Current Market Conditions
2018 proved to be a very busy year for providers positioning themselves for success as market conditions evolve. Payers are pursuing greater efficiency through value-based compensation and providers are responding with cross-continuum partnerships, joint ventures, and strategic acquisitions designed to engineer the best patient outcomes and best financial outcomes.
The trend towards cross-continuum transactions was further supported by the CMS decision to allow Medicare Advantage plans to cover non-skilled care, opening a new channel of growth. Traditional Medicare home health providers who may not be excited about the implementation of PDGM now have another good reason to consider offering non-medical care.
Another trend driving activity in the market is the increased importance of private equity investors capitalizing on consolidation. While strategic buyers are carefully crafting multi-modality providers through cross-continuum transactions, financial buyers are pursuing pure-play roll-ups to create best-of-class assets that can then be divested to a strategic buyer for a market-topping premium. Given the generally fractured market populated by many smaller providers, home health, hospice, and homecare have all become especially desired among investors specializing in lower-middle market transactions.
In June, the BDO Center for Excellence in Healthcare found that over 40% of leading healthcare executives plan to invest in homecare, home health, & hospice (compared to only 5-12% planning to invest in facility-based care). This is certainly corroborated by our experience in the market: Buyers of all types are plentiful but good acquisition candidates are hard to find!
As the year winds down and we look forward to a healthy, happy, & prosperous 2019, will you be thinking about selling, buying, or investing? Consider putting our 20+ years of experience to work for you!
If you’d like to discuss how all of this affects you, feel free to contact us any time.
We’re always happy to discuss market conditions, valuations, and the process we undertake to effect a successful transaction.