Hospice Investment Trends That Could Shape 2024

The hospice merger and acquisition (M&A) space has seen an increasingly diverse and growing mix of investors during the last five years.

Demographic tailwinds are pushing a wider range of stakeholders into the hospice and palliative care realms. This has led to more hospitals, payers, large health systems and home health companies to make end-of-life and serious illness care a pillar of their growth strategies, according to Steven Yecies, managing partner at the private equity firm Kain Capital.

The “audience of hospice buyers” has also included more senior care providers, private equity investors and payers seeking to own a greater piece of the health continuum, he said. Having hospice in their pipeline allows greater opportunities to extend their longitudinal relationships with patients, Yecies indicated.

“These buyers are entering the market in a large way, making acquisitions of large and small hospice providers,” Yecies told Hospice News. “You have these major payers becoming providers themselves, and that wasn’t really as prevalent before. What’s changing is that more buyers are looking to manage the full continuum of care, and they are willing to take on risk to do it. Having hospice as a tool in that offering mix could provide advantages to managing risks. Appetites may have slowed in hospice, but they are still very bullish on opportunities and we’re seeing a continued exclusive focus there.”

The frothy mix of hospice buyers

Recent investment trends show that health care companies have been working to stretch their arms over a wider portion of the system, according to Tom Lillis, partner at Stoneridge Strategic Consulting. The company is part of the merger and acquisition consulting firm Stoneridge, headquartered in Louisville, Kentucky.

More home health and hospice buyers are looking to “control the pipeline” of those services, particularly when it comes to moving upstream – often into palliative care, he said.

“We’re seeing a lot of buzz from the hospice side motivate towards palliative care and these chronically ill patients that ultimately could migrate into hospice,” Lillis told Hospice News. “And that’s true for home health and hospital systems’ interest dovetailing into hospice, too. That’s driving a larger majority of both nonprofit and for-profit growth to invest money in this care. There’s a lot of opportunity there around the pipeline of patient access and increasing awareness around hospice and home health options.”

A “very broad brush” of private equity investors have taken an interest in hospice, according to Yecies.

From large to small investors, the reasons attracting their interest are just as diverse as the companies themselves, he said. Some see promise in leveraging technology in hospice care delivery, ultimately increasing the return on their investment through operational efficiencies and cost savings, Yecies stated. Others see promise in more integrated care delivery networks that ease patient transitions, he said.

“It really depends on what is driving a PE investor to come into the hospice space,” Yecies told Hospice News. “Some have focused on ‘financial engineering’ and on coming into operational areas that had more difficulty performing to find ways of improving quality using technology to change how hospice is delivered. That enhancement of services and focus on the home is a macroeconomic environment that we’re in, regardless of how mixed the base of PE is and where they choose to operate in hospice.”