The news of Optum’s bid to acquire Amedisys came as a surprise — but it fits a larger theme of payers, particularly Medicare Advantage plans, looking to acquire assets to build out a home ecosystem.
In recent years, we’ve seen this play out in a number of ways, with some buyers finding success in their endeavors and others selling off the asset shortly after acquisition. While some buyers, including payers and other providers, have been able to capitalize on owning home health assets, others have struggled to benefit financially.
The drivers
When acquiring a home health agency, payers’ objectives are largely centered around operating costs and the ability to refer as many of their patients to these organizations as possible. If the agency is not delivering a return on investment or is unable to refer enough patients, payers are not afraid to divest and reevaluate structure.
Despite these varying outcomes, the race is on to acquire home-based care assets. We suspect there are two main reasons:
1. Home-based care is a cost-effective alternative
Payers want to direct their members from acute care back to the home without a skilled nursing stay. Especially for Medicare Advantage patients, there is a financial incentive to avoid sending patients to a skilled nursing facility (SNF).
Amid the push to improve patient quality, SNFs are often seen as a cost center that payers are eager to cut out — leading many to invest in home health agencies and services.
2. Home-based care operators need to grow their workforce
All home-based care operators, whether part of a payer organization or not, need to grow their workforce. According to our research, this was the number one factor hindering the expansion of home-based care.
By adding Amedisys’s workforce to their own existing home-based care workforce, Optum could help overcome this challenge.
Optum’s interest in Amedisys is also notable because of the diversity of services that Amedisys offers. Not only do they support home health, but they also offer hospital at home services through Contessa as well as home-based palliative and hospice care. That’s an attractive suite of services for a Medicare Advantage payer interested in offering more care in the home.
What we’ll be watching
It’s still unclear what will happen with Optum’s offer for Amedisys. Even if Amedisys agrees to the acquisition, the deal is likely to face FTC scrutiny. If that does happen, we’ll be watching to see whether Optum has to divest from any of Amedisys’ assets as part of an eventual deal.
With the continued rise in seniors who require skilled care — most of whom would prefer to age in the home — investments and divestments in the home health space will continue to make headlines.
Moving forward, we’ll be paying close attention to the outcomes of larger home health acquisitions by payer organizations.
Specifically, we’ll be watching to see if they’re able to successfully move their members away from facility-based care and into the home, both in terms of quality and the bottom line.
HENRY KOTULA 