Affinity Hospice Holdings, a portfolio company of MBF Healthcare Partners II, L.P. has entered into a definitive purchase agreement to acquire Hands of Mercy Hospice of South Carolina.
The deal marks Affinity’s first foray into the South Carolina hospice market, where the company plans continued expansion. Affinity, based in Birmingham, Ala., also operates in Georgia as well as its home state.
“The team at Affinity is excited with the addition of Hands of Mercy, a quality operator of hospice services. We anticipate immediately leveraging the resources and capabilities at Affinity in South Carolina with this acquisition,” said Ray Shrout, CEO of Affinity Hospice Holdings. “Our leadership team has extensive experience working in the South Carolina market and anticipate growing our market share in existing Hands of Mercy markets and expanding swiftly into new markets in South Carolina.”
Affinity is backed by Coral Gables, Fla.-based MBF Healthcare Partners, a middle-market private equity fund. In addition to hospice, the firm invests in medical centers, pharmacies, health plans, nutrition and dental companies.
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.
Effective management and geographic location are two key factors that can determine whether a private equity firm will invest in a hospice.
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.
South Carolina was 21st in the nation in terms of hospice utilization among Medicare decedents in 2018, at 50.8%, according to the National Hospice & Palliative Care Organization.. This beats the national average of slightly more than 50% by a slim margin. Utah had the highest utilization at 60.5%, and Alaska had the lowest at 22.8%.