The Home Health & Hospice sector hit a new high in deal volume in 2018, despite headwinds in advance of new reimbursement models and regulations being introduced by the Center for Medicare and Medicaid Services in 2019 and 2020.
The strong acquisition interest in the home health and hospice business comes despite the reality that for many agencies, 90% or more of their revenues are derived from government sources, primarily Medicare. As all healthcare providers know, the only certainty is that the level of government reimbursement will change, and change is coming again effective January 1, 2020 with the new Patient Driven Groupings Model (PDGM).
One of the “problems” has been that home health Medicare margins have been increasing since 2014, when they hovered just below 11.0%. They were projected to increase to nearly 16% by 2019. It seems as if the Medicare Payment Advisory Commission (MedPAC) recommends a Medicare reimbursement cut every year, mostly because it believes operating margins are already too high, especially for a government-reimbursed program. Just like the skilled nursing sector, CMS is always tweaking how providers get reimbursed and for what services.
Read more on how this will affect the Home Health & Hospice sector in the 2019 Home Health Care & Hospice Acquisition Report, Ninth Edition. It comes with two-and-a-half years’ worth of deals and data on the challenges, opportunities and emerging trends in this dynamic healthcare sector.