Hospice and home health provider LHC Group (NASDAQ: LHCG) has agreed to create a joint venture with Augusta, Ga.-based University Health Care System to expand hospice and home health services in eight cities throughout Georgia and South Carolina.
Two LHC Group hospice locations will comprise the joint venture with three University Health home health providers, three University Health home health branches and two LHC Group home health providers. The companies expect to finalize the agreement Oct. 1. LHC Group will have majority ownership and take on management responsibility.
“We are pleased to join our new partners at University Health in announcing plans to expand the availability of vital health care services in the states of Georgia and South Carolina,” said Keith Myers, LHC Group’s chairman and CEO. “With our combined experience and infrastructure, we will be able to offer more families and patients the high-quality, efficient, and effective in-home healthcare and hospice services they deserve.”
Annualized revenue from this venture is expected to reach $8.3 million. LHC Group anticipates that this action will not impact 2020 diluted earnings per share. The company has joint venture partnerships with more than 350 hospitals nationwide.
In addition to generating revenue directly, joint ventures form the cornerstone of LHC Group’s hospice mergers and acquisitions strategy, with an emphasis on co-locating hospices in markets where the company’s home health agencies are already operating.
“We prefer to go in and target a market and find a hospice that is a high quality, leading, reputable provider in their community and acquire that as part of a joint venture that is bolted on to our home health agencies to create a continuum of care,” Myers told Hospice News.
Hospice utilization in the states in which the joint venture will operate exceeds the national average of 50% by a slim margin. In Georgia, 51% of Medicare descendants elected to receive hospice care during 2018, according to the National Hospice & Palliative Care Organization. South Carolina that year saw a utilization rate of 50.8%. Utah leads the nation in hospice utilization at 60.5%.
“This partnership combines the expertise and experience of two high-quality medical providers, creating new opportunities to further develop and expand our in-home health care services to include hospice, completing University’s continuum of care,” said James R. Davis, University Health Care System president and CEO. “The great success LHC Group has demonstrated with other partnerships has shown us that their focus on in-home medical services will move the safe, quality, and compassionate care University is known for to the next level.”
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