Hospices are blazing trails toward growth, each provider with its own range of strategies. In 2023, the focus for many is to not only expand their core business but to spread further into the care continuum.
Others are traveling a more traditional route, through de novos and acquisitions, though some are modifying their approaches in a volatile economic environment.
Regardless of providers’ disparate methods, hospice remains a high-growth industry, expanding at an annual rate of 7% to 8% annually, Bank of America (BofA) Global Research reported in TKTK.
By 2030, the hospice market’s total dollar value is expected to nearly double, reaching $64.7 billion, up from $34.5 billion in 2022, according to the data firm ResearchandMarkets.
In this story, Hospice News highlights the growth strategies of several providers. The below comments were taken from original interviews, conducted in person and via the phone, throughout early 2023. Hospice News edited comments for length and clarity.
Expanding the continuum
Sometimes expansion doesn’t refer to a newly established or acquired physical location. Some hospice providers are pursuing growth by building out the range of services they offer, including care that is upstream of hospice.
“We look at the services that we already provide and whether we are meeting all [of a market’s] needs, or if there are additional services that we need to add. Some of our agencies have massage therapy, pet therapy and music therapy. So as we look across our portfolio, we look for places where we need to add to those.” – Stacie Bratcher, CEO, Jet Health
“We’re going to constantly be looking for what I call other ancillary services to bring into the home. Other things that, once again, help patients and their families as they enter this period of life. How can we be more of an intermediary or a trusted guide around some of the services? We can bring in that care and really be anchored off of a lot of those personal attendant services that we have.” – Steve Rodgers, CEO, AccentCare
“We’re getting heavily invested in telehealth programming — to really have a 24/7 connection with our patients. That’s really becoming key to our future and our growth. Through that program, we believe that we’ll have a much greater usage percentage for our patients to be able to access us.” – Jim Palazzo, CEO, Transitions Care
“I was interested in PACE services just because of the similarity that it has to hospice care and the need that it fills, often for some of the poor folks in a community. Because most of the individuals accessing PACE are going to be Medicare and Medicaid beneficiaries. A lot of times you find that they don’t have an option to stay at home, because they can’t afford to bring in support systems or pay for private sitters, and they end up going to a nursing home. That may not be the best solution for the individual or the family, and then PACE can become a solution.” – David Cook, CEO, Hosparus Health
“I think from an Amedisys standpoint, we can kind of take anything and everything that can be done in the home, and we can be the primary contact for providers, for physicians and for health systems – and, ultimately, for payers – in a way that benefits everyone. We have a tremendous opportunity for growth [with Contessa], and maybe all of that is underpinned by just an inherently fragmented market growing behind us, the tailwind of the aging population.” – Richard Ashworth, incoming CEO, Amedisys (NASDAQ: AMED)
Co-location of services
A number of providers that already offer services beyond hospice care — such as home health, palliative care, PACE or personal care, among others — seek to bring their business lines together in the same markets.
This strategy allows companies to create more longitudinal relationships with patients, potentially long before they need hospice. A provider’s upstream business lines can also become a referral source for their end–of–life care services.
“Currently, 80% of our revenues are home health. We would like to build up hospice and to have more overlap of hospice where our home health is located. That’s where it strategically fits, to kind of create those tuck-ins that allow us to have that greater scale and density in a market.” – Barbara Jacobsmeyer, CEO, Enhabit Inc. (NYSE: EHAB)
“Our strategic plan has included the addition of hospice in our existing home health markets, and we have executed on that with all but one location to this point. We’ve been targeted in adding our hospices to our existing footprint where our home health services were provided in order to fully service our patients, their families and their referral sources.” – Bratcher
“We’re very focused on the care continuum. We believe strongly in having overlap within the marketplace. We’ve been very successful over the course of last year, continuing to bring up both de novo hospices and de novo personal attendant services. I think we’ve had upwards of six [certificates of need (CON)] that had been approved over the course of last year in Washington state and Florida, two major areas, as well as Washington, D.C.” – Rodgers
Joint ventures, partnerships
Beyond payment, hospice and health system joint ventures can also ease staffing strains across the care continuum, allowing the partners to pool clinicians to work across a variety of settings.
During the past few years, a growing number of hospices have inked agreements to partner with hospital systems to deliver home-based care, often including palliative care or home health.
Key examples of this strategy include home health and hospice company LHC Group (NASDAQ: LHCG), which was recently acquired by UnitedHealth Group (NYSE: UNH). Also, the Amedisys subsidiary Contessa Health has made joint ventures an essential component of its business model.
“We’re doing a lot of work with partnerships. Some of these partnerships are about goals that these partners are trying to achieve and workforce shortage issues. There are things that we need to do to be able to support people with health care, and we’ve got to do it smarter, sometimes coming together in a partnership.” – Cook
“There’s a lot of services we can do, but we need physicians and others following these patients effectively for us to actually kind of execute on these strategies. If we’ve got, for instance, a joint venture partnership, we’re very much focused on working with them around the ecosystem that needs to be put together to cover on-demand, high-acuity patients in the community.” – Rodgers
Hospice M&A activity oscillated last year in terms of the number of transactions that were completed.
In 2022, roughly 60 home care, home health and hospice private equity deals took place across the United States and Canada. This was down from nearly 100 in 2021, but was in line with 2020’s volume, according to a PitchBook report. Valuations were sky-high in aggregate, largely due to massive home health and hospice deals by large payers, Pitchbook indicated.
The market is expected to recover this year, but with more buyers seeking out smaller assets to purchase rather than big platforms. Nevertheless, traditional acquisitions remain a cornerstone of many providers’ growth strategies.
“When we think about growth, it’s very much a three-pronged approach. We absolutely intend to be very active in the M&A space. We intend to be very intentional about our de novo expansion, and then we intend to be very honed in on just true organic growth through building out our resources within the organization to support that growth, including both front-line salespeople and making sure that we’ve got the back office and clinical field staff to support that growth organically.” – April Anthony, CEO, VitalCaring Group
“We always are looking for acquisitions that will bring equity to the company and that make sense for the company. We’re always looking for markets that we feel really excited about, where we have some connectivity from a geographical standpoint. Our executive vice president of community development [Jake Biddle] is now responsible for M&A. I’d say he has a great relationship with a lot of the brokers that exist out there. So he’s actively searching. He always brings me deals to look at.” – Alex Mauricio, CEO, Bristol Hospice
“We intentionally put a pause [on acquisitions] in the middle of the year last year, but our strategy hasn’t changed. We needed to focus on the third goal, which is operational efficiency. We have to integrate all those cultures and systems, and frankly, not as many assets of a nature that we may want are out there. You have to make sure you follow up and get everybody on the same page, culturally, operationally and clinically, and that’s what we’re going through now.” – David Klementz, CEO, Traditions Health