Strong Management, Geography Attract Private Equity Investors to Hospices

Effective management and geographic location are two key factors that can determine whether a private equity firm will invest in a hospice. 

Private equity interest in the hospice market has been on the rise, driven by the fragmented nature of the industry, increased acceptance of palliative care services, the aging population, the changing regulatory landscape, and movement towards value-based payment models.

“In our practices we look for sophisticated management teams. It takes a skill set to be able to navigate and understand the hospice rules and how to make businesses viable. When I’ve seen investors find sophisticated management teams, that is something I have seen them latch on to very significantly. That’s one of the primary drivers that I’m seeing in the hospice industry,” said Trey Andrews, associate at the consulting firm McGuireWoods and co-author of a recent report on investment in senior care industries. “I think the other is geography. There are certain sections of the country that are being focused on given the population dynamics and demographics.”


Factors that can influence geographic preferences of investors include population growth among seniors,10,000 of whom become Medicare eligible every day, according to the Kaiser Family Foundation, as well as the rate of hospice utilization and co-location of a hospice with home health care operations or other assets.

These tailwinds are making investors hungry for hospice companies at every tier of the market. 

“The hospice space is very active. My practice focuses more on the middle market, but we’re also seeing the lower market consolidated by specific players that are focusing on aggregating single location and smaller centers, hospices,” Andrews told Hospice News. “That said, several of the primary recent investments that we highlighted in the industry over the last year were very significant investments all the way — hundreds of millions of dollars. It’s the entire chain.” 


A number of high-profile hospice transactions involving private equity firms occurred during 2019.

Private equity firm Towerbrook Capital Partners and health system Ascension Health have agreed to purchase the Nashville-based hospice provider Compassus at a valuation of $1 billion, with multiples of EBITDA in the low teens. The two companies will split ownership of Compassus down the middle, each holding an equal stake.

Missouri Home Hospice, LLC, a firm with portfolio companies throughout the post-acute care space, and MHS Equities, LLC acquired Missouri-based Transitions Hospice, marking the third 2019 acquisition for Missouri Home Hospice.

Texas-based Three Oaks Hospice in September acquired three hospice agencies in Dallas, Fort Worth and San Antonio — Total Hospice & Palliative Care, ABS Palliative and Hospice Care and Fellowship Hospice — after receiving more than $21 million in private equity funds from Granite Growth Health Partners, Health Velocity Capital and Petra Capital Partners.

A Salt Lake City-based private equity firm purchased Comfort Hospice & Palliative Care in Portland, Ore., for $20 million. The purchasing company — a large regional operator with 30 additional hospice locations primarily in the western United States — has not been identified publicly. Comfort Hospice & Palliative Care earns nearly $8.3 million in annual revenues and cares for an average of 143 patients per day in four Oregon counties.

Another key trend that can attract investors is service diversification. Hospices nationwide have been expanding their suite of services to include home health care, palliative care, adult day care, and home-based primary care, among others. Investors are watching this activity.

“I think we have seen instances where the ancillary services off of traditional hospice are definitely being explored and are being utilized and approached,” Andrews told Hospice News. “I don’t have a true sense of whether that is a primary goal or target of the investors, but I do think it’s something that is on their radar and that they’re being mindful of as they consider investments in the space.”

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