Posted Wednesday, October 18, 2023
Home-based care providers are increasingly focusing on value- and risk-based contracting to improve outcomes and attract payers. Some providers prefer to focus on one or two core service lines, such as home health and hospice care, while others like Choice Health at Home, Compassus, and Amedisys Inc. prefer a full continuum of care within the home. This shift is influenced by strategy and payment, as it is difficult for legacy providers to transition to risk- and value-based care models after taking on fee-for-service business for decades. However, startups can capitalize on this opportunity by building out full home-based care continuums from the ground up, with the sole purpose of going at risk with a payer.
“Who’s going to say, ‘I’m going to build my organization specifically to go at risk with payers. I’m not worried about the silos that are artificially created by Medicare, Medicaid, or hospitals,’” Dexter Braff, the president of the M&A firm The Braff Group, said at a conference in July. “You’d do home health, hospice infusion therapy, home medical care, physician housecalls, build that organization and have some capacity in a very, very tight footprint. Then go to the payers and say, ‘I’ll take care of all that, and I’m going to charge you X number of dollars per member, per month.’”
In such an arrangement, the reimbursement challenges of providing high-quality at-home primary care or palliative would not be an issue. It would be about driving better outcomes on behalf of a partner.
Braff believes that venture capital – and not private equity – would be the best sort of financial sponsor for that all-encompassing home-based care startup.
“You would have to have a patient investor get involved,” Braff told HHCN. “That’s why you’d need venture capital as opposed to private equity capital, because private equity is not patient. They need to buy and get out in a relatively short period of time.”
In home-based care, there are legacy companies in every market that do one, two or three service lines really well already.
“There’s not as much opportunity for people to start up in the space and grab market share, it’s more difficult,” Braff said. “The behavioral health space is growing so fast, there’s much more opportunity for people to get into it than there is opportunity for people to establish [themselves] within the home care space.”
But nearly every payer recognizes the value of home-based care, and its ability to produce high-quality outcomes at lower costs.
Such a company within a fixed area could make a significant dent in spending for a payer. And that’s generally what payers want – partnerships with companies that can actually reduce spending for this patient set or that patient set.
But the willingness to go fully at risk with a payer doesn’t guarantee that payer will be jumping at the opportunity – in behavioral health or in home-based care.
In a home-based care startup, the reimbursement challenges of providing high-quality at-home primary care or palliative care would not be an issue, but rather the focus would be on driving better outcomes on behalf of a partner. Venture capital would be the best financial sponsor for this startup, as private equity is not patient and needs to buy and exit quickly. Home-based care has a limited market share due to legacy companies already doing well in service lines. However, payers recognize the value of home-based care and its ability to produce high-quality outcomes at lower costs. A company within a fixed area could make a significant dent in spending for a payer, but the willingness to go fully at risk doesn’t guarantee that payers will jump at the opportunity in behavioral health or home-based care.
Source: Home Health Care News
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