Article - March 19, 2024
Across post-acute care, software is proving to be vital to decrease healthcare costs, strengthen provider coordination, and improve patient outcomes. Given historically low technology investment in the market, software adoption among providers is accelerating.
Below, senior professionals from our Healthcare & Life Sciences Group and Technology Group discuss the dynamics creating heightened investor interest and attractive M&A opportunities in post-acute software solutions.
A Growing Need for Post-Acute Services
Several long-term tailwinds are increasing demand for post-acute patient care, including an aging U.S. population. The number of Americans age 65 or older is expected to grow from 45 million today to 95 million by 2060, composing 23% of the total U.S. population.1 “This group will require more acute and post-acute care, and patient volume throughout the healthcare system will continue to rise,” says James Clark, a managing director in our Healthcare & Life Sciences Group. “Lower-cost post-acute healthcare settings, including facility- and home-based care, will be critical for serving these patients.”
As the need for post-acute care increases, operators will be challenged by constantly evolving labor and reimbursement environments. For example, supply and demand imbalances for registered nurses are significant: Over 60,000 additional nurses are needed to keep up with demand by 2030.2 At the same time, the home care segment is not growing fast enough to offer adequate patient care in many geographies. While home care referrals are expanding, so are referral rejections, reaching 76% at the end of 2022 versus 54% in 2019.3
Due to these challenges, providers are rapidly turning to software companies to drive competitive advantages in post-acute care. “Using modern technology in post-acute settings is a necessity to offer higher-quality patient care, better manage healthcare costs, and improve financial outcomes,” says Dan Linsalata, a managing director in our Healthcare & Life Sciences Group.
Optimizing Patient Care
Providers are seeing many opportunities to enhance post-acute care through technology. For instance, health systems are investing in software and cybersecurity solutions to more efficiently coordinate discharges into post-acute care and better integrate IT infrastructure among care community stakeholders.
“The range of constituents using technology to gain market share is expanding across the post-acute continuum,” notes Michael Mahoney, a vice president in our Healthcare & Life Sciences Group.
Clark adds that post-acute care challenges directly impact hospitals, which increases the need for continuous information sharing between the two settings. “As the U.S. healthcare system evolves toward value-based care, software solutions can help accelerate the adoption and success of these initiatives within post-acute care,” he explains.
Amid these patient and healthcare system dynamics, the facility- and home-based post-acute care landscapes are consolidating. This brings investor opportunity as well as a motive for technology investment. “As consolidation continues, there’s a growing need to invest in high-ROI technology solutions and services that complement electronic medical records across post-acute settings,” says Linsalata.
“Physician and hospital referral sources now expect post-acute care providers to adopt interoperable software and engagement solutions,” adds Clark. “This puts pressure on investors and software providers to effectively scale and deploy solutions into the post-acute setting.”
Differentiating via Data and AI
Data and AI have wide applications throughout post-acute care software, offering a substantial value proposition to post-acute providers in numerous areas of their business. “As a first area of focus, post-acute care providers are unlocking and operationalizing existing data assets that can drive operational and clinical improvements,” notes Linsalata.
There are many ways for providers to better leverage data, including providing clinicians with a 360-degree view of the patient to enhance personalized care, and using patient data and predictive analytics to determine an optimal care plan design. In addition, better data utilization can inform patient risk stratification and outcomes tracking, enable participation in value-based arrangements, and provide insights that amplify coding and claim submission accuracy.
The evolving AI landscape is also creating opportunities to increase efficiency and improve patient outcomes in post-acute settings. Applications of AI range from robotic process automation and pre-built workflows for patient eligibility and intake to remote patient monitoring and clinical decision support.
“Post-acute software companies that capitalize on the power of data and AI capabilities will be particularly sought-after investment opportunities,” says Clark.
Harnessing Technology
Long-term tailwinds—including an aging population and sharpening focus on managing healthcare costs—are pushing more patients into lower-cost post-acute settings. Meanwhile, providers are facing higher labor competition, a complex reimbursement environment, and greater demand from referral sources to expand home-based care access.
These dynamics are causing accelerated tech adoption among post-acute providers. “With more providers turning to tech solutions to create competitive advantages, post-acute software companies are increasingly on investors’ radar,” says Linsalata. “Leading solutions in the space, especially those differentiating themselves through data and AI, are well positioned for growth going forward.”
View our report on emerging trends and M&A opportunities in post-acute software, and contact our senior professionals to receive market maps of the facility- and home-based landscapes: technologyinsights@harriswilliams.com
View our report on emerging trends and M&A opportunities in post-acute software, and contact our senior professionals to receive market maps of the facility- and home-based landscapes: technologyinsights@harriswilliams.com
