Amedisys (NASDAQ: AMED) is fired up for more hospital joint ventures, a new area of focus for the Baton Rouge, La.-based home health and hospice provider.
Driving this renewed interest is the company’s June 2021 purchase of Tennessee-based Contessa Health for $250 million. While Amedisys had a few JVs before that transaction, Contessa came with a fleshed-out model and an established pipeline for those arrangements.
At the time of the acquisition, Contessa had 17 joint ventures that generate about $80 million annually, Amedisys CEO Chris Gerard said at the William Blair Annual Growth Stock Conference.
“We think this is just the beginning,” Gerard said at the conference. “Hospital systems also started coming to us with larger kind of arrangements or relationships in mind, wanting to put in their home health and their hospice assets along with the joint venture for Contessa.”
Future partnerships could also fuel the expansion of the company’s core home health and hospice assets in large markets, where they can offer a continuum of care from hospital-at-home to end-of-life care, according to Gerard.
Tennessee-based Contessa Health provides high-acuity services such as hospital-at-home and skilled-nursing-at-home services. Amedisys has previously indicated that Contessa’s JV pipeline has the potential to double its footprint, and potential partners include more than 100 hospitals in 28 states.
The high-acuity home-based care provider has closed two joint ventures during the 12 months since the Amedisys transaction.
This includes a joint venture with Michigan-based Henry Ford Health System launched last October to provide high-acuity home care services as well as palliative care, which followed a palliative care enterprise with Mount Sinai Health System in February 2021, branded as Palliative Care at Home.
But according to Gerard the company is just getting warmed up.
“We think we’ll be announcing some broader-based joint ventures in the very near future that I would say were not part of our roadmap prior to the acquisition of Contessa,” he said at William Blair.
To most observers, these partnerships appear to be a win-win opportunity.
The pandemic drove more care into the home, a lower-cost setting where most patients prefer to receive care when they have the option. Of course, the pandemic also played a role as limited availability of hospital beds and fears of spreading the virus also made home-based care a higher priority.
Recognizing this trend, health systems themselves began to beef up their home-based care capabilities, though historically this has not been their strong suit, generally speaking.
Pursuing a JV allows the hospital to expand its home-based offerings in partnership with entities that are more acclimated to that setting.
“The hospital systems are really wanting to form a deep relationship for us so that they can actually optimize their beds. They can participate in the economics of patients that never land in their beds,” Gerard said. “[With joint ventures] they can optimize their home health and hospice business, because hospitals historically are not good operators of home health and hospice, which is our core business.”
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