Providers strive to diversify services, payment streams

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Post-acute providers want multiple payers, says Justin Fengler.
Post-acute providers want multiple payers, says Justin Fengler.

Companies in the post-acute sector have been seeking deals to diversify their services and limit their reliance on Medicare, according to a recent analysis from investment banking firm TripleTree.

Last year's $409 million Gentiva acquisition of Harden Healthcare illustrates the trend of providers limiting Medicare exposures, according to the analysis from TripleTree Associate Justin Fengler. The merger “significantly diversified” Gentiva's payer mix by increasing its share of Medicaid and private pay dollars, Fengler wrote. 

Deals such as this are not surprising, considering Medicare rates have been consistently threatened in recent years, Fengler told McKnight's.

Gentiva provides home health and hospice services nationwide. It acquired Harden's home health, hospice and community care businesses, but not its long-term care facilities. A shift away from traditional nursing homes was reflected in other deals.

Kindred Healthcare, for example, is scaling up services such as rehabilitation while shrinking its skilled nursing facilities. The seven acquisitions Kindred made in 2013 were designed to shield it from risks “associated with any one setting,” according to Fengler.

“Several large players” are pursuing similar strategies, he wrote. 

Deals initiated by payers have focused on those eligible both for Medicare and Medicaid, according to the analysis. To better serve this group, payers acquired providers and care coordination companies in 2013. 

These trends are likely to continue, Fengler told
McKnight's. Care management and coordination in particular will continue to be a priority, to the advantage of standalone coordinators or providers that are “especially strong in the area,” he said. Companies also might focus more on integrating behavioral health and physical health offerings, he predicted. 


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