AccentCare, LHC Group, VITAS Execs: Care Continuum Sprawl Central to Hospice’s Growth

Expansion across the care continuum is a key to sustainable growth for hospices, according to executives from some of the industry’s largest companies.

The hospice industry has been ripe for growth in recent years, plucking the interest of investors from all walks. Hospices have dug deep into the roots of their growth strategies as competition crops up in the market.

Whether hospices plant seeds of growth through de novos, mergers, acquisitions, or a combination of these, the ability to offer a wide spectrum of services is a key to long-term growth potential, according to leaders of AccentCare, LHC Group Inc. (NASDAQ: LHCG) and Chemed Corporation’s (NYSE: CHEM) VITAS Healthcare.

Hospice News recently sat down with executives at each company during the 2022 ELEVATE Conference in Chicago to discuss how they are honing their M&A and growth strategies. An evolving payment landscape and rising demand of a swelling aging population represent the largest factors pushing hospices to expand services further upstream, according to executives.

LHC Group’s decision to double down on hospice

In recent years, LHC Group’s leadership team has made a “very strategic decision” to double down on hospice deals, according to Carla Davis, the company’s senior vice president of hospice operations.

Thus far, LHC Group’s M&A strategy has focused on co-locating new hospice locations in markets in which it already has a home health care presence.

As LHC Group looks ahead, this strategy will continue to gain speed as it looks to sprawl across the care continuum, according to Davis.

“You’ll see us going forward really looking at how we can build out a continuum of goods that we exist in,” Davis told Hospice News during the ELEVATE conference in Chicago. “How can we co-locate with home health, home- and community-based services, and truly be that continuum of care in the home?”

The focus on hospice de novo growth has doubled the company’s census since last year, according to Davis.

Louisiana-based LHC Group operates 169 hospice locations and 543 home health locations across 37 states and the District of Columbia, covering an estimated 68% of the nation’s 65 and older population. The company completed six transactions in 2021, one of which was the purchase of home health and hospice locations in 28 states from the joint venture between Brookdale Senior Living (NYSE: BKD) and hospital system HCA Healthcare (NYSE: HCA).

This year brought the company’s pending sale to UnitedHealth Group (NYSE: UNH) subsidiary Optum as part of a roughly $5.5 billion deal, which is expected to close by the end of this year.

The company’s acquisitions contributed $36.2 million to its hospice revenue growth in this year’s second quarter. Its hospice segment brought in $102.6 million during that period, a $38.8 million rise from the prior year’s quarter

Though hospice had been a part of its service repertoire, it was not historically at the forefront of the company’s growth plans, said Davis.

“Hospice has been a part of the mission of LHC Group since the beginning, since the late 90s. But the organization grew more strongly in home health, and that really was the primary focus,” said Davis. “Up until 2020 and 2021, LHC wasn’t as focused on being as acquisitive in hospice alone.”

Carla Davis, Dr. Balu Natarajan, Joel Whereley RoboToaster, SmugMug
Carla Davis, Dr. Balu Natarajan and Joel Whereley at the 2022 ELEVATE Conference

AccentCare broadens service spectrum with hospice growth

AccentCare has taken a similar approach to growth as LHC Group, looking to fill gaps of access to health care across the continuum, according to Dr. Balu Natarajan, chief medical officer for hospice at the post-acute care company.

Dallas-headquartered AccentCare is a portfolio company of the private equity firm Advent International. AccentCare operates more than 260 locations in 30 states, providing care to upwards of 210,000 patients and families annually. The company’s continuum of services range from personal, non-medical care to skilled nursing, rehabilitation, palliative care, hospice, home health, telehealth and care management.

Similar to LHC Group, AccentCare in recent years began to prioritize growth into the realm of end-of-life and serious illness care.

In December 2020, AccentCare merged with Illinois-based Seasons Hospice & Palliative; it has since consolidated this subsidiary, along with six others, under the company’s main brand. Prior to merging, Seasons served more than 36,000 patients annually across 19 states, including those that received care in its 28 hospice inpatient centers.

Collaborating with Seasons has more than tripled AccentCare’s average daily census since the two merged, according to Natarajan. Prior to that, AccentCare operated with a “big home health but pretty small hospice” presence, he said.

“We were constantly looking for who was going to be the home health [operator] in any given community, … with whom we could partner to administer [services] beyond what our providers could do,” Natarajan told Hospice News during the conference. “Both groups were looking for a broader spectrum. We’re all really committed to not just the very end of life, but those years leading to the end of life and what that looks like — whether that’s in a nursing care or home setting, whether outside of and beyond the acute care hospital setting.”

VITAS Healthcare’s slow but steady hospice growth

Unlike some of its competitors, VITAS has focused on de novos for geographic growth rather than acquisitions. In February, the Florida-based company expanded with a de novo that swelled its presence into three additional counties across its home state.

VITAS takes a “deep dive” in its M&A approach, slowly working prospects into its fold before developing new ones, according to Joel Whereley, VITAS executive vice president and COO.

“VITAS has always taken a position that we have a unique service model, and that we tend to go deep into a larger market,” Whereley told Hospice News at the conference. “When we would do a de novo, we would go all-in, full-staffed from Day 1 for X number of census. It may take us 10 months or 12 months to get there, but that was our commitment to our mission – to be able to provide that level of care from Day 1.”

VITAS is the nation’s largest hospice provider by market share, according to LexisNexis. The company operates 49 hospice programs across 14 states and in the District of Columbia, with 28 inpatient hospice units nationwide.

Like many providers, referral disruption and labor pressures challenged VITAS growth potential this year. VITAS brought in $298 million in revenue during Q2, a 4.5% decline compared to the prior year’s period. Despite these headwinds, VITAS executives remained optimistic about the company’s acquisition pipeline.

Though the company overall hasn’t completed many acquisitions recently, there are some M&A activities that have flown “under the radar” but have been just as important to long-term growth, according to Whereley.

Value-based payment models may also come into play for the company’s future growth considerations, according to Whereley. Though VITAS has no firm plans centered around value-based care, the company is evaluating how reimbursement shifts may impact future deals, he noted.

“Understanding expanding our geographic footprint, especially as it aligns with potential influencers in a payer-related world, may also have to make sense. We continue to evaluate that, even though we have not been aggressively pursuing acquisitions in the past,” Wherely told Hospice News. “We recognize that as our industry evolves and has a seat at the table, we know if we’re going to be attractive in a value-based world, we may have to be flexible and adjust and partner.”

AccentCare, LHC Group, VITAS Execs: Care Continuum Sprawl Central to Hospice’s Growth – Hospice News