Joint venture partnerships will be key to fueling expansion into the hospice space for national home health and hospice provider LHC Group, Inc. (NASDAQ: LHCG). Accelerated growth in 2021 and beyond will focus on a differentiated strategy that includes the company’s successful joint ventures (JVs).
LHC Group provides hospice, home health, and facility- and community-based services to 60% of the U.S. aging population in 35 states and in the District of Columbia. A swelling national aging population and governmental payment reform favorable and supportive of these services represents a push deeper into home health and hospice markets for the company, according to LHC Group Chairman and CEO Keith Myers.
“The demographics are in our favor with an addressable population doubling by 2060,” said Myers during the 39th Annual J.P. Morgan Healthcare Conference. “We have an unprecedented number of tailwinds ahead. We have an historic consolidation opportunity before us in a highly fragmented market. We expect record-setting growth in joint ventures acquisitions and organic growth ahead. The market is ripe for consolidation.”
A ripe hospice market has made LHC Group bullish on expansion in recent years, with a focus of co-locating new hospice operations where the company already has a home health presence key to its overall acquisition strategy. According to a recent statement, LHC Group holds joint venture partnerships with nearly 400 hospitals and health systems throughout the country.
Co-location growth will be part of its top strategic focus to continue stretching into both the home health and hospice markets in 2021 and into the foreseeable future, as LHC Group president Joshua Proffitt stated during the conference.
“We’ve been talking about our co-location strategy for some number of years now but haven’t provided an update recently on how we’ve progressed,” said Proffitt. “Our accelerated growth in 2021 and beyond is a differentiated strategy built on a long-standing track record of successful joint ventures.”
LHC Group earlier this month completed the acquisitions of Grace Hospice in Tulsa, Okla., as well as two affiliated providers in Mesa, Ariz., East Valley Hospice and East Valley Palliative Care for undisclosed amounts.
Currently, 77 out of LHC Group’s 111 hospices are co-located with home health locations (or 69%), up from 63 locations in 2020 and 58 in 2018. LHC Group reported that an average of 15% to 16% of their hospice admissions came from their home health census.
Proffitt reported that hospice admissions saw 11% growth during the fourth quarter of 2020 despite facing COVID-19 headwinds. Joint ventures were a driving force in the uptick of hospice admissions outweighing other sources of organic growth.
“We’ve never really presented data like this that breaks apart our organic growth between joint ventures and our wholly-owned assets, but it really tells a pretty compelling story to further drive home that differentiated strategy we have with our JVs,” said Proffitt. “You’ll see a similar trend for our hospice admissions growth where a quarter over quarter our joint ventures outpaced our wholly-owned locations throughout the year of 2020, ending up in Q4 at 17.5% percent organic growth for all of our joint venture locations throughout our portfolio for hospice.”
JV partnerships open doorways for LHC Group to continue leveraging its separate business lines and create a health care ecosystem focused on developing longitudinal relationships with patients and their families. Creating a continuum of care is a cornerstone of the company’s co-location strategy.
“We are so clinically integrated from a transition-of care perspective. The real differentiator is from a branding perspective,” said Proffitt. “We are a huge asset for others clinically, sitting right at the table and making the kind of strategic decisions and even building new pathways throughout the transition to take care of these patients.”