June 14, 2023
McKnight’s Home Care
By: Liza Berger
Two seemingly isolated home health news stories this week actually have more in common than what appears at first blush.
One is Optum’s bid for Amedisys, a major development that could place the third home health chain in the hands of a massive health insurance firm. The other is the release of a report on private equity in home health, which found that just a handful of firms are controlling the majority of Medicare revenues in the private equity arena. Totally different stories, right?
Yes, until you take a closer look at the report. While it raised concerns about private equity’s presence in highly concentrated markets, it also revealed that non-private equity firms are operating in highly concentrated markets and contain even larger players. Consider this stat: Almost 80% of all home health markets without private equity ownership are highly concentrated, and the average market share of those firms is about 45%.
What does this mean? Essentially, a few big players may be controlling various metropolitan statistical area markets, which does not necessarily bode well for quality, innovation and competition.
The report issues a warning to this effect: “These results strongly recommend that antitrust enforcers, regulators and legislators should be on the lookout for consolidation and rising concentration in home healthcare markets,” the report said. “They should be especially aware of the emergence of dominant players, whether they be private equity-owned or backed, or non-private equity firms.”
So now I return to my original premise: A takeover of Amedisys by Optum, which is owned by UnitedHealth Group, the largest health insurance company (which also happens to be bigger than JPMorgan Chase, the country’s biggest bank), may have consequences beyond the acquisition. It may be a sign that we need to be careful about a few big players in home health calling all the shots.
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