It’s not just hospitals that are buying each other up these days. The post-acute care sector has seen steady M&A activity over recent years, too, as integrated-care models become more prevalent.
In a new research note on TripleTree’s blog, analyst Justin Fengler noted four major themes that are driving deals in the sector:
Mitigate risk by diversifying payer mix
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Overall, one out of six Medicare dollars goes to post-acute care (but that ratio varies greatly from state to state). CMS is making an effort to curb that spending and is testing out new bundled payment models. Reimbursement cuts would leave long-term care, hospice and home health providers that get most of their revenue from Medicare in trouble, so they’re expanding their footprints geographically and trying to diversify their payer mixes. Atlanta-based home care and hospice provider Gentiva, for example, acquired Austin-based community health provider Harden Healthcare for $409 million to dilute its dependency on Medicare dollars.
Serving more dual eligibles
In acquisition reports, Gentiva also noted that the buy would expand its services to more dual eligibles. Payers have prioritized better care coordination among these populations, as they tend to be more expensive and likely to be readmitted. Centene’s $200 million acquisition of U.S. Medical Management in December also illustrates this trend.
Expansion of post-acute service line offerings
A Personalized Approach to Medication Nonadherence
At the Abarca Forward conference earlier this year, George Van Antwerp, managing director at Deloitte, discussed how social determinants of health and a personalized member experience can improve medication adherence and health outcomes.
In the journey toward accountable care, post-acute healthcare is becoming an increasingly appealing M&A target for various kinds of providers. Kindred Healthcare, the most diversified PAC provider in the U.S., made seven acquisitions in 2013. “The company’s multi-line strategy allows it to take advantage of the growth of the entire post-acute care marketplace, with a particular focus on expanding its higher margin rehabilitation, home care, and care management businesses while reducing its skilled nursing business line,” Fengler wrote.
Better EMR and workflow technologies
Post-acute care providers aren’t eligible for meaningful use incentives, but improving care coordination and reducing hand-off errors are still a priority, so they need effective EMRs and workflow tools. Homecare Homebase, a software company that makes automated workflow solutions for home care and hospices, was acquired by Hearst Corp.’s healthcare division in December.
