Look out, home care. Private equity has its eyes on you. That was one of the messages of a recent report by the Private Equity Stakeholder Project, a nonprofit watchdog group.
As reported earlier this week, home health and hospice deals accounted for 37 of 628 healthcare private-equity transactions in 2022. PE investments in healthcare last year were the second-highest on record, trailing only 2021.
The report noted that in 2018 and 2019, PE was involved in almost 50% of deals in the home healthcare industry, and PE hospice transactions rose nearly 25% between 2011 and 2020.
The incursion of PE into home care is not necessarily a positive development, given everything we have heard and read about PE — namely the frequent allegations of placing profits over care and people. It’s not necessarily a coincidence, after all, that Rand Corp. released a study this week revealing that patients receiving hospice care from for-profit providers have worse care experiences than those who receive care from nonprofit hospice agencies. Family caregivers in surveys analyzed by Rand reported that for-profit firms fell short on a number of services, including providing help for pain and typically have timely care.
PE takes for-profit issues to a new level, Mary Bugbee and Eileen O’Grady from the Private Equity Stakeholder Project noted in a podcast with McKnight’s Home Care Pulse. Whatever problems exist under for-profit ownership are worse under PE ownership, they said.
Why the interest by PE in home care? Bugbee and O’Grady talked about how demographics and fragmentation in the home health and hospice industries make them ripe for PE takeover. Given how vulnerable these two industries are, there is not much they can do to stave off PE encroachment. (And it must be said that we should be careful about painting PE, which serves as an important source of capital for home care, with a broad brush. After all, not all PE companies deliver substandard healthcare.)
On an individual level, there is a lot an agency can do to ensure it does not fall prey to a firm — PE or otherwise — with less than altruistic motives: Don’t lose sight of your mission, find opportunities to stay current and, above all, advocate for yourself in Washington.
Liza Berger is editor of McKnight’s Home Care. Email her at [email protected]