Vistria Group’s Loporcaro: ‘Elevate Hospice into Value-Based Care’

Former Landmark Health CEO Nick Loporcaro recently joined the Chicago-based private equity firm The Vistria Group as a senior operating partner. Vistria currently counts hospice provider Mission Healthcare in its portfolio.

While Mission is Vistria’s only current hospice asset, the firm is a long-time investor in the hospice space. Late last year, Vistria sold Agape Care, a South Carolina hospice company, to PE firm Ridgemont Equity Partners for an undisclosed sum. 

In December 2020, Vistria divested St. Croix Hospice to H.I.G. Capital in one of the largest transactions in what was a robust year for M&A. Financial terms of that deal were confidential.

As senior operating partner, Loporcaro will advise the firm as it continues to pursue health care investments and work to build up Vistria’s new Dallas office

Hospice News sat down with Loporcaro to discuss his move from the health care provider space to the financial sector as well as his outlook for 2022 hospice investment.

What led you to transition from the provider space to the investor space?

Prior to joining Landmark, I had spent the better part of 16 years at McKesson, being the acquirer of many companies. I decided I was going to jump the mothership and go run Landmark, which gave me a lot of exposure from another perspective — to a lot of private equity groups and the payer space.

We transacted with Optum and [UnitedHealth Group (NYSE: UNH)], and initially I decided to stay on and help them in bringing a few other of their portfolio companies together under the auspices of home and community care. But I told them, I didn’t know that I wanted to continue to be an operator.

I was at a point in my life and my career where I had the good fortune for a couple things to line up. I was already on a couple of boards, and I am the chair of the Medalogix board. But I had some exposure to David Schuppan [senior partner and co-head of Health care at The Vistria Group].  

The team met with [Vistria’s co-chairmen and co-CEOs, Kip Kirkpatrick and Marty Nesbitt] briefly and just had a good feel for them among a couple of other private equity firms. So as I wrapped up at Optum at the end of the year, I decided to join the Vistria team for a couple of reasons. 

One reason was the team and the folks that I was working with, as well as the fact that we’re opening up the Dallas office, which is home base for me. Then there was their focus on health care in this space. 

I’m a huge proponent of the work we were doing at Landmark on longitudinal care. We saw the opportunity as we brought Landmark over to Optum to consider how do you bring home health and hospice resources and attach them to that chassis.

I really do think there’s an opportunity here to elevate the home health space and hospice space into value-based care. That’s an area of focus for us. So it resonated with me. I’m dabbling in some other spaces as well, but health care is probably where the majority of my time and interest is.

How did your experience leading a provider entity inform your approach to your work at Vistria?

Some of this will sound altruistic, but please know that it’s sincere. What drew me to Landmark is what draws a lot of providers to companies like Landmark, and it really is the proverbial “keeping the patient as the North Star” and being able to provide better care. 

You start understanding the providers’ motivation, and what it is that’s important and what it is we need to deliver. Now, from the investor perspective, we’re looking for companies that understand that, too. How do you best scale that and then balance what you want to deliver, but at the same time, remember we’re still a business? You still have to be able to grow it. 

I used to put up this hokey slide and refer to it. It had the patient at the top, the payer in one corner, and then the shareholder in another. And I said that in order to give our patients everything they want and deserve, we’ve got to do it at a price point that the payers are willing to pay while delivering double-digit returns to our shareholders.

When you think about that, if you don’t deliver those returns, you don’t have the capital to invest in the services and the systems you need at a price point that payers are willing to pay.

As you understand each one of those components, it helps guide you to what are the best assets out there to look for, based on the thesis or themes in the industry that you want to build towards.

A lot of the publicly traded companies in the space have said they’re going to back off from hospice acquisitions during 2022. Do you expect any kind of similar cool down on the private equity side? If not, what opportunities does this present for firms like this?

I think, candidly — and this is a personal opinion of mine — the voluntary [Medicare Advantage hospice carve-in] won’t be voluntary for long. As you look at palliative care and hospice and that referral, just like home health and in-home medical care, I think there’s complements there.

I know that we’re a little sort of gun shy because of past issues — and maybe abuses. I really do think, especially if you’ve got a palliative discipline, how do you leverage hospice?

I hope there’s not going to be a pullback. I think there’s a true opportunity there. I’m learning a ton with my exposure to Medalogix and the Muse portfolio there. There’s a lot of learning there. As we can bring those to the surface, I think we’ll be able to change people’s minds around what the real value of that is, versus how we look at the financial model today.

Could you expound a little bit on what you meant by abuses or past issues?

As I learn about these industries, people get a look at the question of whether patients were properly served, where people take advantage of the system. You hear those those rumblings, but I’m a huge proponent [of value-based care].

This is a gloss on a quick tangent, but I was interviewed by the advisory board and one of the individuals said to me, “So your model is a lower cost site of care.” I said, actually, quite the contrary. Our costs are 10 times more than going to visit a doctor in a clinic. But the value we deliver to the system, the quality of care we give to our patients and avoiding ER visits and hospital stays, is huge.

So if you come back to doing it in a construct, where now you’re doing it as the overall total cost of care, you start to take away that motive of, “Am I declining care?” Your outcome here is getting better care and reducing overall cost.

What can you say about Vistria’s plans for hospice investments during 2022?

I haven’t been around long enough to give a full picture. I officially started Jan. 1. One thing I do know is everything on [Vistria’s health care portfolio] and hospice is complementary to the longitudinal programs I was talking about earlier, and some things I’ve done in the past. Vistria has demonstrated to me a keen interest in continuing to invest in this space.

What do you see happening in terms of investment in palliative care providers specifically? There are not many companies that specifically do palliative care without also offering hospice, but could you talk about how the availability of palliative care factors into investors’ buying decisions? Does that make an acquisition target more attractive?

It can if you buy into hospice and palliative care being complimentary, not one replacing the other or being competitive. When we actually look at companies like Prospero or Aspire, there are some models out there.

If you look at Landmark, palliative care was part of what we did. It wasn’t standard.

If you had a good hospice network that you could refer to, again, they become very complementary. When you look at where those palliative assets have gone, you look at the payer space. I think if you can come up with a robust, high-quality hospice delivery system, you’re going to have buyers of your services.