Literature Review

Three Oaks Hospice reportedly begins sales process Hospice News; by Jim Parker; 9/16/24 Dallas-based Three Oaks Hospice has reportedly begun seeking a buyer. The private equity-backed hospice launched in 2019 with more than $21 million in investment dollars from Granite Growth Health Partners, Health Velocity Capital and Petra Capital Partners. Rumors of the potential sale were first reported by the website Ion Analytics, which indicated that Three Oaks generates between $12 million and $15 million EBITDA.

Crossroads Hospice & Palliative Care is primed for continued success 9/13/24; Business Wire - Crossroads Hospice & Palliative Care; by Lisa Simon; 9/13/24 Crossroads Hospice & Palliative Care, the leading end-of-life care company, is affirming its commitment to growing its four Ohio locations in Cleveland, Northeast Ohio, Cincinnati and Dayton along with two others, one outside Philadelphia, Pennsylvania and one in Memphis, Tennessee. “We are committed to building our remaining locations and we have the depth of talent and proven standards for the highest quality care and the most time spent bedside, including attended deaths, compared with any other hospice. This is an opportunity for Crossroads to reach its highest potential.” That’s after selling five locations in Missouri, Kansas, Oklahoma and Georgia to Spartanburg, SC-headquartered Agape Care Group, a portfolio company of Ridgemont Equity Partners, earlier this week. Crossroads had been considering a strategic sale of some locations for a number of reasons. Now company leaders are viewing the future of the 29-year-old leader in hospice and palliative care with enthusiasm as they become a more streamlined company with a smaller geographic footprint. “The potential for innovation has never been higher,” said Crossroads CEO and Co-Founder Perry Farmer. “We are committed to building our remaining locations and we have the depth of talent and proven standards for the highest quality care and the most time spent bedside, including attended deaths, compared with any other hospice." ... COO and Co-Founder Clayton Farmer agreed while acknowledging how entrenched Crossroads is in the markets where it operates. “We want our valued referral partners in Ohio, Pennsylvania and Tennessee to know we are here to continue serving their patients and families and we will strive to continue to beat all national averages on key hospice industry metrics.” 

Private equity acquisition of physician practices — Looking for ethical guidance from professional societiesJAMA Network; by Peter A. Ubel; 9/13/24In 2012, private equity firms purchased approximately 75 physician-owned practices; by 2021, that number had risen to almost 500. Most commonly, firms have sought high-paid subspecialty practices. For example, dermatologists make up approximately 1% of physicians in the US, whereas dermatology practices account for 15% of private equity acquisitions. Private equity firms can offer valuable administrative support to clinical practices. Some firms offer expertise to help practices respond to rapidly changing regulatory and reimbursement environments. Firms also provide financial rewards to clinicians who have often spent decades building successful practices. However, private equity acquisitions can also lead to ethically troubling consequences. For example, to maximize the return on their investments, private equity firms sometimes pressure clinicians to see more patients, perform more procedures on those patients, and upsell patients on products not reimbursed by insurance, such as acne creams stocked in dermatology offices. In addition, after being acquired by firms, medical practices often raise medical prices, including an increase in out-of-network billing and surprise bills. These price increases harm patients by increasing their out-of-pocket expenses and, potentially, reducing their ability to pay for care, thus contributing to financial nonadherence and medical debt... In short, some professional societies offer guidance on how to promote members’ interests when selling to private equity, even reminding them to factor the value of their real estate into the sale price, but they offer scant information on the ethical tradeoffs created by such sales.

Antitrust lessons for healthcare roll-ups – and everyone else Competition Policy International - CPI Columns US & Canada; by Lauren F. Dayton & Swara Saraiya; 9/12/24 ... The practice described in the U.S. Anesthesia Partners suit, known as a “roll-up,” is a common strategy employed by private equity firms through which smaller businesses in adjacent markets are acquired and consolidated. Large healthcare networks acquire smaller practices for similar reasons. That consolidation enables companies to build a greater presence, operate more efficiently, and can allow them to attract better talent. But that same consolidation can also create the risk of anticompetitive effects. The FTC’s suit is noteworthy because federal competition regulators have historically focused on the companies themselves, not their financial sponsors. The case is in step with statements by competition regulators about increased scrutiny of the healthcare industry, and of acquisitions by private equity firms, in particular. ...

More nonprofit hospices consolidating amid economic, regulatory pressures Hospice News; by Jim Parker; 9/12/24 As M&A in the for-profit space continues its two-year slump, nonprofits are consolidating in rising numbers. Recent years have seen an uptick in consolidation activity among nonprofits in the hospice space. Increasingly, nonprofits are pursuing acquisitions and affiliations, as well as forming regional collaboratives. In addition, some nonprofits have also been acquired by for-profit companies. Driving this trend are reimbursement and regulatory pressures, as well as a need to compete with larger, well-capitalized for-profit entities, according to Mark Kulik, senior managing director for the M&A advisory firm The Braff Group. [Click on the title's link to continue reading this significant article.] 

Leading the Way: Gilchrist and Franklin Hospice forces in landmark integration Franklin Hospice, Chambersburg, PA; by Karen M. Giffin; 9/9/24 Franklin Hospice and Gilchrist ... have announced an affiliation agreement. This partnership will unite two of Maryland’s oldest and most experienced nonprofit organizations, together with nearly 70 years of service to their communities. As the healthcare landscape continues to transform nationwide, this type of affiliation of two synergistic nonprofit organizations with similar missions, visions, and values will position both organizations for continued growth, innovation and financial strength. ... This strategic affiliation will strengthen their ability to offer compassionate care to more patients and families throughout Central and Southern Maryland, as well as Washington and Frederick Counties and South-Central Pennsylvania. Both organizations will retain their name and branding while offering a unified approach to care. 

BrightSpring projects ‘robust, cccretive’ hospice, home health M&A pipeline Hospice News; by Holly Vossel; 9/6/24 BrightSpring Health Services Inc. is poised for growth in the home health and hospice landscape. The company anticipates ramping up merger and acquisition (M&A) activity in coming years, with an emphasis on long-term return on investment, according to BrightSpring President and CEO Jon Rousseau. The company is focusing on significant expansion in the next two years, he indicated. Tuck-in deals and de novos have been key to BrightSpring’s strategic growth. Acquisitions have increasingly become a larger part of its game plan — though with a cautious and diligent mindset, Rousseau said ...

Enhabit foresees smooth sailing on near-term hospice growth Hospice News; by Jim Parker; 9/5/24 Enhabit Inc. expects consistent hospice growth even as it contends with payer and reimbursement headwinds for its home health business. The home health and hospice provider recently terminated its home health contract with the Medicare Advantage payer UnitedHealthcare, a subsidiary of UnitedHealth Group, citing nine months of unsuccessful negotiations. In addition, Enhabit and the rest of the home health industry are facing a potential 1.7% rate cut from the U.S. Centers for Medicare & Medicaid Innovation’s proposed 2025 payment rule. Meanwhile, Enhabit’s hospice segment continues to grow sequentially.

Growing private equity involvement suggests rapid consolidation in hospice industry: studyMcKnight's Home Care; by Adam Healy; 9/4/24Increasingly, many hospices are being acquired by private equity firms, which may indicate growing consolidation of the industry, according to a new study. Between 2015 and 2022, 47 PE firms were responsible for 124 US hospice acquisitions. The larger share of these transactions occurred in more recent years, the researchers found. Fewer than 10 PE-backed acquisitions were made each year from 2015 to 2017, but from 2018 and beyond, PE firms acquired between roughly 15 and 35 hospices per year. Some of these acquisitions involved a large number of agencies, a sign of PE-fueled consolidation in the hospice sector, the researchers noted.Publisher's note: We first covered this story in The Guardian 9/5/24 (Private equity ownership of US hospice centers boomed in recent years – study) and include McKnight's story to highlight the impact this study is having.

Private equity acquisitions of hospices are increasing; Ownership remains opaqueHealth Affairs; by Melissa D. Aldridge, Lauren J. Hunt, Zelle Halloran, Krista L. Harrison; 9/24Private equity ownership across the US health care system is rapidly increasing, yet ownership structures are complex and opaque. We used an economic data set tracking mergers and acquisitions linked to Medicare data to identify private equity hospice acquisitions. Given the influence of for-profit ownership on hospice quality, transparent data on private equity investment are fundamental to ensuring high-quality end-of-life care.

Healthcare private equity transactions under scrutiny: Midyear review Healthcare Business Today; by Editorial Team; 9/4/24 Highlights

OhioHealth and Compassus finalize partnership for home health and hospice PR Newswire, Columbus, OH and Brentwood, TN; by Compassus / OhioHealth; 9/4/24 Compassus, a leading national provider of integrated home-based care services, and OhioHealth, a nationally recognized, not-for-profit, charitable healthcare outreach of the United Methodist Church, are pleased to announce the finalization of their partnership for home health and hospice services to be called OhioHealth at Home in partnership with Compassus. Under this partnership, Compassus has acquired ownership interest in three hospice locations and four home health locations that were formerly led by OhioHealth. Compassus will manage the operations of these agencies, leveraging its extensive experience in home-based care, while OhioHealth will continue to play a key role in delivering high-quality care in Ohio. OhioHealth's Athens hospice services and the Kobacker House in Columbus, Ohio, are excluded from the partnership. Editor's note: 

State seeks input on Columbia Gorge hospital, Gentiva hospice care The Lund Report, Oregon and SW Washington; by Nick Budnick; 8/29/24 State officials are checking in on two health care acquisitions that have occurred since August of 2022, the absorption of Mid-Columbia Medical Center into California-based Adventist Health as well as a private equity firm's acquisition of Kindred Hospice. Now the state wants to hear how the renamed entities are doing: Adventist Health Columbia Gorge and Kindred Hospice Care. “OHA wants to understand how ownership changes may have affected health care services at AHCG and Gentiva hospice agencies,” according to a state announcement. “We’d like to hear from patients, health care providers, employees, and community members who have interacted with AHCG or Gentiva in the past year.”