New giant in long-term therapy: RehabCare buys RehabWorks
Two major players in long-term care contract therapy have decided to join forces.RehabCare Group is buying Symphony Health Services, parent company of RehabWorks, in a $101.5 million cash deal. St. Louis-based RehabCare applied for federal antitrust clearance Thursday. It announced the deal after the close of stock trading Wednesday.
RehabCare will absorb the publicly held RehabWorks over the next 18 months. The companies currently have about 15,000 employees and contracts at 1,400 long-term care facilities, with about 38% of sites overlapping, company officials said.
"The contract therapy business is very competitive, and with the tight labor market for therapists, the only way you can reconcile wage growth with much slower growth in reimbursement is enhancing productivity and building your scale of economics," RehabCare President and CEO John H. Short told McKnight's on Thursday.
About 100 duplicative jobs might be lost after RehabWorks' headquarters relocates from Hunt Valley, MD, to St. Louis but no direct care workers or managers would lose jobs, Short said. Symphony's other main subsidiaries, the Polaris Group consultancy and VTA Management Services, will retain their identities, he added.
Providers should benefit from the merging of talents because therapists will have a bigger base of best practices and professionals to draw from, said R. Scott Jones, president and CEO of Symphony Health. Jones will remain with the company and oversee transition issues. In addition, all RehabWorks operations, which are largely paper-based now, will convert to handheld computer technology to get up to speed with RehabCare processes, Short said.
With total revenues of more than $500 million, RehabCare is twice the size of RehabWorks, though their contract therapy divisions are nearly the same size, Short said. Combined, he added, they will make up about 10% of the LTC therapy market, which should present no antitrust concerns. The deal is expected to close June 30.