Rising Demand Driving Private Equity Interest in Palliative Care

Palliative care has seen an influx of private equity and venture capital investment in recent years, with growing demand for serious illness care a driving factor. Along with a fragmented marketplace, these factors signify a strong business case to support continued palliative care, according to Fred Bentley, managing director of health care consulting company Avalere Health, speaking at the Hospice News Palliative Care Summit.

Private equity interest in serious illness and end-of-life care industries remains bullish, with hospice and home health sectors seeing strong consolidation activity at the end of 2020, according to a fourth quarter report from Provident Healthcare Partners. The report indicated that increased private equity transactions and an influx of new deals throughout 2021 are helping to heighten valuations.

“[With] private equity, there has to be a really strong and compelling business case there,” Bentley told Hospice News. “Put all those factors together — really strong demand [coupled] with the fact that it is still a pretty fragmented market space and the efficiencies that can be gained even as you’re capturing the upside of that growth — put that all together and you’re going to get investors’ interest when you can check all those boxes.”


New payment models, technological innovations and the widespread adoption of telehealth have transformed the landscape of palliative care on the heels of the COVID-19 pandemic. More patients sought out support from these clinicians during the deadly outbreak which has claimed more than 580,000 lives, according to the U.S. Centers for Disease Control and Prevention’s most recent report. The pandemic has underscored the need for hospice and palliative care.

Demand for palliative care has skyrocketed during the pandemic, with “recognition of the need and the importance” as well as demand for services “really high all across the country,” according to Diane Meier, M.D., founder and executive director of the Center to Advance Palliative Care (CAPC).

More than 70% of hospitals in the United States last year with 50 or more beds had a palliative care program last year, up from 67% in 2015 and 7% in 2001, according to CAPC, which reported that these institutions cared for 87% of all hospitalized patients nationwide in 2020. CAPC reported at least half of the in-home palliative care providers in the United States are hospices during 2020.


The trend of rising demand and the strong clinical rationale for palliative care are key points backing private equity interest, according to Bentley.

“Increased interest among investors signifies that they see some of the trends, which are a really strong demand [and] a really strong clinical rationale for palliative care,” Bentley said. “And now there’s an increasingly strong business and economic rationale for palliative care. Investors can help these companies scale up this model regionally and nationally, even.”

Though some large players such as Aspire and Caremore, subsidiaries of Anthem (NYSE: ANTM), the overall palliative care marketplace remains fragmented, made up of a fair amount of “mom and pop” operations. These organizations often make alluring targets for acquirers, according to Bentley.

Private equity investors could be attracted to the palliative care field for similar reasons as payers, seeing the opportunity to capitalize on cost-savings realized from expanded access to palliative care, particularly in terms of reduced hospitalizations, readmissions and emergency department visits. Home-based palliative care could reduce societal health care costs by $103 billion within the next 20 years, the nonprofit economic research group Florida TaxWatch said in a 2019 report.

Providers and investors also foresee opportunities to grow palliative care through the Medicare Advantage program. According to an analysis by ATI Advisory, 61 health plans nationwide are offering in-home palliative care as a supplemental benefit. This is up from 29 in 2019. More than 455,000 beneficiaries are enrolled in these plans. The geographic scale of palliative care as a supplemental benefit expanded nationwide this year, becoming available in 293 counties across 11 states during 2021 compared to 175 counties in seven states last year, according to Elexa Rallos, analyst for ATI Advisory.

“There’s nothing unique about palliative care, it’s just that investors know that they can consolidate it and achieve economies of scale there,” Bentley told Hospice News. “Once you start achieving meaningful scale, your ability to negotiate favorable rates with payers increases. As you get that scale, you can negotiate more favorable fee-for-service or value-based care arrangements.”

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