More health systems are forming joint ventures with home health agencies

HCA Healthcare acquired a majority stake in Brookdale Health Care Services last year. It has since divested 23 home health centers, 11 hospices and 13 therapy agencies in 22 states to the LHC Group.

“Volume growth is not inpatient, it’s outpatient,” said Eb LeMaster, general manager of Ponder Co. “HCA, for example, ventured into certain areas and retracted like the home healthcare, but I think you have to keep looking for different sources of income, some of which are more profitable than others.”

Jefferson Health and Bayada Home Health Care formed a joint venture last year to expand care across New Jersey and Pennsylvania. In January, Saint Alphonsus Health System in Boise, Idaho, entered into a joint venture with Encompass Health, which also expanded another JV with Baptist Health in South Florida. LHC Group last year announced a home health joint venture with Texas Health Resources and Methodist Health System. Delaware-based ChristianaCare formed a hospice-specific joint venture with AccentCare last year.

Over the past five years, Alternate Solutions Health Network has partnered with numerous health systems in Ohio, Florida, Michigan and Virginia to jointly own and operate home care and hospice care agencies.

“Health systems are increasingly partnering with home health agencies and organizations across the continuum of care to improve patient outcomes and quality,” wrote Terry Fulmer, president of the John A. Hartford, in an email to Modern Healthcare. “This is partly due to value-based payment arrangements and opportunities for savings when post-acute care is integrated for people with complex illnesses.”

The regulatory framework for home health agencies changed in 2020 with the Patient-Driven Groupings Model. Generally, it bases compensation on patient characteristics rather than hours of therapy and has eliminated requests for advance payments, which are essentially down payments for scheduled treatment.

A provision in the PDGM changed payments from a 60-day episode to a 30-day period, which required more detailed accounting of patient conditions and more control over hospital referral patterns. home health, experts said.

That, in part, will likely lead to more consolidation and joint ventures in healthcare sectors, industry watchers said, noting that staffing will be the biggest hurdle.

“Mom-and-pop home health agencies need to consolidate and scale to cope with the administrative burden,” said Ray of West Monroe. “Now that more healthcare systems are venturing into home healthcare, it will be interesting to see if there will be an in-house wellness awakening, or if the JV model will progress.”