Revenue pressures driving home care consolidation, private equity’s growing influence, provider group says

Revenue pressures driving home care consolidation, private equity’s growing influence, provider group says
McKnight's Home Care; by Adam Healy; 6/11/24
Pressures such as insufficient government reimbursement and rising Medicare Advantage penetration are contributing to consolidation in home care and hospice, LeadingAge told regulators last week in response to a February request for information surrounding healthcare market competition. “Sustainable fee-for-service rates that cover the continually rising costs of delivering care are of critical importance,” LeadingAge said. “Outside revenue pressures such as lower reimbursement rates from managed care plans, reduced units of service through accountable and managed care organizations, and an increasing need to be an organization of a certain size in order to contract with managed care organizations and accountable care organizations are also factors that drive consideration of consolidation options.” One particular concern, LeadingAge noted, is the growing investment in healthcare by private equity firms. Private equity firms have driven a significant share of home care and hospice consolidation in recent years. PE firms had a hand in 35 home health deals, 15 personal care deals and 13 hospice deals last year, according to a recent report. And studies have shown that patients receiving care from PE-owned providers may experience worse health outcomes than patients at nonprofit agencies.