HCA Healthcare Inc. (NYSE: HCA) – the big Nashville, Tennessee-based hospital network – is looking to make serious integration progress on the hospice and home health assets it purchased from Brookdale Senior Living Inc. (NYSE: BKD) last year.
“We’re in the early stages of integration,” HCA CEO Sam Hazen said during a fourth-quarter earnings call on Thursday. “We’re looking for some significant strides on that front in ‘22.”
HCA completed its $400 million deal to acquire an 80% stake in Brookdale Health Services last July. In doing so, it added 57 home health agencies, 22 hospice agencies and 84 outpatient-therapy locations to its portfolio.
Brookdale – one of the largest owners and operators of senior living communities in the country – had been considering a sale of its hospice and home health segments since December 2020. With valuations at an all-time high and a relatively limited market for prospective buyers, cashing in on the hospice business, in particular, made a lot of sense.
On its end, HCA acquired a majority stake in Brookdale Health Services to immediately bolster its post-acute care capabilities. While it still does business with hospice and home health referral partners, having internal options helps streamline the discharge process.
Given HCA’s acute care capabilities and supply of physicians, the deal also opens up new doors in the form of innovative care delivery models. Shifting higher-acuity care into the home has become a major trend across the health care sector of the past two years.
“COVID has certainly shed a huge spotlight on the importance and the value of home health, home care and hospice,” Mark Kulik, managing director for home health and hospice at the M&A firm The Braff Group, previously told Hospice News. “As a result, I think you’re seeing an unusual buyer step into the marketplace, one that’s not private equity traditionally and one that’s not strategic.”
Currently, HCA’s overall network includes 183 hospitals and 2,000 ambulatory sites of care. The company sees about 32 million patient encounters annually.
The hospital giant has turned its attention to integration after first doing a strategic review of Brookdale’s hospice and home health locations. Ultimately, HCA decided to hang onto post-acute care assets mainly in markets where it has an existing hospital footprint.
To that end, the company – with Brookdale – sold 11 hospice locations, 23 home health locations and 13 therapy locations to LHC Group Inc. (Nasdaq: LHCG) toward the end of 2021.
“The first part of this year has been about integration,” Hazen said on the call. “We sold non-overlap components to another home care company, and then we’ve been organizing ourselves around home care and hospice inside of the markets where we overlap.”
Hazen did not specify what “significant strides” will look like when it comes to integration.
Brookdale CEO Cindy Baier, however, has previously suggested that HCA has big plans for Brookdale Health Services.
“Given what a really strong operator HCA Healthcare is, they will have a plan in terms of how to grow [Brookdale Health Services (BHS)] aggressively,” she said last February. “And that will be from incorporating BHS into their continuum of care.”
HCA’s Q4 2021 revenue was about $15.1 billion, a more than 5% increase compared to $14.3 billion in the fourth quarter of 2020.
Revenues for the year ended Dec. 31, 2021, totaled roughly $58.8 billion, up 14% compared to $51.5 billion the prior year.
Companies featured in this article:
Brookdale Senior Living, HCA Healthcare, LHC Group, The Braff Group
