Welcome to the Blog! Home Healthcare M/A Industry at a Glance
We would like to welcome you to the Prestige Healthcare Group blog! As we continue to grow and reach out to home care and home healthcare agencies to help them create a better life than yesterday, we wanted to open up this channel to talk about the home health industry and the many challenges that agency owners face. Our goal is to help educate home healthcare agency owners on HHA merger and acquisition (M&A) with helpful information and start to talk about what makes an agency appealing to an organization like ours.
Today we wanted to open up the blog with a bit of a scoop on where the Home Healthcare industry stands today.
Competitive Market
According to a March 2022 report by Medpac to Congress, the number of HHAs fell by 1.0 percent from 2019 to 2020, but the number of home health agencies had steadily increased since 2004. Specifically, between 2004 and 2016, the number of HHAs climbed by 60%. Some areas around the country have experienced growth in HHAs. The supply of HHAs varies across states, for example in 2020, Texas averaged 8.4 HHAs per 10,000 fee-for-services (FFS) beneficiaries, whereas New Jersey averaged less than 1.0 per 10,000 FFS beneficiaries. Despite a drop in home health users from 2019 to 2020, the average payment per home health user increased 2.8%.
Throughout the pandemic and moving forward, with technological advancements and medical innovation along with an aging population, home health could grow exponentially as our country’s aging population of adults that by all accounts, will soon outnumber children.
Now May Be the Time
Change is demanding. Change causes fatigue. Turnover and staffing can be a challenge. The last few years of the pandemic have put a dent in anyone’s business plans. At some point along the business ownership journey, owners may start considering selling.
If you are a home care agency owner and you are considering a change in the future of your company, M/A may be the answer. The merger and acquisition market for home healthcare agencies is booming, with some companies selling for between 5x and 10x. This is in part because of a quickly aging population, among many other factors, we will continue to talk about here on the blog. Many HHA owners are seeing the benefits of selling their company, or turning it over to a Management Service Organization which allows them to keep their position while enhancing key areas of the business.
Home Healthcare M/A Spike
During the peak of the pandemic, healthcare M&A hit new highs as agency owners faced significant challenges in an unpredictable time. Some sort of balance has returned, as has the number of strategic M&A deals. This is demonstrated in a recent report from KPMG. Transactions delayed by COVID finally came to fruition in the end of 2021, with sellers fearing 2 things: capital gains tax rates, and burnout.
What is a Management Service Organization?
A Management Service Organization (MSO) is a company that provides non-clinical services to home care and/or home healthcare agencies to help them operate at a higher level. Some of the services an MSO may provide could include:
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Billing and Collection
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Accounts Payable
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Overall Revenue Cycle Management
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Payer Negotiations and Credentialing
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Employment of Non-Clinical Staff
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IT Services
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C-Suite Administrative Services
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Human Resources
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Marketing
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Space Rental
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Equipment Rental
As a trusted MSO that works with several affiliates in NY and NJ, we are seeking to build quality relationships with owners of home care and home healthcare agencies in North Carolina. We are proud of what we have been able to accomplish with these agencies, and are seeking to acquire and/or assist high-performing, well-respected agencies that are in need.
We aim to help you better understand how much your company may be worth in 2022, and depending on your vision for the future of your organization, you could either stay on as an owner for as long as you’d like, or walk away, but no matter what you can trust that we will strive to continue the legacy that you’ve created with your community.
Stay tuned to the blog for more HHA M/A news and notes, and remember to follow us on Linkedin to learn more about our company!
