By acquiring home care company Amedisys for $3.3 billion through Optum, UnitedHealth Group is doing what many companies are eyeing: gaining a “greater footprint” in the post-acute space. This is needed as home-based care gains popularity and the Medicare Advantage population expands, one industry consultant explained.
“As enrollment in Medicare Advantage continues to grow year-over-year, there is increasing incentive to reduce overall cost of care and shift care to the most appropriate, lowest cost setting,” implying the home, said Tyler Giesting, director in West Monroe’s healthcare & life sciences practice.
About $265 billion worth of care services for Medicare and Medicare Advantage members is anticipated to move from traditional facilities to the home by 2025, according to McKinsey.
Baton Rouge, Louisiana-based Amedisys is a provider of home health, hospice and high-acuity care services. Eden Prairie, Minnesota-based Optum, a UnitedHealth business, is acquiring Amedisys through an all-cash transaction for $101 per share, the companies announced Monday. Optum is a healthcare services provider and offers care through local medical groups and ambulatory care systems.
Back in May, Option Care Health, a provider of home and alternate site infusion services, said it would acquire Amedisys in an all-stock transaction for $97.38 per share. But being an all-cash transaction, UnitedHealth’s offer was more appealing, several experts told MedCity News. For terminating the deal, Amedisys will pay Option Care $106 million.
The deal follows another home care acquisition by Optum, which bought LHC Group last year for $5.4 billion.
“Optum took a giant leap into home-based care with LHC. … The Amedisys deal appears to be a doubling down of this focus,” said Ellen Herlacher, principal of LRVHealth. “This transaction — in combination with the LHC deal — paints a picture of virtuous referral patterns between outpatient and home, all taking place in the Optum environment.”
Giesting added that Optum, LHC Group and Amedisys all have assets that complement each other. LHC Group has a personal care services business (which helps with non-medical activities like meal prep), an area that Amedisys gave up this year. Optum also has a geriatric primary care offering through its Landmark Health acquisition.
“This gives the potential combined organization greater operating scale and a more diverse range of services to care for patients across more of the post-acute care spectrum as their needs change over time,” he said. “It also positions them to care for more complex, higher cost populations and provides them more ‘on-ramps’ to additional services a patient may need, which is particularly important when taking financial risk for certain patient populations.”
Optum and Amedisys would likely agree, stating in a news release that the deal “unites two organizations dedicated to providing compassionate, value-based comprehensive care to patients and their families.” The companies declined to comment further on their transaction.
Other large organizations have also succumbed to the allure of the home.
In March, CVS Health bought home care company Signify Health for $8 billion, reportedly beating out UnitedHealth Group and Amazon. Walgreens Boots Alliance also recently acquired its remaining 45% stake of CareCentrix, another company in the home care space, for about $392 million.
The $3.3 billion price tag of the Amedisys deal especially signals the rising prominence of home-based care, said Michael Greeley, co-founder and general partner of Flare Capital Partners.
“It really underscores the power of moving services into non-traditional settings, specifically the home,” he said in an interview. “It’s very validating to see the price that was paid.”
Alyssa Jaffee, partner at 7wireVentures, anticipates more acquisitions and funding happening in the home care space.
“The Covid-19 pandemic accelerated the transition to care at home, with increased adoption driven by regulatory changes that now enable reimbursement for at-home services,” Jaffee said. “This acquisition serves as not only evidence of the paradigm shift in the reimbursement landscape and how consumers engage with health and care, but how traditional healthcare players are also adapting to this shift by embracing new approaches.”
The deal is pending Amedisys shareholder approvals and regulatory approvals.
Photo: designer491, Getty Images
