Home Care & Hospice

Five Key Trends in the Space

Home care and hospice is one of the largest and most dynamic subsectors within healthcare. It’s constantly evolving, driven by shifts in government policy and reimbursement, dynamic labor markets, care-delivery model improvements, and advancing technology. 

In this article, we share five trends in the home care and hospice space. Many of these key trends were discussed at Home Care 100, an annual conference that Harris Williams bankers recently attended.

Federal Policy: Washington’s Agenda Creates Opportunities

A rapidly evolving policy environment has focused on making home care and hospice more accessible to millions of Americans. “The government’s goal is to improve quality of life and reduce overall costs to the system by shifting patients into their preferred care setting, which is usually their home,” says James Clark, a managing director in the Harris Williams Healthcare and Life Sciences Group. 

This agenda is widely supported, with 85% of U.S. adults believing it should be a high priority for the federal government to expand Medicare coverage for at-home healthcare. A recent example is the Choose Home Care Act, which has been introduced with bipartisan support in both the House and the Senate. The act aims to enable Medicare patients to receive additional cost-effective home-based services as an add-on to the existing Medicare home health benefit following their discharge from a hospital. Those additional services would include skilled nursing, therapy, primary care, personal care, continuous remote patient monitoring, meals, home adaptations, and non-emergency transportation. 

Beyond generating as much as $247 million in annual savings for Medicare, the act would also open the door for home care providers to broaden the continuum of care options offered to patients and improve care coordination between providers. ii

i https://www.prnewswire.com/news-releases/new-public-opinion-poll-finds-s...
ii https://www.nahc.org/wp-content/uploads/2021/07/Choose-Home-Factsheet.pdf

Higher-Acuity Care in the Home

Several breakout sessions at the conference focused on emerging care models aimed at treating higher-acuity and more clinically complex patients in the home, such as Hospital at Home and SNF at Home. “Demand for these models has been accelerated by the COVID-19 pandemic,” says Michael Mahoney, a vice president in the Harris Williams Healthcare and Life Sciences Group. “When hospitals were facing steep capacity constraints, they valued providers that could help move more complex patients out of the hospital and into the home sooner while maintaining the same level of care.” 

Mahoney adds that while these models yield benefits for patients, hospitals, and payors, the industry is still evaluating the right reimbursement mechanisms. “The Choose Home Care Act would provide a mechanism for some of these higher-acuity services in the home, which is another reason providers support it,” he says.

Expansion of Home Care & Hospice Services Under Medicare Advantage

The Centers for Medicare & Medicaid Services (“CMS”) has increasingly recognized the value of delivering more care in the home, not only from a cost containment perspective, but also to deliver higher-quality care.

“Hospice and home care are less expensive than hospital or skilled nursing home settings, and contribute to greater patient satisfaction,” says Clark, who recently attended the Home Care 100 Conference. “CMS is creating models supporting providers that are delivering quality outcomes in lower-cost home-based settings,” he says. 

One way CMS is encouraging this shift is through the expansion of services covered by Medicare Advantage (MA) plans. Several years ago, the agency expanded supplemental benefits covered under Medicare Advantage through Special Supplemental Benefits for the Chronically Ill (SSBCI), allowing home care companies to provide meals, transportation, and care for social needs, all services that fall outside of the traditional Medicare homecare benefit. Participation in these expanded benefits has significantly expanded, creating opportunities for home care providers. Just 267 MA plans offered SSBCI in 2020, but 1,292 will in 2022. iii

CMS is also recognizing the value that hospice can provide to patients at the end of life. Beginning in 2021, through the Medicare Advantage Value-Based Insurance Design Model (“VBID”) program, participating MA plans could include the Medicare Hospice benefit in their Part A benefits package. In 2022, the number of MA plans that offered hospice care doubled to around 115, expanding the opportunity for hospice providers to partner with MA plans in serving their members. iv  The keynote speaker at the conference cited higher-quality care, rather than cost savings, as the key driver of CMS’ decision to adopt the MA hospice carve-in.

 iii Milliman report: Overview of Medicare Advantage supplemental health benefits and review of Contract Year 2022 offerings
 iv CMS


Staffing and Recruiting Challenges

While there are many positive tailwinds and opportunities in this sector, a key topic at the conference was the industry-wide challenge of meeting rising demand due to difficult staffing and recruiting.

“Demand for home care and hospice continues to grow and has accelerated in the past several years,” says Clark, “However, meeting that demand has been a challenge.”

“For many executives at the event, the most pressing concerns have to do with staffing challenges, the labor market, and employee attrition,” he says. “Many clinicians have burned out due to the challenges of the pandemic, and some have left the profession altogether. Companies will need to be innovative in their efforts to attract and retain clinicians while improving efficiency.”

Incredibly Active M&A Market

Just as demand for home care and hospice services continues to rise, demand is also surging for top-quality assets in the space. “The M&A environment in this sector in 2021 was one of the most active across all of healthcare, and we expect buyer and investor interest to remain very strong in 2022,” notes Mahoney. 

M&A can also be an effective strategy for gaining the new service offerings linked to recent CMS innovations, says Clark. “There's an opportunity to capitalize on these new industry developments through consolidation. The ultimate goal is helping healthcare providers be the best partners to constituents, and ultimately provide better care for the senior population.”

Relevant Harris Williams Transactions

agape-border.png heart-of-hospice-border.png community-based-care-border.png homecare-holdings_border.png

carehospice-border.png accentcare-border.png all-metro-border.png encompass-border.png

Register to Download

All fields with an asterisk (*) are required.