The coming year promises to be robust in terms of financial deals in the home health space, according to a lawyer who focuses his practice on advising companies, and their investors and lenders, on mergers and acquisitions.
“2021 is going to be a very strong year for home health consolidation and m and a activity,” Chris Donovan, a partner at Foley & Lardner told McKnight’s Home Care Daily.
Donovan pointed to three major trends that are likely to be hallmarks of 2021. One of these is more vertical consolidation among what he coined the three legs of the stool: home health, hospice and palliative care, and home care or personal care. For example, more home health businesses may be acquiring hospice firms.
“The larger ones are trying to fill out the legs of the stool so they have all three of them in adequate scale,” Donovan explained.
The reason for this vertical consolidation is the growth in Medicare Advantage (MA). As this area of Medicare is expanding and taking on more enrollees, it is looking to partner with providers that can provide the care for these beneficiaries.
Agencies “want to make themselves more attractive as a contracting partner with a health plan,” he said.
Primary care physician practices
Another trend is home health partnering with primary care physician practices.
“A lot of it is going back to positioning the home health company for risk contracting vis a vis MA and other plans asking them to take risk,” Donovan said.
As an example, if a home health company has a relationship with a primary care company, that agency will be able to provide risk-adjusted pricing, clinical continuity, and seamless and better outcomes, he said. Working with a primary care company may offer opportunities in an area such as palliative care, which does not fit neatly in the realms of home health or hospice. Partnering with a primary care provider might enable a home health firm to offer this type of service.
“It establishes a clinical link between the two,” Donovan said. “From the standpoint of home health, it enhances their position vis a vis payers.”
Hospital partnerships
The third trend that Donovan sees taking shape is home health agencies working with hospitals in joint ventures. As hospitals are taking on risk with MA or other plans, a relationship with home health helps hospitals control quality to ensure patients do not return to the hospital. It also ties in with the new hospital-at-home concept where hospitals “want to provide highly accelerated services and more clinically intense services” outside the hospital, he noted.
All of this adds up to a busy year and the continuing collapse of siloes among the various parts of home health.
“They’ll be connected in a financial and clinical way,” he said. “A lot of that is driven by the payment side, risk taking and the need to have the control over the various delivery models you need to take on that risk.”
This article originally appeared on McKnight's Senior Living
