Insight

Finding Value in Home Health and Hospice M&A

How acquirers in home health and hospice can overcome complex market, regulatory, and operational challenges.

Ross Nelson

Ross Nelson

Principal, Advisory, Strategy, KPMG US

+1 312-665-1456

Thomas Johnson

Thomas Johnson

Managing Director, Advisory, HCLS Strategy, KPMG US

+1 312-665-2110

Andrew Vogel

Andrew Vogel

Managing Director, Advisory, HCLS Finance, KPMG US

+1 213-533-3040

Kuma Sordzi

Kuma Sordzi

Director, Advisory, People Strategy, KPMG US

+1 213-955-8909

Matthew Lacroix

Matthew Lacroix

Director, Advisory, Strategy Tech CoE, KPMG US

+1 415-963-5522

To realize value from acquisitions in the home health and hospice sector, buyers have to navigate particularly challenging market, regulatory, and organizational obstacles.

In today’s market, several developments combined to reignite M&A in this sector: the growing demographic bulge of the aging boomer generation, a recent increase in reimbursements paid by the Centers for Medicare and Medicaid Services (CMS), and the shift toward care at home due to COVID-19 restrictions.

Consolidation is expected to continue and perhaps accelerate. There are still more than 34,000 home care and hospice providers nationwide, ranging from local “mom and pop” operations to 50 large companies that account for nearly 30 percent of industry revenue. The adoption of new payment reimbursement models is expected to increase deal volume because the complexities of compliance are forcing smaller entities to seek mergers with larger organizations that have the staff and expertise to implement the changes.

Despite these tailwinds, the home health and hospice sector remain a challenging area to achieve value. It can be difficult to evaluate the risks involved with small and medium-sized providers, assess complex regulations, or meet evolving personnel and technological requirements.

In this paper we offer a three-stage roadmap for value-creating acquisitions in home health and hospice:

  1. Using a data-driven approach to identify the right markets and potential targets.
  2. Conducting thorough due diligence to understand risks and upside potential.
  3. Focusing integration efforts on areas aligned to the company culture to create value.