Trends in market share growth can demonstrate how well hospices were able to recover from the headwinds brought on by the coronavirus pandemic. New data from Trella Health indicate that in many cases large national organizations were able to return to pre-pandemic admission levels faster than smaller companies and nonprofits.
Nationally, Amedisys Inc. (NASDAQ: AMED) saw the largest increase in market share between the second and third quarters of 2020 with 7% growth. In Trella’s state-by-state analysis Amedisys was among the three highest gainers of market share in six markets: Louisiana, Maine, New Jersey, Pennsylvania, Rhode Island and South Dakota.
Promedica Health System, Bayada Home Health Care, Elara Caring, Compassus and St. Croix Hospice were also national leaders in market share growth between Q2 and Q3 last year. St. Croix is a portfolio company of the private equity firm H.I.G. Capital.
Smaller providers may need to refocus their marketing efforts to remain competitive.
“The independent and non-profit agencies have an opportunity to increase their market share by investing in their sales, marketing and performance, and highlighting their high-quality outcomes in the communities they serve,” Ian Juliano, CEO of Trella Health, told Hospice News.
Performance during the middle quarters of last year is a key indicator of how well companies were able to regain business lost during the early months of the pandemic. Most organizations saw a drop in admissions in those periods due to a slow down in referrals from institutional sources like hospitals, nursing homes and assisted living, which also saw lower utilization and tight restrictions as to who could enter.
According to Trella, large companies were able to adapt more quickly to pandemic conditions, including some private equity-backed hospices like St. Croix.
Trella reviewed Part A and Part B Medicare claims to identify the National Provider Identifiers (NPIs) that demonstrated the highest percentage of growth and then aggregated the NPIs that rolled up to the same parent companies in each state. Their researchers defined this growth as the sum of market share increase in a state for each NPI associated with a parent company.
While industry giants saw the most growth nationally, this trend was not universal within the individual states. Hospices in geographies with fewer competitors had the most opportunity to increase or lose market share, according to Trella. More competitive markets had less room for variation in their percentages. For example, Hospice of the Red River Valley grew 5.1% in North Dakota, giving them the largest state-wide market share increase in the United States. However, because their footprint extends through only two states they did not appear among the national leaders.
Another key consideration is the time period being considered. Most hospices saw admissions declines early in the pandemic, meaning that their Q3 numbers reflected more of a recovery than true growth when compared to pre-pandemic numbers.
While Trella did not track market share growth by type of ownership, a number of private equity portfolio companies showed up high in the state-by-state rankings. Private equity interest in the hospice sector has been gaining momentum in recent years, even as valuations hit all-time highs. Private equity hospice transactions rose nearly 25% between 2011 to 2020, according to M&A advisory firm The Braff Group.
“We worry about the future of traditional non-profits and smaller agencies when we see the level of sophistication and resources the PE-backed agencies are putting into sales and marketing,” Juliano said. “The difference is not in the quality of care the agencies are providing, but in how serious the PE-backed agencies are taking census-growth.”