Literature Review

Pacs Group CEO calls for caution when dealing with private equityModern Healthcare; by Diane Eastabrook; 5/30/24Do you think private equity is becoming a problem for nursing homes? [Pacs Group Chair and CEO Jason Murray replies] I’m not saying that all private equity is inherently bad, but I do think that if providers are not careful about how the capital is aligned with their mission as a company, then you can get into some dangerous situations. As the company tries to perform, they might not be at the level where the capital partner would like them to be, so the business plan changes. Whenever that business plan changes from patient care to a return on capital, it’s a losing scenario.

Publicly traded hospice companies poised for dealsHospice News; by Jim Parker; 5/24/24The nation’s publicly traded hospice companies are primed for more acquisitions after a 2023 slump, fueled by census and growth. Transaction volume declined in the hospice and home-based care space in 2023, following the two record-breaking prior years. [Examples include:]

Steward proposes timeline for selling assets in bankruptcy Modern Healthcare; by Caroline Hudson; 5/20/24Steward Health Care is seeing interest from potential buyers of its 31 hospitals, particularly in Massachusetts and Arizona, and it hopes to complete sales this summer. The health system, which filed for Chapter 11 bankruptcy protection earlier this month, also is in advanced discussions with UnitedHealth Group's Optum to buy physician network Stewardship Health. Optum, which had been negotiating with Steward before the bankruptcy filing, submitted a "stalking horse" bid. A stalking horse bid is the initial bid on a bankrupt company's assets that helps set the minimum price for other potential buyers. Steward also is in discussions with "various third parties" for its northern Massachusetts facilities, the health system said in a bankruptcy court filing last week.

What healthcare REITs mean for providers, patientsModern Healthcare; by Hayley DeSilva; 5/14/24Steward Health Care's Chapter 11 bankruptcy filing is the latest example of the significant role real estate investment trusts play in healthcare. REITs have served as a financial solution for providers and health systems, allowing them to broaden their networks without as hefty a capital investment. Steward, for example, is the largest tenant of Medical Properties Trust, which bought Steward's real estate assets in 2016. The REIT, which also owns 10% of Steward, has approved $75 million in debtor-in-possession financing to help Steward maintain patient care while looking for operators for its hospitals.

Aveanna is looking to grow in its ‘rightsized’ home health segment again Home Health Care News; by Andrew Donlan; 5/14/24 Aveanna Healthcare Holdings leaders believe the company is back at a place where it can bank on near-term growth in its Medicare-certified home health business. It first entered into a business “transformation” in January 2023, and that transformation is already paying dividends, according to CEO Jeff Shaner. But much of the turnaround has been led by the private-duty services segment. Now, Shaner sees a path for the company to begin accelerating its home health and hospice lines. 

Vitas’ acquisition pipeline likely growing Hospice News; by Jim Parker; 5/15/24 Vitas Healthcare, a subsidiary of Chemed Corp. is gearing up for potential acquisitions. ... VITAS is targeting its home state of Florida and other Certificate of Need (CON) states for potential deals, Michael Witzeman, vice president, CFO and controller at Chemed said during the Bank of America Securities Health Care Conference. “We certainly think that there’s a pipeline growing, and we have the resources on our balance sheet with cash and no debt to be able to really be a player in any of these,” Witzeman said. “We would like to be in states that have CON restrictions much more than an unrestricted state, but we certainly have the interesting inability when things come available to be able to jump on them.” ...

Medicaid 80/20 rule could drive surge in home care deals Modern Healthcare; by Diane Eastabrook; 4/10/24 Private equity firms and large home care companies could soon be going head to head to buy smaller personal care operators expected to exit the industry because of a new regulation. The potential for industry consolidation stems from the Centers for Medicare and Medicaid Services’ Ensuring Access to Medicaid Services rule that will require home care companies to spend 80% of Medicaid reimbursements on caregiver wages. Mergers and acquisitions advisers predict the so-called 80/20 rule, finalized April 22, could prompt many smaller operators to sell.

Hospice pivotal to Enhabit’s growth strategy as a standalone company Hospice News; by Holly Vossel; 5/9/24Hospice will remain a core piece of Enhabit Inc.’s (NYSE: EHAB) strategic growth plans following its recent announcements to remain a standalone business. The company was mum about its strategic decision not to sell in Thursday’s earnings call, but executives elaborated on its home health and hospice focal points. 

Financial strain on nursing homes sparks buying binge Modern Healthcare; by Diane Eastabrook; 5/8/24Skilled nursing facility deals increased more than 80% in the first quarter of 2024 compared with the same period in 2023. There were 57 nursing home acquisitions valued at nearly $1.4 billion in the first quarter of this year compared with 31 deals valued at $448 million during the same period last year, according to Levin Associates, which tracks healthcare mergers and acquisitions. ... Last year was the worst year for healthcare bankruptcies in five years, according to restructuring and consulting firm Gibbins Advisors. Senior living and pharmaceuticals accounted for half of the 79 Chapter 11 filings in healthcare in 2023, the company said. It predicted continued distress for the senior care industry this year in a January research report.

Addus HomeCare expects 2024 acquisitions Hospice News; by Jim Parker; 5/7/24Addus HomeCare Corp. is poised for further acquisitions, potentially including some hospice deals. The company is seeking to pair its clinical services with its personal business in its existing markets. This is a cornerstone of its acquisition strategy. But Addus Chairman and CEO Dirk Allison does not rule out the possibility of moving into new markets if circumstances are right. ... When examining new markets, Addus focuses on regions where they can quickly become the largest or second-largest provider by market share, according to CFO Brian Poff. ... Addus’ roughly 33,000 employees provide hospice, home health and private duty nursing services across more than 200 locations in 22 states.

Bon Secours Mercy Health, Compassus finalize hospice and home health partnership PR Newswire; news provided by Bon Secours Mercy Health and Compassus; 5/2/24 Bon Secours Mercy Health (BSMH), the fifth-largest Catholic health system in the U.S., and Compassus, a leading national provider of innovative home-based health care services, have finalized an agreement to form a joint venture partnership. Compassus will manage 10 home health agencies and 11 hospice operations formerly led by BSMH serving patients in Florida, Illinois, Kentucky, Ohio, South Carolina and Virginia. 

Tenet adds 45 ASCs, sells 9 hospitals in Q1Becker's Hospital CFO Report; by Alan Condon; 5/1/24 In the first quarter, Dallas-based Tenet Healthcare sold nine hospitals while its outpatient business United Surgical International Partners acquired 45 ambulatory surgery centers and added 32 service lines. Tenet has increased the number of ASCs in its portfolio to 512 and decreased the number of hospitals it operates to 49, highlighting the company's expectation that its ASC business will drive long-term growth as care continues to shift from inpatient to outpatient settings. Tenet posted a net income of $2.2 billion in the first quarter — up from $143 million in the same period last year — and aims to spend about $250 million a year on ASC mergers and acquisitions. 

Ensign Group buys 7 nursing homes in 6 states Modern Healthcare; by Diane Eastabrook; 5/1/24 Senior living services company Ensign Group acquired seven skilled nursing facilities in six states, as well as a long-term acute care hospital. The deals closed Wednesday [5/1], the same day Ensign Group will report first quarter 2024 earnings. The acquisitions include: [click on the title's link for the list] ...