Tennessee-based Alleo Health System has acquired ABC Hospice in Alabama, marking the organization’s entry into that state’s market. Financial terms of the transaction were not disclosed.
Alleo has been pursuing an aggressive growth strategy this year, seeking to expand its geographic footprint and its patient census to better position the nonprofit to negotiate with payers. Alleo is preparing for the inclusion of hospice in the U.S. Center for Medicare & Medicaid Services’ (CMS) value-based insurance design model demonstration project in 2021, commonly called the Medicare Advantage hospice carve-in.
“With the changes in Medicare reimbursement that’s coming, we want to remain viable as a not-for-profit, and we know that the expanded footprint will increase our opportunities to get those managed care contracts and continue to give excellent hospice care,” said Timothy Health executive vice president of business development for Alleo Health. “We’re celebrating our 40th anniversary this year, and we will be here for 40 more years.”
The demonstration, according to CMS, is intended to increase access to hospice services and facilitate better coordination between patients’ hospice providers and their other clinicians. The Medicare Advantage program has been growing in recent years. The number of participating beneficiaries tripled between 2019 and 2020, totaling nearly 1.2 million enrollees in 30 states, according to CMS.
Medicare Advantage plans often seek to contract with providers that cover a wider geographic area rather than numerous smaller organizations. Nonprofits have been joining forces through acquisitions and regional affiliations to better compete with large players in the hospice space, some of which have a national footprint.
Larger numbers of for-profit companies have been entering the hospice space seeking to capitalize on growing demand as the population ages. Non-profit organizations in 1990 provided 95% of hospice care in the United States. By 2017, for-profit companies represented 69% of the hospice market, while the non-profit market share dropped to 27%, the Medicare Payment Advisory Commission reported. Government providers accounted for approximately 3%.
The acquired organization, ABC Hospice, is a privately owned for-profit company that will become a non-profit under the auspices of Alleo Health.
“As the founder of ABC Hospice, I am very proud of the care ABC Hospice provided to our community over the last 15 years. Now it’s time to look to the future and the next 15 years,” said Keith Sanderson, Founder of ABC Hospice, “ABC Hospice is excited to grow and learn under the wing of Alleo Health System. Alleo Health System will bring a wider range of hospice services, along with seasoned leadership and organizational strength.”
Alleo is the parent company of Hospice of Chattanooga, Palliative Care Services, Good Shepherd Hospice, Comprehensive Care, Upper Cumberland Hospice and Palliative Care Services, and Kangaroo Kidz. Kangaroo Kidz is the Chattanooga region’s only pediatric specialty hospice and palliative care provider.
Alleo Health System emerged on the scene in 2019 when the non-profit Hospice of Chattanooga rebranded its network of hospice and palliative care providers, which now serve nearly 30 counties in Tennessee, Georgia, North Carolina and, with this acquisition, Alabama.
“We’ve talked with the owner [of ABC Hospice] for about a year about opportunities and, and we all thought it would be a good fit — similar cultures focused on excellent care, excellent customer service,” Heath told Hospice News. “He had been approached by many different players in the market but waited to find a great fit as far as culture to make it a smooth transition. We will take good care of his legacy and take care of the employees and the families that they’re cared for as well.”