Your Primer to Healthcare Mergers and Acquisitions
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Resilience and Growth in Human Services & Healthcare During COVID-19

Jun 1, 2020

by Rachel Boynton

Volume 7 Issue 10, May 26, 2020

By mid-to-late March, we all felt the immediate effects of the "lockdown" of our communities. Some healthcare businesses stopped services entirely while others saw a large dip in those offered. Organizations with a diversified payor source probably fared better than single-source providers, everyone felt the effects. At VERTESS, we had some deals stop, some slowed or paused, and others moved along. Progress — or lack thereof — all depended on the confidence of the buyer and ability of the seller to adjust.

As I spoke with multiple business owners over these past two months, I learned about impressive changes and adaptations undertaken that strengthened services and helped keep the doors open.

Rising Up in the Face of Adversity

The use of technology has been an incredible remedy for the lack of service delivery created by reduced human interaction. I spoke with a substance use disorder (SUD) business owner who explained how his business quickly pivoted to online appointments in the early days of the pandemic. Although it took a few weeks to get all of his clients onto and comfortable with the platform, he expects revenue will likely surpass pre-COVID-19 numbers. The reason: access. He believes that those clients who previously were no-shows because of transportation, work, and/or childcare challenges will now attend the majority of their appointments. Similarly, another provider of inpatient SUD services explained how online visits will help ensure a smoother transition from inpatient care because the commute to the office is eliminated.

I spoke to an old colleague who provides community-based services in the Northeast. He highlighted the incredible and previously unrealized benefits of the shared living model primarily provided by his organization. Group homes and intermediate care facilities have generally struggled to maintain healthy staff and keep all residents well during the crisis. Meanwhile, most shared living providers, including my colleague, agreed to cover day program hours and keep individuals in their own homes — an approach that has more effectively protected staff and residents. This further accentuates that the natural setting of a community-based home can provide non-intrusive emergency supports to those in crisis. This colleague experienced only a slight decrease in revenue and has maintained a healthy community.

Home health care is also experiencing growth opportunities as fewer people are comfortable going into busy office buildings or crowded waiting rooms to receive in-person therapies. Many patients feel safer when they can undergo therapies at home or even virtually as a means to avoid the potential risk of exposure in a clinical setting. To minimize risk, many patients are provided the option to receive home health — and for longer periods of time — who may not have had this option prior to the health crisis.

Early educations and therapies for autism spectrum disorders (ASD) took a hit when schools closed. One of my creative sellers in this field has not only pivoted to offering online sessions, but they are looking at additional lessons and games that will engage children remotely while helping them continue to grow. While the seller has experienced a decline in services since some are difficult to conduct online, owners of ASD businesses are witnessing growing ASD needs as schools remain closed. With this seller's state slowly opening, my sellers have established processes to best ensure thorough sanitization of small office spaces and a "drop-off" protocol where parents wait in the car after dropping a child off with a therapist outside of the office. These sellers believe that they will make up their losses over the extended summer break by providing additional online and in-person services.

Smaller home care settings are seeing a surge in popularity as well. I have friends who own residential homes that care for medically fragile individuals with intellectual or developmental disabilities. Due to some of their more extreme medical needs, these people are often cared for in nursing homes, even beginning when they are young teenagers. My friends' organization staffs a small home to create an intimate and cozy feeling while providing the needed nursing care. When we were locking down, these owners were opening an additional home and moving people in.

Renewed Interest in Acquisitions

Following about a few weeks of silence in April, I experienced a sudden and significant increase in buyers, both strategic and investors, looking for new opportunities. Strategic buyers are understanding the importance of diversification of services and funding sources while investors are recognizing that in the coming weeks, we will likely see a rebound of service delivery, with some businesses possibly experiencing increases.

In addition, during times of difficulties, some people start to look for ways to make a difference. I have one buyer who was working for a large private equity group but then left to invest his own money in an intellectual or developmental disability company that he could feel good about backing and growing. There is always a need for therapies, care, and supports, regardless of the economy. Most buyers are aware of the importance of these services.

Is Now a Good Time for You to Sell?

Opportunities are often the result of a disruption or changing landscape. Many healthcare businesses are growing and expanding because of new demand. As providers identify their weaknesses, they are often looking for a partner or buyer that can help them address vulnerabilities and grow their service and/or product lines. Similarly, there are growing businesses that are in even greater demand than before, with owners who know that now is the time to go to market and capitalize on their value.
Rachel Boynton

Rachel Boynton CM&AA

Managing Director

As Co-Founder of LifeShare, a multi-state human services and healthcare organization, Rachel has a unique background of over 20 years of successful operational and executive experience, in addition to an MBA in Healthcare Management. She began her professional life as a home care provider, an experience that created the foundation for the innovative quality and success of LifeShare, while also changing her life. At LifeShare, she managed their Operations (Adult Day/Residential; Child Therapeutic Foster Care; HCBS; Child Therapeutic Day/Diversion Services, and Educational Programming), Finance, HR and Quality Assurance (facilitating COA accreditation and policy/procedure implementation). After selling LifeShare to Centene, Rachel remained during the transition of management and helped to provide outcome measurements and COA compliance reporting. At VERTESS she is a Managing Director providing M+A advisor and consultant services, specifically in the I/DD, behavioral health and related healthcare markets, where systems are rapidly evolving, and providers are striving to adapt strategically to diverse challenges.

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