‘That’s a Game-Changer’: Investors Have Their Eye on One-Stop-Shops in Home-Based Care

In terms of business, providers are slowly beginning to move away from the strict distinctions of home health, home care and hospice.

“These are separate businesses,” Dexter Braff, president of The Braff Group, said on Wednesday during a panel discussion at the 18th annual Healthcare Private Equity & Finance Conference. “These are only separate because of the payment mechanism. They are not preternaturally different.”

The Braff Group is a Pittsburgh-based M&A advisory firm.

Instead, providers are beginning to embrace a more hybrid model of care, Braff said.

“What we can expect to see — and we are beginning to see this happen as we move to more population-based services — is not hospice providers or home health providers,” he continued. “We’re seeing companies that have nursing and paraprofessional services that can be deployed in the right place, in the right setting. That’s a game-changer.”

This is because these hybrid home-based care providers, or one-stop-shops, are able to provide a deeper level of care.

“We need the continuum of care,” Jonny Miller, vice president of Revelstoke Capital Partners, said during the panel. “For us, that has meant pairing skilled care with hospice because there is such a tremendous overlap from a referral source perspective. With our current platform, if it’s a hospice-only deal or home health-only deal, we will look to layer in services through acquiring a license in that market for the service that’s not being offered.”

Revelstoke Capital Partners is a Denver-based private equity (PE) firm that focuses on the health care sector. The company has approximately $4.3 billion of assets under management.

In recent years, companies such as Compassus, Jet Health and ModivCare Inc. (Nasdaq: MODV), among others, have made moves to deliver a full continuum of care by layering a variety of care services.

Braff noted that the health care sector will likely see more of these companies and pointed to Mckinsey’s recent findings, which estimated that up to $265 billion worth of care services for Medicare fee-for-service and Medicare Advantage beneficiaries could shift to the home by 2025.

Hybrid models are just one area of home-based care that has caught PE investors’ attention. Workforce concerns are also top of mind.

While the demand for care continues to rise, the availability of care is limited due to staffing shortages that have been compounded by the public health emergency.

“We are really running into a supply-side constraint,” Miller said. “It’s not just home health and hospice, it’s health care services in general. [Organizations are] fundamentally dependent on their clinicians … to drive growth, whether that’s expanding into a new market or being able to staff appropriate care.”

With this in mind, it’s not out of the question for PE firms to take an interest in health care staffing companies in the near future.

“If I’m a PE group and I have a lot of business in health care services, maybe I invest in a health care staffing company so I can hedge my bet,” Braff said. “The numbers are breathtaking. In the last month or two, the gap between new hires and openings hit a million positions.”

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