The acquisition of Contessa Health by Amedisys (NASDAQ: AMED) is opening new lines of communication with hospitals and health systems that could fuel further expansion by the home health and hospice provider.
Amedisys purchased Contessa in June 2021 for a total consideration of $250 million. Contessa Health is a Tennessee-based company that provides hospital-at-home and skilled nursing-at-home services. Amedisys purchased the company in conjunction with efforts to expand their range of high-acuity services.
Amedisys executives speaking at the JP Morgan Healthcare Conference indicated that the company’s work with Contessa is spurring discussions about potential new acquisitions, including the home health and hospice assets of some hospital systems.
“We’re having a lot of good conversations with hospital systems now — relatively large ones — that are looking at us and saying, ‘Well, if you’re doing this really well with Contessa, maybe you should take over our home health and hospice assets,’” Amedisys Chairman and CEO Paul Kusserow said at the conference. “Our pipeline is certainly filled up, and a lot of opportunities and great conversations [occur] when we get around the table with some of these hospital systems that are giving us opportunities that really weren’t in front of us as much before.”
Contessa in Oct. 2021 launched a joint venture with Michigan-based Henry Ford Health System to provide high-acuity home care services as well as palliative care. This follows the establishment of a palliative care enterprise with Mount Sinai Health System in Feb. 21, branded as Palliative Care at Home.
Contessa reportedly has a pipeline for similar partnerships that includes more than 100 hospitals in 28 states, according to comments in Amedisys earnings conference calls. These deals have the potential to double Contessa’s footprint, Kusserow said when reporting last year’s Q3 earnings.
Amedisys’ net service revenues rose to $553.5 million during the third quarter of 2021, up from $544.1 million from the prior year’s period. The company’s hospice segment revenues dropped to $195.5 million from $199.7 million in the prior year’s quarter due to pandemic headwinds. Industry-wide dips in average daily census and length of stay contributed to the decline.
“We feel like it’s related to the pandemic either directly from COVID patients or indirectly from patients delaying care, diagnostic testing, seeking end of life care and coming on services later in the dying process, which is also impacting the median length of stay,” Kusserow said. “There also is a typical kind of acceleration of death rates over the holidays. That’s a phenomenon that’s existed in hospice forever.”
Kusserow announced earlier this week that he will retire as CEO in April with President and COO Chris Gerard set to take the helm. Kusserow will remain chairman of the board.