Home Health and Hospice Agencies Need to Evaluate Their Future & Buy, Sell, Grow or Merge

Jan. 3, 2013 - PRLog -- As 2012 winds down and the year-end transactions for Home Health and Hospice companies are now behind us, it is time to start looking towards the New Year and the direction of where Home Health and Hospice companies plan to go – and grow.  Owners need to evaluate if they would like to continue to grow (organically or through acquisition) or divest (sell – all or part) in 2013.  According to the U.S. Census Bureau, in 2010 there were 25,686 establishments in this industry.  The largest share of home health care services was Medicaid paid.  The National Association of Home Care & Hospice (NAHC) states that Medicaid home health spending is expected to grow an average of 10.2% annually through 2017.  The home health care industry, from the 2012 IBISWorld Market Report, is estimated to be worth more than $70 Million and the top three states with the largest number of industry establishments include Texas, California and Florida, accounting for about 12.6%, 10.3% and 9.8% of the total number of establishments, respectively.  

VALLEXA, a merger & acquisition advisory firm that specializes in healthcare services, can confirm the trend with an especially strong interest for deals in the Texas area but also across a wide swath of the country in total.  With this projected growth, VALLEXA wonders what direction the owners will choose.  VALLEXA urges the buyers that they work with, as well as new buyers for 2013, to reach out to search firms earlier than later so that marketing campaigns for targets can be initiated ASAP in Q1 2013.

The vast majority of transactions that take place in home health and hospice have buyers with past industry knowledge and often times most sellers now require that any potential buyers have experience within the home health or hospice space. In doing so, this helps to assure the ease and speed of the transaction as well as the success of the business moving forward.

Brian Robinette of VALLEXA has noted that this school of thought was reflected by several Hospice sellers (from hospice license deals to large census hospice agencies) in the 2012 market, across the country.“With years of experience in Healthcare M&A, one of the things we have seen time and again is how imperative it is for a buyer to have previous industry specific knowledge, which is required for a smooth and successful transaction.  At the very least, a potential buyer must have a partner or consultant with home health and hospice expertise working very closely with them.  Even entry level buyers need to have completed a great deal of Healthcare and Medicare business research before entering into the market as a potential buyer. There are many challenges faced in healthcare related businesses but are well worth it if you have the understanding and knowledge of how these agencies work.”

So the time is now to visualize the success of your home health and/or hospice agency.  Whether a seller or a buyer, merger or acquisition, divestiture or acquisition; the opportunities abound in 2013 and now is the time to start the process to ensure success and the future of your home health and hospice legacy.