Value-Based Care, PDGM Sparks Home Health Dealmaking Activity


The house well being market has been a hotbed of M&A exercise as of late, and there are a selection of key elements sparking the dealmaking curiosity.

Since its implementation in 2020, the Affected person-Pushed Groupings Mannequin (PDGM) has loomed massive within the residence well being area.

Now, PDGM is a driving pressure behind a lot of the transaction exercise going down on this area, in keeping with Linda Murphy, COO and founding father of Concierge Dwelling Care.

“Initially, there have been some firms pondering, ‘Properly, possibly I can probably get via PDGM,’” Murphy mentioned throughout a Wednesday Wellsky webinar. “‘Let’s see what it appears like.’ We’re discovering, sadly, a few of these firms aren’t even the standard property that they might’ve been at the start of PDGM. There are people on the market that haven’t been capable of handle, and also you’re making an attempt to avoid wasting them earlier than they’re too far gone, so to talk.”

Concierge Dwelling Care has six areas in north and central Florida that primarily present Medicare-certified residence well being providers.

For some struggling suppliers, COVID-19 aid measures delayed the need to merge or promote their enterprise.

“The influence of PDGM was largely muted final yr due to the Supplier Aid Funds or the [Medicare advanced payments],” Ross Sallade, a shareholder at legislation agency Polsinelli, mentioned through the webinar. “It looks as if that veil has been lifted and that consolation is beginning to disappear as we stretch on via the pandemic.”

Sallade famous that, final yr, a lot of residence well being insiders and shareholders predicted that PDGM would pressure smaller suppliers out of the business and result in record-breaking consolidation. He believes that this would be the case transferring ahead.

The house well being M&An area has develop into a “pressure-packed” and seller-friendly market, he added.

“The diligence strain to get via it shortly appears to be much more so than regular,” Sallade mentioned. “Sellers appear to be extra keen to dump what they take into account to be a problematic purchaser, somebody who actually goes to dig in on the diligence and make it troublesome to get to shut.”

One other issue driving dealmaking exercise within the residence well being area is the bigger shift towards value-based care.

“Worth-based care is coming, and there are lots of totally different fashions being examined,” Preston Brice, a accomplice at Grant Avenue Capital, mentioned through the webinar. “There are lots of totally different people who find themselves now centered on it — for instance, hospital techniques and direct contracting entities — and are on the lookout for suppliers that may deal with that. That’s the place having scale issues.”

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With this in thoughts, suppliers are making ready for the potential nationwide growth of the Dwelling Well being Worth-Primarily based Buying (HHVBP) Mannequin and the way this could additional speed up this development. Typically, HHVBP is an effort to create monetary incentives for higher high quality of care.

Concierge Dwelling Care, specifically, isn’t any stranger to HHVBP. The corporate’s massive Florida footprint meant it operated in one of many 9 states chosen to take part within the Medicare demonstration.

“We’re very comfy in that world,” Murphy mentioned. “I really feel very constructive about this. I’m excited that we’d be in a cohort that’s extra than simply state-driven.”