Mea Culpa: The Home-Based Care Predictions HHCN Got Wrong For 2023

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At the beginning of each year, publications and experts like to lay out predictions for the next 12 months.

Home Health Care News also plays prognosticator. We published our 2024 home care trends piece earlier this week, and will publish our home health trends piece next week.

But an equally useful exercise – for myself and for HHCN’s audience – is to take a look back at what we got wrong in the previous year. It’s not just about what we got wrong, either. It’s about dissecting why we got it wrong in the first place.


It’s worth noting that our home care and home health trends predictions for last year were, in most cases, prescient and on the mark.

But the hit rate was not 100%. For instance, public home-based care companies did not see a universal rebound. Home care billing rates did not level off. Care management may have become incrementally more relevant, but certainly did not explode.

Those are just some examples. In this week’s exclusive, members-only HHCN+ Update, I uncover everything we got wrong in the past year – and why.


Home health care

The first thing I got wrong in 2023 was categorized under the prediction that “big names will remain active in the home health M&A space.”

While that’s not necessarily untrue, home health M&A overall remained down in 2023. There were 95 total home health, home care and hospice transactions, according to the M&A firm Mertz Taggart. That was considerably down from 2021, which was to be expected, but also 14% down from 2022.

But, most notable from that prediction is this sentence: “While America’s corporate giants will keep their attention on home-based care opportunities, there’s a good chance that 2023 passes without another monster, jaw-dropping mega deal that’s anywhere close to UnitedHealth Group’s LHC Group buy.”

That turned out to be not the case at all. Just four months after UnitedHealth Group (NYSE: UNH) closed on its deal for LHC Group in February, it agreed to acquire Amedisys Inc. (Nasdaq: AMED) for about $3.3 billion in an all-cash deal.

The deal wasn’t quite what the LHC Group deal was – that had a $5.4 billion price tag – but it was undoubtedly a “monster mega-deal” in the home health space.

Later-revealed SEC filings also confirmed that Amedisys was effectively being shopped around for months before a deal was agreed to. Option Care Health (NYSE: OPCH) agreed to a deal with Amedisys first, but Optum ultimately won out in the bidding process.

With Amedisys and LHC Group underneath UnitedHealth Group’s Optum umbrella, the company would own about 10% of the home health market.

At the beginning of 2023, Amedisys’ former CEO, Paul Kusserow, had just returned after the dismissal of Chris Gerard. A new CEO search was underway, which backburnered the thought of a near-term transaction.

After Richard Ashworth was named CEO in March, he barely logged two months before the company had agreed to give up its independence.

In the end, Amedisys’ board clearly had changed its tune on the best path forward in late 2022. Prior to that, Amedisys was best off on its own, its leaders believed.

After that, however, headwinds such as Medicare Advantage (MA) penetration, fee-for-service rate cuts and continued staffing woes altered opinions.

A similar thought process led to an LHC Group sale in the first place, which is why HHCN should have seen this coming.

“We recognized that [shift] more quickly than a lot of providers, just because of the referrals we got from hospitals,” former LHC Group CEO Keith Myers said at HHCN’s FUTURE conference in September. “We had a much higher percentage of managed care referrals coming our way, and we didn’t have the resources to care for those patients, and we wanted to care for them. The hospital needs us to care for them.”

HHCN also predicted that public players would rebound in 2023 from significant downturns in 2022: “Now, with the final rule in place, the start of Home Health Value-Based Purchasing (HHVBP) model’s first performance year and other factors tied to the pandemic that might not be as big of an issue, 2023 looks to be a year of stabilization.”

With Amedisys, that was somewhat the case, but mostly due to the UnitedHealth Group deal. Overall, its stock price was up about 13% in 2023.

But the headwinds facing Enhabit Inc. (NYSE: EHAB) – and others – did not let up, which led to a strategic review that should materialize in a sale soon. It was down over 21% for the year.

Addus HomeCare Corporation (Nasdaq: ADUS) was down 6.6% on the year, but home health care is one of its smaller service lines, to be fair. It was met with an additional headwind, with the proposed rule from Centers for Medicare & Medicaid Services (CMS) that included potential caregiver wage mandates in home- and community-based services.

The Pennant Group was an outlier, up nearly 27% on the year. But it also has a large senior living portfolio.

For the most part, the operating environment didn’t stabilize much for providers in 2023, though COVID-19 concerns did wane.

Home care

One of the chief concerns for home care providers in 2023 was rising billing rates. Early on in 2024, that hasn’t changed, which makes HHCN’s prediction that “billing rates will level off in 2023” way off.

Anecdotally, providers have not seen billing rates taper. If anything, the cost of delivering services – and subsequently, billing rates – has continued to rise.

“Factors like inflation and recession will contribute to the growing cost of labor, leading to increased prices for services,” Qiana James, the CEO and founder of Friendly Faces Senior Care, told HHCN in December. “This may make home care unaffordable for many seniors, potentially forcing them to consider less desirable alternatives like nursing homes.”

Only 14% of Americans can currently pay for at-home care as they age, a recent analysis conducted by the Joint Center for Housing Studies of Harvard University found. That number is even lower in certain markets across the country.

HHCN did predict that providers would start to either diversify into alternative payer sources, or, alternatively, completely tailor themselves as companies geared toward the wealthy. That prediction was correct, but more providers are opting for the latter option.

Two things contributed to this poor prediction. For one, macroeconomic factors – such as inflation – remained troublesome for home care providers. Secondly, Medicaid programs have become a steadying force, something that would not have been expected prior to the pandemic. 

Other than Medicaid, home care providers have also diversified into MA, but with limited success. HHCN saw MA as a viable revenue stream for providers through supplemental benefits, but also an avenue to convert more private-pay clients down the line.

BrightStar Care is one of the providers that remains committed to MA, and has converted some beneficiaries to private-pay clients.

Because of that MA mission, BrightStar Care was one of the franchise companies that had tensions with franchisees rise in 2022.

As far as I can tell, those tensions have eased of late, despite HHCN predicting that those tensions would increase in 2023. That is, in part, because of BrightStar Care’s effort to buy back locations from owners unwilling to invest in new initiatives.

At the same time, Honor – which owns the large home care franchise Home Instead – did lay off 15% of its HQ staff, letting go of many legacy Home Instead employees in the process. That likely didn’t spark confidence among Home Instead franchisees at the time.

Finally, care coordination. HHCN predicted that care coordination would become more popular in home care over the last year. Outside of the companies that have touted their programs for a while – such as Arosa and Help at Home – that hasn’t necessarily been the case.

It could be that home care providers gain more influence in other home-based care models or become the center of coordinating care in the future.

But, for now, most providers are just focused on maintaining a healthy staff and margin in their core business.

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