Your Primer to Healthcare Mergers and Acquisitions

5 Reasons TrumpCare Will Cause A Home Care Boom

Feb 27, 2017

by Bradley M. Smith

By Bradley Smith, ATP, CM&AA

Volume 4 Issue 5, February 27, 2017

It’s no secret that the home care industry has been in a downward spiral for the past decade, primarily due to declining reimbursements and audits, among other obstacles. As a direct result, the number of providers has decreased, leading to larger and larger companies that can take advantage of economies of scale. Despite these concerns, demand has continued to rise as older citizens and people with disabilities want care in their own homes.

Home care companies, including home health and hospice agencies, are putting a lot of faith in TrumpCare, especially Health and Human Services (HHS) Secretary Tom Price, for good reason. He has a strong history of championing healthcare reform and he has pledged to reduce the regulatory red tape that bedevils many home care companies. Here are the five most significant reasons why we will see expansion in the home care industry during the Trump administration:

  1. HHS Secretary Tom Price will listen and promote home care. Previous secretaries of HHS have had little to no communication with providers, making assumptions (usually negative) about the provider community. Coming from the provider side, Secretary Price has a history of working with home care agencies because of his belief that providers have an extremely valuable role in the healthcare continuum.
  2. The Trump administration will expand the financial commitment to home care. The US has large Medicare/Medicaid beneficiary populations with limited personal funds for necessary medical services and home care is often the least expensive way to deliver effective services and equipment. Numerous studies have concluded that for every $1 spent on home care, The Centers for Medicare & Medicaid Services (CMS) saves $30 dollars (or more) in acute care cost. Additionally, patient outcomes in the home are generally better than in an acute care setting. Given the focus on cost cutting and block grants we can expect even more financial support for these services.
  3. Changes in Obamacare (aka the Affordable Care Act) will be incremental. Despite all the harsh rhetoric, I expect the framework for the ACA to stay largely in place. Residents of many states have made their concerns known in several raucous town hall meetings and concerns about the ACA have been prominent. Complete repeal-and-replace is more of a campaign slogan than the reality of what people desire. Home care options were promoted by Obamacare and are likely to continue to have favored status.
  4. The healthcare continuum will become more outpatient focused. The evolution of healthcare away from hospital-centric care toward outpatient services (e.g. ambulatory surgery centers) will accelerate because of cost effectiveness and good outcomes, including lower infection rates. Home care has been demonstrated to be a strong partner in supporting a positive patient social environment and reducing the likelihood of hospital admissions.
  5. Home care M+A activity will increase. As a result of public policy shifts, cost controls and other changes, providers will need to further scale and consolidate to insulate themselves from risk. Additionally, there will be another generation of tech savvy entrepreneurs that will find new opportunities in startups, as well as acquiring existing providers as they build a more comprehensive continuum of services.
Bradley M. Smith

Bradley M. Smith ATP, CM&AA

Managing Director/Partner

For over 20 years, Brad has held a number of significant executive positions including founding Lone Star Scooters, which offered medical equipment and franchise opportunities across the country, Lone Star Bio Medical, a diversified DME, pharmacy, health IT, and home health care company, and BMS Consulting, where he has provided strategic analysis and M+A intermediary services to executives in the healthcare industry. In addition, he is a regular columnist for HomeCare magazine and HME News, where he focuses on healthcare marketplace trends and innovative business strategies for the principals of healthcare companies. At VERTESS, Brad is a Managing Director and Partner with considerable expertise in HME/DME, home health care, hospice, pharmacy, medical devices, health IT, and related healthcare verticals in the US and internationally.

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