come up with an [AI] solution. You need the right kind to come up with the solutions. So, when it comes to the retention problem, make sure that you’re actually collecting the right data to mirror what you’re trying to solve.”

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