Home Health Industry Headed for Post-COVID ‘Hangover’ Phase

Amedisys Floats Future Innovation Plans, Details COVID-19 Costs

Among its many impacts, the COVID-19 emergency signaled the decentralization of health care and the disruption of M&A activity.

When it comes to post-acute care, skilled nursing facilities (SNFs) and other institutional care settings additionally saw patients migrate into the home in order to avoid the spread of the virus. Amedisys CEO and President Paul Kusserow touched on those and other topics earlier this month during the Home Health Care News FUTURE conference.

“We’re looking at more decentralization in health care, away from large institutions, until it can be deemed completely safe,” Kusserow said during a fireside chat. “We’re looking at surgeries migrating outside of hospitals, so more ambulatory growth in surgery, more in the post-acute world. There’s obviously more of a push toward the home, trying to manage chronic illness … outside of institutions.”

The decentralization of care will be supported by technology and the expanded reach of telehealth, he added.

Baton Rouge, Louisiana-based home health, hospice and personal care provider Amedisys has 524 care centers in 39 states and Washington, D.C., according to company statistics.

Another major impact of the public health emergency is that the industry experienced a slowdown when it came to dealmaking.

In the months leading up to the implementation of the Patient-Driven Groupings Model (PDGM), many industry insiders predicted that there would be an increase in consolidation and M&A activity.

In Kusserow’s words, deals “completely dried up.”

“We had over 50 deals,” he said. “Once PDGM kicked in, we were anticipating hundreds of deals being on the table. COVID interrupted the full impact of PDGM.”

Still, Kusserow pointed out that the current environment may soon lead to the increase in consolidation that experts once predicted.

Amid the public health emergency, the industry saw several subsidies or relief measures enacted, including payroll tax deferrals, the suspension of sequestration and loan programs. All of that will eventually go away, leaving providers to fend for themselves.

Additionally, looking to next year, the elimination of home health pre-payments, or Requests for Anticipated Payment (RAPs), is on the horizon for providers.

“With the debt that they’ll have incurred and have to repay, plus the elimination of the upfront payments of the RAPs, plus the sequestration coming back, you add all that together and I think it’s going to be a big hangover after what has been an artificial environment for home health,” Kusserow said.

During the “hangover” phase, Kusserow thinks a lot of smaller providers will exit, resulting in consolidation and dealmaking in the industry.

One major deal that did come together for Amedisys in 2020 was the acquisition of AseraCare, which was first announced in April.

The deal falls in line with the company’s past efforts to strengthen its hospice business.

Kusserow believes AseraCare will be a favorable company in terms of growth and scale. Meanwhile, Amedisys has its eye on other opportunities in the hospice market.

“I think there’s a lot of other regional hospices that are coming on the market,” he said. “We’ve seen that people are viewing this as a good time to sell.”

Despite COVID-19, Amedisys had a strong second-quarter despite COVID, generating “a prodigious amount of cash.” The company plans to use that money to be opportunistic on the M&A front in months to come.

Looking ahead, the company has identified palliative care as its next aggressive growth area.

“Palliative is an area that we’re growing in — and pretty aggressively. We’re currently doing this on a de novo basis,” Kusserow said. “We’re looking for various assets. We’re finding that palliative care is something that our clients and customers and referral sources are asking us for, very aggressively.”

While Kusserow pointed out that there’s the potential to lose money when it comes to palliative care, he said he believes the company has found a good economic formula to do it on a break-even basis.

Targeting the palliative care space also leaves room for further growth on the hospice and home health sides of Amedisys, according to the CEO.

“We believe that … palliative gets people into hospice sooner, and it does grow hospice,” he said. “So, we believe we’ll see that on the other end. We also believe it’ll be helpful to our home health efforts.”

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