The hospice merger and acquisition activity in 2023 has departed from previous years, with distinct factors influencing the trends. Valuations, asset sizes, and the mix of buyers are some of the key factors that have contributed to these changes. In contrast to the past, private equity activity has slowed down this year.
According to Mark Kulik, senior managing director of The Braff Group, the hospice industry is experiencing unusual developments compared to recent years. Not-for-profit hospices acquiring one another have become more common, whereas private equity buyers are less prevalent.
A new range of buyers has entered the scene, with payers and nonprofit organizations taking on a more significant role. Out of the 13 publicly announced hospice and home health deals in 2023, the majority involved smaller entities known as “bolt-ons.” Private equity investors were only involved in three of these transactions, while the rest primarily consisted of affiliations between nonprofits.
Notable nonprofit hospice transactions for 2023 include Hosparus Health’s acquisition of Baptist Health Deaconess Hospice, the affiliation of Capital Caring Health and Chapters Health System, and the merging of Kosciusko Home Care & Hospice (KHCH) with Stillwater Hospice.
Payers, such as UnitedHealth Group subsidiary Optum, have also shown increased interest in the provider space. Optum has announced plans to acquire Amedisys, one of the largest home health and hospice operators in the country. This follows Optum’s acquisition of LHC Group, a Louisiana-based home health and hospice provider, at the end of 2022.
These significant transactions signify the consolidation trend and the growing prevalence of “payviders” in the home health and hospice sector. The value-based reimbursement system and its evolution will likely continue to generate interest from payers in the hospice industry.
The lines between payers and providers are blurring, and this trend is expected to shape the future landscape of home-based care in the health care services space.
