M&A Volume May Shift From Hospice to Home Health

Though many expect a hospice M&A rebound in 2024, the scales are tipping in favor of home health companies among buyers.

Generally, signs point to heightened buyer activity this year, particularly among private equity as interest rates start to come down. After 2023’s slump, PE firms have been sitting on more than $800 million in dry powder, according to data shared with Hospice News by The Braff Group.

Interest in hospice remains high, but the home health’s profile is rising faster in today’s market, according to Joel Rhodes, partner at the M&A advisory firm Triavo Health.


“There’s a much greater appetite across the board for health care acquisitions. In the hospice and home health arena, what we are seeing is that there’s a little bit of a tilt to home health now over hospice, but you still have the private equity firms that have a very hospice heavy thesis, and they’re in their thought process. But there’s definitely more of a tilt in the home health space.”

Transaction volume declined in the hospice and home-based care space in 2023, following the two record-breaking prior years. Only three hospice deals took place in the third quarter of this year compared to 11 in Q3 2022 and 18 in the same period in 2021, according to The Braff Group.

But additional data point to a resurgence. A recent survey by the M&A firm Mertz Taggart, found that 77% of 51 home-based care buyers indicated that they would be more active in the M&A market this year compared to 2023.


Interest rates remain a wild card. In the early part of the year the Federal Reserve has kept rates steady, but many expect them to start coming down by the summer and into autumn.

“So much of what we’re expecting to see from an activity standpoint is going to depend on whether or not the Fed adjusts interest rates,” Rebecca Springer, lead health care analyst at PitchBook, recently told Hospice News’ sister site Home Health Care News. “Higher interest rates could affect the value of future cash flows and exit valuations.”

A number of factors are influencing these trends, including heightened regulation in the hospice space.

The U.S. Centers for Medicare & Medicaid Services (CMS) has honed in on hospice program integrity through a number of new regulations, including some in the agency’s 2024 hospice final rule. The regulations focused on Medicare enrollment in an effort to stifle unethical or illegal activity in the space. Other provisions appeared in the 2024 home health final rule, which among other things prohibits the sale of a new hospice within 36 months.

Even though a similar rule already exists in home health, the fact that the hospice requirement is new for this year could lead to some disruption. The home health version of the rule has been in place for more than a decade.

Potential reimbursement pressures also play a role, according to Triava CEO Jared Rhodes. The Medicare Payment Advisory Commission (MedPAC) recently called for a freeze in the hospice per diem base rate for 2025, for instance.

A third major factor is the rise of Medicare Advantage and managed care, Rhodes indicated.

“Now, managed care far outweighs typical Medicare reimbursement. The reimbursement is much lower per census, and so you’re doing more work for less money per census,” Rhodes said. “But I think the thought process is that you can really get some pretty large-census home health companies out there in the marketplace because of the managed care side of the business. If they can land a good contract, or multiple contracts with some of these managed care providers, that allows them to be able to expand their census pretty drastically.”

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