TPG Capital, Leonard Green & Partners to Share Ownership of WellSky

Health technology company WellSky and its parent company, the private equity firm TPG Capital, have signed a definitive agreement to bring on Leonard Green & Partners as a capital partner. Financial terms of the transaction were not disclosed, but TPG Capital will make a new equity investment in WellSky. 

Leonard Green is a Los Angeles-based private equity investment company. The firm will share 50/50 ownership of WellSky with TPG Capital, according to the tech provider’s CEO Bill Miller. TPG Capital is the private equity arm of TPG, which invests heavily in the health care space. The deal is expected to close during the third quarter of this year. 

“Leonard Green has come in and has taken a meaningful stake on par with TPG, and they’ve had some history of doing partnerships together,” Miller said. “[The two companies] certainly took comfort in the fact that they’ve had a history together, and now I’ve got two great financial sponsors to help us continue our mission.”

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TPG Capital acquired Overland Park-headquartered WellSky in Dec. 2016. WellSky serves more than 15,000 client sites globally. The tech company indicated that infusion from this investment partnership would allow it to expand the range of solutions that it offers and invest in new capabilities, particularly in the realms of analytics, telehealth and payer relationships as specific growth areas of interest, according to Miller.

Data analytics is becoming increasingly important as hospices move gradually closer to working in value-based payment environments, particularly with the advent of Primary Care First and the value-based insurance design demonstration project, commonly called the Medicare Advantage hospice carve-in, coming in 2021.

Hospice providers are using analytics to identify patients in need of end-of-life or palliative care services earlier in the course of their illnesses and to track outcomes. These types of data will also be important when hospices begin to negotiate rates with private payers.

“We are a great analytics company, and we will continue to add those capabilities across our portfolio. You’ll see us add more capabilities around telehealth and you’ll see us do things with payers,” Miller said. “I think we’re becoming very good partners with several payers, and I think they need some unique expertise from us and systems support from us. You’ll see us use that capital to build out our networks and strengthen our relationship with payers.”

While the use of telehealth was already growing during 2019 and early 2020, the COVID-19 pandemic has tremendously accelerated that expansion, particularly due to 1135 waivers released by the U.S. Centers for Medicare & Medicaid Services (CMS) during the pandemic. The waivers temporarily allowed hospices to provide many more services via telehealth than regulators previously allowed, including allowing physicians to recertify patients for hospice.

“In some respects WellSky will just do exactly what we’ve been doing, grow organically, continue to serve our clients well, understand and listen to their needs. If we do that, we’ll find a way to grow. I think we will be acquisitive. There’s no doubt about it. And there are adjacencies that we will get into that make sense and strengthen who we are,” Miller said. “We will continue to strengthen our hands at connecting our clients in a world that’s changing to the inevitability of risk-based agreements and risk-based contracts with payers and the federal government. That’s going to be a big part of what we do.” 

Home Health Care News Reporter Bailey Bryant contributed to this report.

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