4 areas for hospice growth in 2023

Hospices are paving the way for growth, and each provider has its own set of strategies. In 2023, for many, the focus will not only be on expanding their core business, but also further expanding their range of care services.

Others are following the more traditional path of de novos and acquisitions, although some are changing their approach in an uncertain economic environment.

Regardless of the disparate practices of providers, hospice remains a fast-growing industry, growing at 7-8% annually, according to Bank of America (BofA) Global Research at TKTK.

The total value of the hospice market is expected to nearly double by 2030, reaching $64.7 billion from $34.5 billion in 2022, according to ResearchandMarkets.

In this article, Hospice News talks about the growth strategies of several providers. The comments below were taken from original interviews conducted in person and by phone in early 2023. Hospice News has edited comments to be longer and clearer.

Continuum expansion

Sometimes the extension does not refer to a newly installed or purchased physical location. Some hospice providers are looking to grow by expanding the range of services they offer, including pre-hospice care.

“We look at the services we already provide and whether we answer all [of a market’s] needs, or if there are additional services that we need to add. Some of our agencies have massage therapy, pet therapy and music therapy. So as we look through our portfolio, we look for places where we need to add them.” – Stacey Bratcher, CEO of Jet Health.

“We will constantly look for what I call other support services to bring into the home. Other things that, again, help patients and their families as they enter this period of life. How can we be more intermediaries or reliable conduits for some services? We can bring that care and really stick with many of the personal escort services we have.” – Steve Rogers, CEO of AccentCare.

“We are investing heavily in telemedicine programs to really have a 24/7 connection with our patients. It really becomes the key to our future and our growth. We believe that through this program, our patients will have a much higher percentage of usage so that they can access us.” – Jim Palazzo, CEO of Transitions Care.

“I was only interested in PACE services because of their similarity to hospice care and the needs they meet, often for some of the poor in the community. Because the majority of people accessing PACE will be Medicare and Medicaid beneficiaries. Many times you find that they are unable to stay at home because they cannot afford to use support systems or pay for private babysitters and end up in a nursing home. It may not be the best solution for the individual or family, and then PACE may be the solution.” – David Cook, CEO of Hosparus Health

“I think from an Amedisys perspective, we can take on everything that can be done at home, and we can be the main point of contact for providers, physicians and healthcare systems – and ultimately payers – in a way that brings benefit to everyone. We have huge room for growth [with Contessa]and perhaps all of this is reinforced simply by the inherently fragmented market growing behind us, a tailwind of an aging population.” – Richard Ashworth, new CEO of Amedisys (NASDAQ: AMED)

Co-location Services

A number of providers that already offer services beyond hospice care, such as home health, palliative care, PACE or personal care, among others, are seeking to consolidate their lines of business in the same markets.

This strategy allows companies to develop longer lasting relationships with patients, potentially long before they need hospice. The provider’s previous business lines can also be a source of referrals for end-of-life care services.

“Currently, 80% of our income comes from home healthcare. We would like to build a hospice and have more hospices where our home healthcare is located. That’s where it’s strategically placed to create those linings that allow us to have more scale and density in the market.” – Barbara Jacobsmeyer, CEO of Enhabit Inc. (NYSE: EHAB).

“Our strategic plan included adding hospices to our existing home healthcare markets, and we have accomplished this in all but one location so far. We aimed to add our hospices to our existing outreach, where our home healthcare services were provided, to fully serve our patients, their families and their referral sources.” – Bratcher

“We are very focused on the care continuum. We strongly believe in the need for duplication in the market. We have made great strides over the past year as we continue to develop both de novo hospices and de novo personal chaperone services. I think we had over six [certificates of need (CON)] which was approved over the past year in the states of Washington and Florida, two major areas, as well as in Washington, DC.” – Rogers

Joint ventures, partnerships

In addition to paying, hospice-health system joint ventures can also ease the workforce burden at all stages of care by allowing partners to bring physicians together to work in different settings.

Over the past few years, an increasing number of hospices have signed partnerships with hospital systems to provide home care, often including palliative care or home health care.

Key examples of this strategy include home health care and hospice company LHC Group, which was recently acquired by UnitedHealth Group (NYSE: UNH). In addition, Contessa Health, a subsidiary of Amedisys, has made joint ventures an important component of its business model.

“We work a lot with partners. Some of these partnerships are related to the goals these partners are trying to achieve and labor shortage issues. There are things we need to do to be able to support people in healthcare, and we need to do it smarter, sometimes in partnership.” – Prepare

“We can provide a lot of services, but we need doctors and others who effectively monitor these patients in order for us to really implement these strategies. If we have a joint venture partnership, for example, we are very focused on working with them on the ecosystem that needs to be assembled to reach community acute patients on demand.” – Rogers

“It is important that we become a major palliative player and stake out this land for ourselves. I think there is a coordinated effort between home health care, palliative care and hospice, and I should think there is an important focus on building our palliative programs so that we get people to hospice at the right time.” We have found a way to afford quality palliative care and ensure it is a coordinated effort.” – Paul Kusserow, Amedisys Chairman

Traditional Acquisitions

Hospice M&A activity fluctuated last year in terms of the number of deals completed.

In 2022, there were approximately 60 private equity deals in home care, home health care and hospices across the United States and Canada. That’s down from nearly 100 in 2021, but in line with 2020’s volume, according to a PitchBook report. The combined valuations were sky-high, largely due to large deals in home health care and large payer hospices, Pitchbook points out.

The market is expected to recover this year, but more buyers will be looking to buy small assets rather than large platforms. However, traditional acquisitions remain the cornerstone of many vendors’ growth strategies.

“When we think about growth, it’s a very three-pronged approach. We absolutely intend to be very active in the area of ​​mergers and acquisitions. We intend to be very deliberate with our de novo expansion and then we intend to fully hone in on true organic growth only, growing our resources within the organization to support that growth, including both frontline salespeople and making sure we have there is a back office and field staff to organically support this growth.” – April Anthony, CEO of VitalCaring Group.

“We are always looking for acquisitions that will bring capital to the company and make sense for the company. We are always looking for markets that really interest us, where we have a connection from a geographical point of view. Our Executive Vice President of Community Development [Jake Biddle] now responsible for mergers and acquisitions. I would say that he has excellent relationships with many of the brokers that exist there. So he is actively looking. He always brings me offers that I can look at.” – Alex Mauricio, CEO of Bristol Hospice

“We deliberately paused [on acquisitions] in the middle of last year, but our strategy has not changed. We needed to focus on the third goal, which is operational efficiency. We have to integrate all these cultures and systems, and frankly, there are not many assets that we may need. You have to make sure everyone is on the same wavelength culturally, operationally and clinically, and that’s what we’re going through right now.” – David Clemenz, CEO of Traditions Health