Despite facing forceful pandemic-related headwinds from COVID-19, mergers and acquisitions and organic growth are fueling market share growth among the organizations listed in the LexisNexis 2020 Top Hospice Providers report.
VITAS Healthcare, a subsidiary of Chemed Corp. (NYSE: CHE), led the charge as the largest hospice provider in the United States last year, with 4.42% of market share. Kindred Healthcare ranked second nationwide with 2.86%, followed by HCR Manorcare at 2.16%, Amedisys Inc. (NASDAQ: AMED) at 2.09%, and Seasons Hospice & Palliative Care (1.62%) in the top five. The report does not reflect the 2019 acquisition of Compassionate Care Hospice by Amedisys, as it lists these organizations as two separate companies. According to LexisNexis, this will be updated in next year’s report and could influence the company’s rankings.
“For VITAS, Kindred, HCRManor Care [and] these kind of national players in acquisitions and mergers, it would take a pretty significant set of mergers and acquisitions to unseat them,” Christopher Golden, strategic health care alliances manager at LexisNexis, told Hospice News. “VITAS is at more than 4% of the market share. Once you get outside of the top 20 or 16, no one even has half a percentage point. It would take a pretty significant set of circumstances to approach those top five spots.”
Atlanta-based LexisNexis Risk Solutions recently listed the top 100 hospice and home health agency rankings for 2020. The majority of the organizations maintained their positions from 2019’s rankings despite the coronavirus pandemic. Rounding out the top ten largest hospices were Curo Health Services, Compassus, Compassionate Care Hospice, LifePath Hospice, and Hospice of the Valley. The top 100 hospice providers make up more than 40% of the overall national market.
LexisNexis ranks hospices by percentage of market share based on patient counts, looking at the claims associated with each provider. The market share percentages are the shares of all hospice provider claims nationally, not limited by region or geography. The report offers insights for hospice providers on potential M&A activity and growth for their business with details of industry-wide rankings, market dynamics, competitor standings.
The fact that little has changed reflects a stabilized market following shake ups in prior years, largely due to industry consolidation.
“A lot of [change] actually had been driven from the past years, about four or five years ago, where we really started to see the consolidation, the acquisitions and mergers that created these handful of national or at least kind of super regional providers,” Golden said. “That’s the place where we saw movement into the top 10 or top 20 providers, because of either mergers that happened or mergers that we were able to attribute to their parent company.”
The hospice merger and acquisitions market has been thriving in recent years, gaining momentum in the fourth quarter of 2020 with a significant uptick of activity. About 51 deals took place among those industries, according to a quarterly report by M&A advisory firm Mertz Taggart.
Amedisys was among the top providers prioritizing their hospice segment expansion, completing its acquisition of Homecare Preferred Choice, Inc., doing business as AseraCare Hospice, in June of 2020. The $235 million transaction made waves in the hospice industry as it expanded the company’s footprint further with 44 locations across 14 states, anticipated to boost Amedisys’ annual revenue by $117 million.
The recent mergers of Empath Health with Stratum Health and AccentCare with Seasons Hospice & Palliative Care also reflected the consolidation trend and may impact future analyses of company size by market share. Future disruption could occur with the potential sale or spinoff of Encompass Health (NYSE: EHC) or Brookdale Senior Living’s (NYSE: BKD) home health and hospice segments. The Seasons/AccentCare merger is expected to move the combined enterprise into the No. 3 spot.
One change to the 2020 list was Florida-based LifePath Hospice, an affiliate of Chapters Health System, which rose to No. 10. Florida is home to the bulk of the top hospice and home health providers nationwide, with 17 headquartered in the Sunshine State, according to the LexisNexis report. Florida held the largest pool hospice providers with 9.74% of the national hospice market share, followed by Kentucky, Ohio and Illinois.
While the industry saw little movement in terms of market share in 2020, this year may be different due to disruption from the COVID-19 pandemic, continued consolidation and the inclusion of hospice in value-based payment structures such as Medicare Advantage and the Center for Medicare & Medicaid Innovation’s Serious Illness Population and direct contracting models.
“All of these data points can help us help this industry try to figure out where those trends are going quicker, but it’s hard to tell where everything is going to be because trends are all disrupted right now with COVID,” said Sean Larson, senior director of health care strategy for LexisNexis. “It’s a great way to look at who is adopting trends early, especially over these trying times with COVID-19 management — that has changed how we do everything.”
While little shifted in terms of the top providers from year to year, the overall hospice market share is anticipated to swell and emerge from a fog of economic unknowns ahead from pandemic impacts and a new payment system.
Companies featured in this article:
Amedisys, AseraCare Hospice, Chapters Health System, Chemed Corp., Compassionate Care Hospice, Compassus, Curo Health Services, Empath Health, HCR Manorcare, Hospice of the Valley, Kindred Healthcare, LexisNexis, LifePath Hospice, Mertz-Taggart, Seasons Hospice & Palliative Care, Stratum Health, VITAS Healthcare