Wyatt Matas

Culture Focus for Hospitalist Success

Fri, 03 May 2013 00:00:00 -0500

Today's Hospitalist highlights one of the most critical elements to a group's success: culture. In the article, Are Difficult Doctors Sabotaging Your Practice: bad behavior hurts morale and performance, we find the difficult cultural patterns that not just patients, but physicians themselves experience¹:

59% of physicians experience insults or degrading comments
55% won't follow established protocols
54% won't cooperate with other providers
54% yell
40% inappropriate jokes
26% incompetence
24% discriminating behavior
21% spreading negative rumors
14% substance abuse

In high stress environments, such as hospitals, we may sometimes expect tempers to flare or dialoge to become more strained, but healthcare's shift to value has developed a focus on culture as a core element for success. The central element to culture is of course: communication; but what makes some hospitals better at communication than others?

First, one must consider how communication works in a hospital, both formally and informally. Every healthcare organization has its formal and informal communication networks. The fundamental issue inherent in these networks is that traditionally these communication networks operate in silos by nature (i.e. training). For example: nurses communicate largely with other nurses; case managers communicate largely with other case managers, and physicians communicate with other physicians, etc.

Then, one must consider the role of mission, vision, and organizational values in terms of culture, how those elements affect culture and if the organization sets clear expectations communicating those values to employees.

As patient feedback becomes a key data point in value-based care delivery, physicians have to pay attention to not just how they communicate with patients, but with other physicians as well (patients can "feel" culture) and more healthcare organizations are trying to determine ways to break the silos to redefine their culture. These tips may help:

Actually define your healthcare organization's culture. What is that culture comprised of? How is that culture defined? What makes it work better than other healthcare organizations?
Create cross-culture networks. Hospital committees and not just business-functioning committees; develop interesting cross-cultural committees
Define leadership communicaton: body-language, voice, and listening. Make leadership communication a part of every leader's annual review process.

Hospitalists, as natural navigators and professionals interacting with staff cross-culturally, have the ability to significantly impact hospital culture. The natural key of course is for the hospitalist group's culture to be functioning first.

1. Source: QuantiaMD (2011)

Home Health Pivot Point: The Business Case for Behavioral Health

Wed, 24 Apr 2013 00:00:00 -0500

Wyatt Matas supports its clients by creating highly valued models for integrated care delivery while providing innovative solutions to the post-acute care industry. As part of Wyatt Matas' evolving portfolio of growth strategies for clients, we have been investigating emerging trends and success indicators in areas providing growth opportunitis to home health providers with specific regard to behavioral health programming as an expansion of their current service offering.

Our objectives are to:

Assist clients in creating more value-based models to payers by moving beyond traditional (commodity) program and pricing models;
Demonstrate that by already providing "boots on the ground" services, home health companies already have a significant down payment on augmenting their product lines with the addition of behavioral health; and
To help clients sell integrated solutions to payers in general, and managed care companies in particular.

Our theses for this paper:

Behavioral health patients are often the highest cost;
Payers are looking for models to integrate physical medicine and supports for behavioral health;
Home health has a unique value proposition-- boots on the ground (community health workers) leveraged to include behavioral health supports (not necessarily treatment) packaged for cost savings and quality guarantees; and
New types of cross-trained community health workers, recruited from the neighborhoods in which they will work, are not only the most cost-efficient, but often the most appropriate team members to help people at home as well.

Some of the opportunities for home health agencies to access include:

Providers and payers are beginning to design care models that merge physical healthcare models with the treatment of behavioral conditions; and
Payers in particular are acutely aware of these costs as they take on more responsibilities for managing the Dual Eligible Medicare/Medicare populations, as well as growth within the Medicaid Aged, Blind and Disabled (ABD) contracts.

These new care models are examples of Care Cycle Management: integrating disease management with care delivery to improve outcomes while lowering costs of at-risk patients. Wyatt Matas has the solutions to help design an offering for home health programs to take to MCOs. This is the pivot point to behavioral health. We present this document to highlight some of our thinking and to encourag deeper dialogue as to how we can accordingly help your organization grow, purposefully and profitably.

To discuss these theses and opportunities, contact Chip Measells, Partner, Wyatt Matas at via e-mail or phone at ChipM[at]wyattmatas.com or 202.628.4713.

President Obama's Budget vs. Home Health

Tue, 23 Apr 2013 00:00:00 -0500

In Forbes' recent Home Health Medicare Co-Pay: A Study in Unintended Consequences¹, an insightful analysis into the ramifications of President Obama's most recent budget submission is presented, showing a clear disconnect between policy, policy's intent, and the economic consequences of policy disconnects in a fragmented healthcare system.

A summary of President's Obama's most recent budget scenario for home health:

The Obama budget calls for an increase of $1.4B in discretionary spending for the administrative expenses related to implementation of the Patient Protection and Affordable Care Act.
$730M comes from instituting $100 co-payments for Medicare patients using home health care.
The co-pay would apply to "episodes of care," requiring five or more visits over a period of 60-days or less, and is not immediately preceded by a hospital stay.
The primary goal is, in the words of the Medicare Payment Advisory Commission (MedPAC), "ensuring appropriate use of home health care."
The administration predicts that "savings" from non-use of home health adds $730M to the federal budget.
The problem: this "savings scenario" fails to account for the fact that a significant fraction of home health services are also used by patients who would otherwise be using standard, more costly hospital care. See related Wyatt Matas post, Focused Insights into Home Health: the State of Home Health Care.

As this policy is designed, Medicare patients are more likely to forgo needed home health services, leading to reduced patient outcomes, hospitalization, or even readmission. At its core, the Forbes article helps MedPAC better align goals to reduce fraud in home health and helps MedPAC realize that introducing a co-payment in the Medicare population does not reduce legitimate use of home health care without affecting the level of fraud at all and may actually increase overall healthcare expenditures elsewhere--the opposite of value-based care.

Instead of reducing fraud, this proposed change resembles rationing in healthcare by keeping potential patients on the sideline. More creative solutions are needed to eliminate fraud in home health, though penalizing patients, elderly and indigent, is probably not the best way to do so.

So, what does Medicare cover in home health²?

Traditional Medicare covers some home health: intermitten skilled-nursing, physical therapy, speech-language pathology, and occupational services.
Medicare will only pay for medically necessary skilled nursing facility care, and is usually only available for a short while following hospitalization.
Medicare will cover home health care services for those who meet certain eligibility requirements, including regular care and review by a physician and homebound certification, meaning the patient is restricted to the confines of the home due to illness or incapacity.

What doesn't Medicare cover in home health?

Medicare does not pay for custodial care: help bathing, getting dressed, eating, and light therapy or exercise.
Those who require more than part-time (or 24-hour care), meal delivery, homemaker and pesonal care services.

To connect with Wyatt Matas on this topic, please e-mail or call Chip Measells, Managing Director at ChipM[at]wyattmatas.com or 202.628.4713,

Endnotes:

Forbes, Home Health Medicare Co-Pay: A Study in Unintended Consequences. Robert A. Book and Doug Holtz-Eakin.
The Medicare News Group, Medicare FAQs: What are the Coverage Limits for Home Health Care Services.

Accountable Care Organizations, Part 1 of 3: A Balanced Intro to the ACO

Mon, 22 Apr 2013 00:00:00 -0500

Few topics are more discussed in today's healthcare marketplace than that of the accountable care organization (ACO). A careful review of ACO information and data in the marketplace suggests an almost editorially based and potentially biased "buyer vs. seller" market mentality across regions, healthcare systems, physicians, managers and business owners. As decision-makers comprehend, weigh, and implement shared savings models and bundled payments via accountable care, Wyatt Matas, takes an opportunity to remove those "rose-colored lenses" and the "clouds of gloom-and-doom," to present a balanced view into the reality of the accountable care organization. In this 3-part blog series, our goals are to: 1) filter through the buyer vs. seller information marketplace for ACO information, while reviewing stats within a landscape of information, 2) to review those pioneering ACO implementers and deal-makers, and finally, 3) to look at the nuances, challenges and opportunities in the ACO marketplace.

A Brief History

As a defined term (first published in 2007), the accountable care organization (ACO), is jointly credited to Elliot Fisher (physician researcher--Dartmouth Institute for Health Policy and Clinical Practice) and Glenn Hackbarth (chair of the Medicare Payment Advisory Commission) to mean: "an organization, virtual or real, that agrees to take on responsibility for providing care for a particular organization, virtual or real, that agrees to take on responsibility for providing care for a particular population while achieving specified quality objectives and constraining costs.¹" Evolved from the 1970s and 1990s health maintenance organization (HMO) models for capitated payments, the accountable care organization was designed to encourage quality performance across healthcare systems, providers, and various healthcare delivery channels via enhanced collaborative mechanisms (communication and technology) driven by shared bonus payments.

The 2005 - 2010 Centers for Medicare and Medicaid (CMS) Medicare Physician Practice Group Demonstrations are credited with being the immediate precursor to the ACO model. These early demonstrations may attribute to the current data and perspectives in the marketplace as, out of the 10 physician practices participating, only 2 demo participants reduced health spending enough to earn and qualify for bonuses throughout the five year program, while only 3 demo participants received no financial bonuses during that same time period. In context:

average bonus amount, (w/o controlling for ACO structure, patient acuity, etc.) was $5.4M, though bonuses ranged from a few hundred thousand dollars to $16M;
the demonstration project saved Medicare $121 per beneficiary (220K Medicare beneficiaries participated);
ACOs participating made an average initial investment of $1.7M.

Despite what some recognize as a lack-luster performance, with relatively limited savings and headwinds into costs for collaboration and investment, the data was tempered as these early ACOs still existed in a fee-for-service world, thus these demonstration participants continued testing the ACO model.

Stats in Brief & In Context

As of January 2013, Medicare announced its third cohort of participating ACOs, bringing the total to more than 250 since the passing of the Patient Protection and Affordable Care Act (ACA). This data point, at ~250 participating Medicare ACOs is key as early CMS financial models describe Medicare savings of $940M realized at 270 participating ACOs and now brings more than 4M Medicare beneficiaries into the ACO network. Other recent data points showcasing ACO market penetration²:

Combined Commercial-Medicare ACOs: 1 in 10 Americans are covered via an accountable care organization, or 25M - 31M covered patients;
Medicare ACO: 2.4M Medicare (as of January 2013, projected to be 4M Medicare beneficiaries)
Medicare ACO, non-Medicare: 15M non-Medicare patients are in a Medicare ACO;
Commercial ACO: 8M - 14M commercially insured are in a non-Medicare ACO.

Further, as ACOs develop regionally and at differing rates, they are being segmented as³:

Mainstream: 65% of ACOs - "energetically accountable," as part of Medicare's shared-savings program and via contracts with commercial payers.
Forerunners: 15% of ACOs are forerunners -- functioning well-ahead of the current ACO model;
Toe-dippers: ~20% of ACOs classified as toe-dippers -- unsure of the future, moving with the pack.

Within the context of its definition, the accountable care organization, as a virtual or actual collaborative model, advances care cycle management's emphasis on patient care transitions: patient hand-offs via entry points, within facilities, amongst systems, partner organizations, partnering facility structures, and post-acute settings.

In part 2 of 3 of this ACO series, Wyatt Matas explores some of the commercial and Medicare-based accountable care organizations, their structure, regional concentration, review the Pioneer ACOs, and some of the initial deal activity highlights surrounding ACO development and comprehensively what these data points mean collectively.

To connect with Wyatt Matas to learn more about this or related posts, please contact Chip Measells, Managing Director, Wyatt Matas via e-mail or phone at ChipM[at]wyattmatas.com or 202.628.4713.

Endnotes:

HealthAffairs, Health Policy Briefs. January 31, 2012.
Oliver Wyman, The ACO Surprise. November 2012.
Leavitt Partners and KLAS Research release, Comprehensive Report on Accountable Care Organizations. November 30, 2012.

The Process of Selling a Hospitalist Group from Start to Finish

Fri, 19 Apr 2013 00:00:00 -0500

The following was originally published at The Hospitalist, April 2013, by Steven M. Harris, Esq.

Whether your hospitalist group has five or 500 practitioners, you and your partners might be thinking about whether you want--or need--to enter into a merger acquisition in the near future. For some hospitalist groups, mergers and acquisitions could be part of a growth strategy designed to increase geographic footprint, market penetration, or bargaining power. These types of transactions will allow larger groups to increase their competitiveness by being able to leverage investments in such items as information technology upgrades across a larger base of business.

For others, a desire to retire or an inability to either afford or justify certain capital investments needed to remain competitive might be leading some players to consider selling their hospitalist groups. Moreover, changes in the healthcare industry, coupled with the anticipation of tax increases, could factor into decisions to sell practices in the relatively near term.

While each transaction is unique, most tend to follow a similar process, incorporating a number of relatively standard phases that must be undertaken in order to complete transaction. The transaction process typically takes between three and nine months, although preparations are often best begun in advance of the actual deal process.

Preliminary Matters

For hospitalist group owners and executives considering selling their practice, a number of preliminary matters should be addressed in preparation for a sale. First, potential sellers should carefully consider whether they really wish to enter into the sale process. The sale process is lengthy, time-consuming, and costly, and it is often stressful and demanding on the practice's management. Thus, potential sellers should not undertake the process unless they are serious about selling and have a realistic expectation of what they will receive as the purchase price.

As part of the preparation, sellers should begin by assembling an experienced transaction team. Typically, the team includes key members of the practice's management, as well as experienced healthcare mergers and acquisitions attorneys and accountants. These experienced professionals can be of great assistance in making sure that a transaction is executed on a timely basis and under terms appropriate for the specific transaction.

Another prudent step in undertaking a tax analysis to determine the implications of the sale on both selling the practice and its individual owners. This analysis should be performed as far in advance of a proposed transaction as possible, in order to allow time for adjustments to be made (if necessary) to limit the tax implications in advance of the sale. Sellers also want to use this preparatory phase to make sure that the practice's books and records are in good order in preparation for the buyer's due diligence review, as well as to address any issues in order to make the practice more attractive to potential buyers. Some sellers might want to have an investment banker or other qualified professional provide a valuation appraisal of the practice to provide a realistic purchase price.

Finding a Buyer

As a seller begins the process to find a buyer, the seller must first consider the approach that it wants to take. Some larger groups are sold through auction-like processes in which a number of bidders are contacted and invited to participate. The advantage of this type of process is that it typically drives prices higher by introducing competition into the bidding process. On the other hand, this type of process has certain disadvantages, such as a longer time frame and increased risk of a breach and confidentiality.

For some sellers, a more targeted approach, with limited participants, might be more desirable. If a fair purchase price can be obtained without involving multiple potential buyers, the process can be completed faster and with less risk to the ongoing business operations.

The process of finding a buyer typically requires the seller to provide potential buyers with confidential information regarding the business so the interested parties can evaluate whether the selling group is even of interest and the amount that they will be willing to pay. However, the selling practice should only provide this confidential information after potential buyers have signed nondisclosure agreements.

Ultimately, the process will lead to the submission of specific proposals from interested parties. Typically, this results in the seller and the selected buyer entering into a letter of intent, a statement of key terms for the proposed transaction. Letters of intent are largely not binding and are subject to the satisfaction of conditions, such as the negotiation of definitive written agreements. Typically, in this phase of the process, the basic structure of the transaction, the purchase price, and the manner of payment are determined.

Due Diligence

In almost all sale transactions, the buyer will conduct a review and investigation of the seller's business. The purpose of this review is to confirm the information previously provided by the seller and to allow the buyer to gain a thorough understanding of the business to determine whether it is truly willing to buy the business on the terms identified in the letter of intent. The buyer will want to confirm that it is not going to inherit any unexpected liabilities or problems, such as the healthcare regulatory issues or lawsuits. To comply, with the information requests from the buyer as it conducts due diligence review, the seller will be required to assemble many documents and voluminous amounts of financial and other information. The burden of providing this information to the buyer will be substantial and could distract management from their day-to-day duties of running the practice.

Upon completion of the due diligence process, the buyer will either confirm that it is willing to move forward with the transaction (such as a reduction of the purchase price) or be unwilling to proceed with the transaction altogether.

Negotiating Definitive Agreements

The parties will need to negotiate and agree on certain definitive written agreements, which will govern the transaction. First and foremost, this will include a purchase agreement, such as a stock purchase agreement or an asset purchase agreement. In addition, there may also be various ancillary agreements, such as noncompetition agreements between the buyer and the owners of the selling practice and new employment agreements for the sellers.

Typically, the negotiation of definitive agreements proceeds in parallel with the buyer's due diligence review.

Closing

At the closing, both sides will sign numerous documents, including those necessary to transfer ownership of the purchased group to the buyer, as well as all ancillary agreements and other documents needed for the transaction. Once signatures have been obtained and exchanged between the parties, the transfer of title will occur and they buyer will tender the purchase price.

Post-Closing

Although the vast majority of the work associated with the transaction will termination upon the completion of the closing, certain aspects of the sale will require some attention after closing. For example, there may be purchase price adjustments based upon the final balance sheet or net working capital position of the seller's business as of the closing date. Typically, these adjustments are addressed in the months following the closing. Also, if any indemnification claims are brought, the parties will need to address those claims and reach a resolution.

Merger and acquisition transactions are complex, time-consuming matter that requires a great deal of effort on the part of all parties involved. An orderly process is essential for both buyers and sellers. Sellers will want to take steps to make sure that the transaction is completed in a timely manner while minimizing risk to the ongoing business operations. At the same time, buyers will want to make sure that the value that they are receiving from the seller's business is commensurate with the purchase price and that the buyer's goals for entering into the sale will truly be met post-closing.

Deal Activity Snapshot: Post-Acute & Home Health 2010 - 2013 Q1

Mon, 15 Apr 2013 00:00:00 -0500

In Wyatt Matas' recent Focused Insights into Home Health: the State of Home Health Care, we briefly analyzed Q1 2013 private equity deals supporting the post-acute and home health care marketplace.
Within this knowledge construct, we divided major home health deal activity and supports in terms of a "three-legged stool," supported via: staffing solutions, technology (i.e. telehealth), and company platform creation and development via capital deployment and business growth.
Here, we review those three-legged supports from deal activity and capital deployment perspectives 2010 - 2013 Q1.
Summarized tables with valuation data available on Slide 4.
You'll also notice the Chart 2: Post-acute & Home Health Related Private Equity Capital Deployment 2011 Q2 outlier, which includes deals for:
- Genesis HealthCare (Real Estate Assets) - $2.4B
- HCR ManorCare (Real Estate Assets) - $6.1B
Capital deployed data was available for 104 of 198 deals or 52.5% of deals in Chart 1: Post-acute and Home Health Related Private Equity Deal Count 2010 - Q1 2013.

At Wyatt Matas, we welcome your dialouge, questions, and feedback. Please contact Chip Measells, Managing Director, Wyatt Matas via e-mail or phone at ChipM[at]wyattmatas.com or 202.618.4713.

Focused Insights into Home Health: the State of Home Health Care

Sun, 07 Apr 2013 00:00:00 -0500

The home health sector, under scrutiny due to Medicare payment concerns (re-basing and payment abuse issues), public company analyst forecasts, and yet, its promise for reducing systemic healthcare costs and inefficiencies, advancing the accountable care organization (ACO) model, telehealth, and population health management comes into focus in this Wyatt Matas article.

Here, we focus on facts, drilling into core macro trends; we quickly take a look at interesting data-points in the public and private markets, and along the way, we consider the effects of healthcare policy to present an enhanced view into the home health sector.

We also take a brief look into the long potentialities of home health, where not only its ability to lead as a post-acute treatment strategy comes into play as an emerging market for dual eligible and behavioral health patients, but its dual ability to provide patient care and patient engagement for managing chronic disease and preventive healthcare services pivot to a near-frontier market position in the care cycle management ecosystem.

To clearly define home health, we first consider home health's total definition to provide care for: post-acute care, chronic disease management, and preventative care services. The post-acute care sector, as a rapidly evolving ecosystem, is now characterized not only via traditional long-term care and hospice, but skilled-nursing, assisted living, and home health as well. "Home care," as a term, is generally limited to the non-medically invasive aspects of healthcare at home, but for purposes of this review, we broadly include "home care," in this analysis as well.

From a cost perspective, home health presents a valued, though under-utilized patient care option. The growing trend to long-term care services, as cited in Genworth's 2012 Cost of Care Survey¹, provides fundamental insight into the median annual costs for:

assisted living facility - $39,600, +1.2% year-to-year (5.7%, five-year annual growth);
private nursing - $ 81,030, +4.2% year-over-year (4.2%, five-year annual growth);
home health aide services - $19 per hour, 0% increase year-over-year (1.1%, five year annual growth).

Without direct regard for geographic differences in cost, we can understand the general marketplace concerns in long-term care where Medicare payments are forecast to decrease via re-basing, while costs are generally increasing in assisted living and private nursing, thus eroding top and bottom-lines. As some employers consider part-time and innovative employee labor options due to health coverages via the Patient Protection and Affordable Care Act, we may expect home health aide service costs to remain moderately stable, while demand for those patient care services increase. With 345,300 home health aides in 2010, this number is expected to nearly double to 665,900 home health aides in 2020².

Despite any concerns noted via the Genworth survey, we can only expect long-term care services to continue increasing. As the largest healthcare expense, hospital providers begin trending to provide care in more value-based, post-acute forms, with home health at the top of that treatment option list. This last point breathes life into home health, when we consider 28% of total Medicare expenditures occur in the last year of life--costs largely characterized by multiple, costly hospital readmissions via the intensive care unit (ICU) and emergency room (ER). As a rich data point and model for reducing hospital readmission rates, the Sutter Health Northern California Advanced Illness Management (AIM) Program (a Pioneer ACO)³, showcases how rapidly the value of home health may be realized. In 2011, AIM enrolled its 1,000^th patient, reporting:

Increased patient and family satisfaction - 4.7 out of 5;
68% reduction in hospitalization 30-days after enrollment;
80% reduction in ICU days;
26% reduction in hospital average length-of-stay (ALOS); and
an overall significant reduction in costs while providing enhanced care to patients and families.

Included in the AIM program, patients received: a personalized care plan, nurse case management across the care continuum (home, doctor's office, and hospital), social work and community health worker support, and in-home nursing care to provide comfort and clinical monitoring. At 31%⁴ (2010) of total healthcare spending, the hospital cost reductions via the ICU and ER service lines, are top-of-mind for many hospital executives and doing so via integrated post-acute services pivoting to a well-modeled home health program is of net value in the accountable care organization healthcare marketplace.

As a healthcare system expenditure management tool, this perspective is only compounded when accounting for the overall demographic macro trend to the baby boomer population--a U.S. generation well known for its independence. With 3.5M U.S. Americans turning age 65 in 2013, a trend projected to increase for the next 20 years⁵, the complexities of population health management coupled with consumer-patient market force demands snap into clarity as home health is positioned to realize the value.

With this long horizon, we can quickly see current public companies as pioneers standing in a space undergoing intense pressures. Taking a glance at a home health company such as Addus Homecare Corp. (NASDAQ: ADUS), we find a company experiencing a per share price increase of +140% year-over-year with a P/E ratio of 21.98⁶, a ratio similar to T. Rowe Price Group (TROW), J.M. Smucker (SJM), and Tenet Healthcare (THC). More interesting is the Addus Homecare business model, now focused to provide home health services via its several years profitable home and community service, with an ~10% revenue increase year-over-year^7,8.

The Addus Homecare home and community model, financed via local and state government programs (Medicaid), is positioned to work closely with managed care companies by providing a "boots-on-the-ground" provider service offering within the patient preferred place of care: home. Pointing in this direction, we cite the Wyatt Matas U.S. Healthcare Expenditures: Home Health Lens Analysis, where U.S. home health Medicaid is growing at a 6.7% compound annual growth rate, more than Medicare's 5.8% during the same 2007 - 2012 time period.

The active Q1 2013 deal activity in private equity markets⁹ brings a more complete post-acute care and home health landscape into perspective. In private equity markets, we note six Q1 2013 post-acute care and home health related deals:

January 2013: CareAnyware - provider of home health and hospice technology (leveraged buy-out);
January 2013: Genesis Healthcare - provider of skilled nursing and rehabilitation to residents and patients ($325M debt financing);
January 2013: Hospice Advantage - offers personal care services and assists with nutrition, cleanliness and house-holding (leveraged buy-out);
February 2013: Sinfonia Healthcare - provider of home health services (platform creation)
March 2013: Heart to Heart Hospice - provider of hospice care to patient homes and provides care in nursing homes, assisted living facilities, and other residential facilities (development capital); and
March 2013 : Atlantis Healthcare - provides dialysis services at home, in-center, or in hospitals (leveraged buy-out).

Also affecting home health trends and noted in private equity markets are staffing companies and home health related business models:

January 2013: Invo Healthcare Associates - provider of outsourced clinical services to special needs children (development capital);
January 2013: OrthoNet - orthopedic speciality benefit management company ($55M revolver);
February 2013: OA Nurse Travel - provider of nurse travel and rapid response Joint Commission certified nurses ($31M leveraged buy-out); and
February 2013: Care Options for Kids (Optional Care) - provider of pediatric staffing and therapy services ($17.5M in development capital).

And finally, pointing to innovation in the home health space, we note two Q1 2013 telehealth deals:

January 2013: INRange Systems - the company offers a telehealth medical device for documented and professional medication administration to outpatients ($1.6M venture funding);
January 2013: Sotera Wireless - developer and seller of vital signs and monitoring technologies for hospital and home environments ($5.6M of a planned $14.8M in venture capital).

With telehealth and telemedicine remote monitoring projected to increase to 1.8M users¹⁰ worldwide, we can begin to see a pathway for home health to encompass its entire mission to provide chronic disease care and preventative care services for not just elderly and disabled (traditional Medicare and Medicaid populations), but private pay and insured patients as well.

For chronic disease management, the Alliance for Home Health Quality & Innovation (AHHQI) has well-noted home health solutions for congestive heart failure and congestive obstructive pulmonary disease (COPD)¹¹. Looking at the respective, but overlapping patient population data points: 33.9% of home health dual eligibles under the age of 65², and 23% of Medicare beneficiaries with a mental health impairment¹², with both points increasing, home health also provides a valued service offering at the convergence of behavioral health and physical medicine to treat disease.

In brief, as the marketplace adjusts to new care models and structures, the home health sector may face some headwinds, but the tailwinds into demand, accountable care organization models, and private equity activity make for a long-term perspective in a developing home health industry. With this view, we expect near-term headwinds to last 2-3 years, while a 5-year horizon looks more promising for home health agency revenue and net income. In the marketplace, outside of the publically traded home health agencies especially, we find smaller mom and pop home health agencies in cloudy straits.

As the automatic 2% Medicare spending cut hits home health providers, we clearly expect revenues to decrease. In the face of tepid economic growth and general market uncertainty around payment schedules via health information exchanges, home health agencies find themselves marginally constrained by the effects of: (1) decreased reimbursement, (2) decreased operating margins, (3) limited investment opportunites and fundraising options, and (4) a lack of direction in determining the appropriate business models and positions for navigating the current headwind heavy environment.

For interested parties and our clients, Wyatt Matas provides these insights to assist home health agencies with prioritizing viewpoints and determining the best business models for integration today, that may lead to a profitable home health business down the road. Until the long-term convergences, mentioned above, meet the marketplace, it looks like a long road for home health agencies.

For questions or comments, please contact Managing Director, Chip Measells via e-mail or phone at ChipM[at]wyattmatas.com or 202.628.4713.

Endnotes:

Genworth, 2012 Cost of Care Survey. 2012
Avalere Health, Home Health Chart Book. September 2012.
California Association of Physicians Groups (CAPG), Case Studies in Excellence, 2012.
Kaiser Family Foundation, Healthcare Costs: A Primer, Figure 7. Distribution of National Health Expenditures by Type of Service. May 2012.
U.S. News and World Reports, How Baby Boomers will Change the Economy. Tom Sightings, January 2013.
Finviz.com. Accessed April 4, 2013.
Securities and Exchange Commission - EDGAR Online System, Addus Homecare Corp. 2011 10-K.
Securities and Exchange Commission - EDGAR Online System, Addus Homecare Corp. 2012 10-K.
Pitchbook. Accessed April 4, 2013.
ComputerWorld, Healthcare IT, In-home Health Monitoring to Leap Six-Fold by 2017. Lucas Mearian. January 2013.
Alliance for Home Health Quality and Innovation (AHHQI), White Paper: The Value of the Home Health Solution for CHF and COPD.
Kaiser Family Foundation Analysis, Medicare's Role and Future Challenges. 2012.

Related Wyatt Matas Posts:

Note: this article was updated April 12, 2013.

Note on forward-looking statements:
This website may contain certain forward-looking statements based on current expectations and assumptions that involve risk and uncertainties. WMA assumes no obligation to update the information included on this website, whether as a result of new information, future events or otherwise.

Overview: Key Behavioral Health Data Points

Sun, 31 Mar 2013 00:00:00 -0500

This PivotPoint infographic provides insight into behavioral health (the synthesis of mental health and substance abuse treatment) as a business case and data-rich pivot point to more integrated value-based healthcare models. Key takeaways:

At any given time, 1 in 5 (19.7%) U.S. adults experiences a mental health issue;
49% of Medicaid beneficiaries with disabilities have a compounded psychiatric illness;
The highest 5% of Medicaid cost beneficiaries experience the following 3 behavioral health dyads, illustrating the case integration of behavioral health and physical medicine:
- 40.4% - psychiatric/cardiovascular
- 39.8% - psychiatric/central nervous system
- 28.6% - psychiatric/pulmonary
24%, or nearly a quarter, of U.S. adults experience a major depressive episode (MDE) with high-blood pressure;
23% of U.S. adults with a serious mental illness (SMI) have a substance abuse or dependence issue;
23% of Medicare beneficiaries have a mental health impairment;
5.6% - or $113B of U.S. Health Expenditures.

All health plans are beginning to offer behavioral health coverage, increasingly, on an integrated basis with physical health. These health plans are: (1) developing predictive models for major diagnosis (i.e. depression), (2) often have cross-trained behavioral health/physical health teams ("boots-on-the-ground"), and (3) are developing this model via patient centered medical homes.

Please continue this conversation via e-mail or phone with Chip Measells, Managing Partner, Wyatt Matas, at ChipM[at]wyattmatas.com or 202.618.4713.

Strategic Investing in Healthcare

Wed, 06 Mar 2013 00:00:00 -0600

Today's healthcare marketplace, shifting to value-based care, requires the ability for healthcare organizations and companies to recognize, embrace, and rapidly adopt healthcare change. To do so, companies require capital to build the infrastructure that allows them to be effective in coordinating care and managing patient cost.

While there are many types of investment firms wanting to deploy capital into innovative healthcare companies, these investors often bring limited strategic value beyond capital deployment. As value-based care evolves, providers will face complex issues and need strategic guidance from partners "living in it." A growing trend is emerging where strategic investors not only provide capital, but also bring a deep-level of understanding and experience with scaling complex healthcare models.

In this case, a strategic investor is a healthcare company or organization with capital willing to invest in companies with innovative care delivery models, technology, and/or a valued geographic market access point aligning investor talent-resources with the needs of the company. This strategic capital and knowledge deployment construct, increases the likelihood of business success while bending the cost-curve to value-based care. Today's primary focus for strategic investors is to accelerate value-based care initiatives.

Healthcare's strategic investors may include: health plans, hospital systems, and large healthcare providers looking to invest in attractive value-based care models, such as: home health, emerging health IT companies, physician practice and/or some other care provider.

Many of healthcare's large, strategic investors invest to generate innovation and innovation delivery to the marketplace. Generally, this is taking place as larger healthcare organizations experience difficulties innovating in a marketplace dependent upon a fee-for-service model under reimbursement pressure, leading to time constraints for internal innovation to develop and surface. Despite (and because of) these market pressures, these same potential strategic investors require the access and upside to innovation delivery for the company, so they use excess cash to participate with innovating companies, generally further downstream or in a different business life-cycle.

Some recent examples of strategic investing in healthcare include:

Amedisys (NYSE: AMED) provides a precedent example through its investment in Clinically Home. As a public, home health company, Amedisys has the cash and resources to strategically invest. As a high quality home health provider, the Clinically Home model provides staff, technology, and an entry point expanding the Amedisys footprint. Here, the business relationship is symbiotic.
Other healthcare provider examples as strategic investors include the Mayo Clinic, Cleveland Clinic Innovations, and The Johns Hopkins University. In each respective case, the strategic investor has invested in some technology, value-based care model, or system to deliver value to the marketplace and innovation to the business.

Advantages of Receiving Strategic Capital:

Opportunity to scale innovation across the investor's larger geographic and/or business footprint.
The board level and operational input from the strategic investor can expand the perspective of the company.
Generally, the Strategic Investor is not solely driven by returns--they want access to the innovation.

Hurdles to Receiving Strategic Capital:

Most large healthcare providers are bureaucratic by nature and very few have an investment process--this can significantly slow down the deployment of capital.
All healthcare providers have dozens of challenges they are facing as they evolve and attempt to innovate. Strategic initiatives are being driven from various levels in the organization and knowing who, when, and how to approach a strategic investor can be complicated for many healthcare organizations in search of strategic capital.
Structuring an investment from a strategic investor can also be complex. While health systems and other providers are quite motivated to invest in innovative companies, most large health systems have little experience with structuring such deals and their expectations can vary widely.

In today's healthcare marketplace strategic investors will play a larger role during a time of fundamental healthcare change. To fundamentally change healthcare, strategic investors and investment acceptors both have opportunities to innovate while remaining true to their respective business objectives and mission goals.

For more information about becoming a strategic investor or to learn more abot working with strategic investors, please continue this conversation via e-mail or phone with Chip Measells, Managing Partner, Wyatt Matas at ChipM[at]wyattmatas.com or 202.628.4713.

Chronic Conditions as Value-based Care Drivers

Wed, 06 Mar 2013 00:00:00 -0600

The following charts profile Medicare fee-for-service (FFS) beneficiaries by chronic condition, dual eligible status, and health expenditure, respectively, while illustrating the drivers to value-based healthcare models.
Key Takeaways: (1) 37% of Medicare FFS have 4+ chronic disease conditions, (2) post-acute care (PAC) plays a vital role in managing complex patients with multiple chronic conditions, and (3) managing complex, dual eligible patients represents the greatest opportunity for post-acute and value-based care models to manage cost.
As a post-acute vertical, home health provides an optimal value-based care environmnet for treating chronic, co-morbid, and end-of-life care in the Medicare and dual-eligible populations.
Acute care providers are beginning to realize the value in optimizing, creating, and accelerating business models to address transitions to post-acute care as these models reduce the cost burden of care for: (1) readmission and (2) direct care provider intervention. At the same time, acute care providers recognize home health as an innovative driver to telemedicine.

For our readers and clients, the recognition of chronic disease burden as a driver to value-based healthcare and post-acute care models represents an important component in understanding the current market landscape and the business opportunities available. Please feel free to continue this conversation via e-mail or phone with Chip Measells, Managing Partner, Wyatt Matas, at ChipM[at]wyattmatas.com or 202.618.4713.

U.S. Healthcare Expenditures: Home Health Lens

Mon, 04 Mar 2013 00:00:00 -0600

The following table and charts provide an indepth snapshot view into United States healthcare spending and payer sources, respectively.
These healthcare expenditures are focused to: hospitals, providers, nursing care, and home health, with home health showing a slight increase, displaying an early shift to more apporpriate value-based care models.
Looking deeper into home health, we find Medicare and Medicaid spending increasing in the home health sector.
A compound annual growth rate (CAGR) analysis shows Medicaid spending in home health increasing at a slightly advanced rate compared to Medicare.
At just 2.8% of 2011 total health expenditures, home health continues to provide a clear and comprehensive, value-based value-proposition to the marketplace.

Understanding Value in Nonprofit Healthcare Organizations

Wed, 06 Feb 2013 00:00:00 -0600

While in the midst of the highest consolidation activity since 2000¹, some nonprofit healthcare organizations seem to be struggling with not only understanding their strategic options, but having a clear understanding of their market value as well.

The January 2013 sale of nonprofit, Visiting Nurse Association of Southeast Michigain Inc.², for just $295K on $2.4M in net assets and $1.3M in revenue, suggests the organization was vitally unaware of their value (valuation) in the marketplace.
Similarly, the January 2013 news³ of the Visiting Nurse Association of Texas, riding three years of revenue losses, and now cutting 400 employees, one may surmise that nonprofit healthcare needs help.

Nonprofit healthcare organizations sometime believe, they have limited options and value because of their nonprofit status. Often times this is absolutely not the case. Those investors, potential partners and acquirers looking to expand their footprint or add capabilities want to align themselves with providers the community respects. After all, healthcare is local. Board of directors of nonprofits need the same strategic guideance afforded to the most sophisticated organizations. Even more so today as the options are more complicated and nuanced in today's healthcare environment.

For nonprofit healthcare organizations and hospitals to navigate 2013, we suggest the following:

Nonprofit healthcare organizations should be valued as for-profit healthcare organizations.
It is the fiduciary responsibility of the board of directors to have a clear understanding of the organization's value (valuation) and the strategic options available in today's briskly-paced healthcare marketplace.
Nonprofit healthcare organizations need to consider the transaction process in order to maximize the exit value.
Specifically, nonprofit healthcare organizations should understand the alternatives to exiting the business completely, i.e. management contracts, joint ventures, and strategic alliances.

Additionally, today's nonprofit healthcare marketplace requires national and state-level geographic knowledge as each state moves to implement full or partial pieces of the Patient Protection and Affordable Care Act. Local geo-politics aside, C-suite nonprofit leadership must play a role in sharing (and shaping) market trends (i.e, key health indicators), successes, and strategies at the board level.

Please feel free to continue this conversation via e-mail or phone with Chip Measells, Managing Partner, Wyatt Matas at ChipM[at]wyattmatas.com or 202.618.4713.

Sources:

Fitch:U.S. Hospital Consolidation Activity Hits High in 2012 Spurred by Healthcare Reform, Fitch Ratings. January 2013.
Former VNA Companies to Expand Services Under New Names, Crain's Detroit Business. January 2013.
Visiting Nurse Association to Lay Off 400 in North Texas, Dallas Business Journal. January 7, 2013.
Benefiting from Charity Care: California Not-for-profit Hospitals, Institute for Socio-Economic Policy. August 2012.

Related Wyatt Matas Posts:

Choosing a Successful Post-Acute Business Strategy in Today's Changing Healthcare Environment, February 2012.
Four Considerations when Evaluating Selling a Nonprofit Organization, March 2012.

Wyatt Matas Summary: "Sustaining Medicare for the Future: What's Next in the Debt-Reduction Debate"

Thu, 31 Jan 2013 00:00:00 -0600

Yesterday morning, Wyatt Matas attended the Kaiser Family Foundation event, "Sustaining Medicare for the Future: What's Next in the Debt-Reduction Debate."

The conversation focused on the current healthcare environment and how the market is actually moving into an inherently different (opposite) care model. There was discussion regarding market "acceptance" (providers especially) in terms of embracing these new value-based care models and the policy options available as "cost" factors more into policy decision-making. These were not policy recommendations, just a discussion of options available.

A brief summary of the key findings of interest from the Kaiser Family Foundation report: Policy Options to Sustain Medicare for the Future (January 2013), below:

Section 1, Medicare Eligibility, Beneficiary Costs, and Program Financing: Age-Eligibility Notes:
- Raise the Medicare eligiblity from 65 to 67
  - CBO estimates by raising the Medicare eligibility in 2014, would reduce net Federal spending by $113B over 10 years.
- Raise Medicare eligibility from 65 to 67 for those with high life-time earnings
  - no budget effect available
Section 1, Medicare Eligibility, Beneficiary Costs, and Program Financing: Beneficiary Cost Sharing Notes:
- Introduce cost sharing for home health services
  - Option 1.4a - Impose a 10% co-insurance on all home health episodes
    - CBO estimates Federal savings of $40B over 10 years if implemented in 2013
  - Option 1.4b - Impose a $150 co-pay per full episodes encompasing 5 or 5+ visits
    - No CBO option available. Actuarial Research Corporation (ARC) estimates $19B in Federal savings over 10 years (2014 - 2023)
  - Option 1.4c - Impose a $150 co-pay per full episode--restricted to episodes that do not follow a hospitalization or post-acute care
    - MedPAC estimates this would produce $1B - $5B in Medicare savings.
- Introduce cost sharing for the first 20-days of a skilled-nursing facility (SNF) stay
  - CBO estimates a daily co-pay for the first 20-days would reduce Federal spending by $21.3B over 10 years (2012 - 2021), if implemented 2013
- Modify current cost-sharing requirements to reflect "value-based insurance design"
  - No cost estimate available
Section 1, Medicare Eligibility, Beneficiary Costs, and Program Financing: Beneficiary Premiums Notes:
- Option 1.10 - Increase the income-related Part B and D premium to expand to more beneficiaries
  - done by increasing the income-related premium
  - done by increasing the share of beneficiaires paying the income-related premium
  - CBO estimates $30B in Federal savings over 10 years (2013 - 2022)
Section 1, Medicare Eligibility, Beneficiary Costs, and Program Financing: Revenues Notes:
- Raise the Medicare Payroll Tax - discussion to split Medicare payroll tax between employer and employee to 3.9% (1.95% paid by each)
  - $651B with a 1 percentage point increase in Medicare payroll tax (CBO, 2011)
- Increase other existing taxes: alcohol ($60B, CBO, 2011 estimate), tobacco ($42B, CBO, 2012 estimate), sugar-sweetened beverages ($50B, CBO 2008 estimate), employer-funded health insurance ($310B, CBO, 2011 estimate)
Section 2, Medicare Payments to Plans and Providers: Provider Payments Notes:
- Reform physician payment and the Sustainable Growth Rate (SGR)
  - MedPAC estimates their recommendation (to repeal SGR and establish legislative updates) would cost $200B over 10 years
  - Retain SGR, revise with a new base period - $254B over 10 years
- Modify update formulas and make other changes to overall payment levels
  - Freeze all Medicare payment rates for one year
    - Freezing inpatient and outpatient payments in 2013 would save $30B over 10 years,
    - save $6B SNF care,
    - save $4B home health
- Expand value-based purchasing and reduce hospital readmission (no cost estimates available)
  - Use value-based purchasing (VBP) programs to achieve savings, increase the percentage of Medicare payments subject to VBP, and place greater emphasis on patient outcomes and efficiency
  - Expand value-based purchasing to other Medicare services
- Rationalize payments across settings and circumstances
  - Equalizing payments for outpatient visits could reduce Medicare spending by $250M - $750M in 2013; between $1B - $5B over five years
  - Encourage care in lower-cost settings
- Change payments for post-acute care and hospice care
  - MedPAC estimates proposal to rebase SNFs and home health agencies (HHA) would save between $5B - $10B over five years
  - Modify SNF and home health payment to combine prospective payment with shared savings and risk (no cost estimate available)
- Modify or eliminate special provider payments
  - Reduce or eliminate special payments to rural hospitals -- projected savings of $2B over 10 years
Section 3, Delivery System Reform for High-Need Beneficiaries Notes:
- Implement Medicare Models of Care for High-Need Beneficiaries
- Implement state-based models for beneficiaries covered by Medicare and Medicaid
  - Require beneficiares who are dually-eligible for Medicare and Medicaid to enroll in Comprehensive Medicaid Managed Care Plans -- estimated to save $1B in 2015 and $12B 2015 - 2020
Section 5, Medicare Program Administration: Program Integrity Notes:
- Raise the requirements that certain high-risk provider groups must meet in order to enroll and stay enrolled in Medicare
- Institute new pre-payment screens for high-risk providers
- Increase post-payment review of suspicious claims
  - Institute pre-payment review for hospices with a high proportion of patients with high length-of-stay
  - Institute post-payment review on home health agencies with inordinately high outlier patients

The Kaiser Family Foundation report, Policy Options to Sustain Medicare for the Future (January 2013) can be downloaded at this link, with an audio on the same page.

Sources:

Kaiser Family Foundation, Policy Options to Sustain Medicare for the Future. January 2013

Related posts:

Overview: Key Medicare Data-Points

Thu, 24 Jan 2013 00:00:00 -0600

This Pivot Point infographic displays key Medicare data-points focused to: patient profile, finance, utilization, and economics.

1 in 6 U.S. covered by Medicare.
50% have incomes below 22%
40% have at least 3 chronic conditions
23% have mental health impairments (behavioral health)
17% younger than 65 and disabled
10% account for 57% of Medicare spending
9% or 4.5M people utilize utilize home health services²
15% or share or $520B of the U.S. Federal Budget³

These data points clearly reveal the opportunity for new organizational business models (Accountable Care Organizations), investment and capital deployment in a shifting, value-based healthcare landscape.

The dual-eligidble, home health, behavioral and mental health segments are indicators of patient care groups in need of appropriate care cycle mangement insights, strategic relationships, and ability to ready the maxiumum value-proposition to health systems, provider organizations and this special group of health care patients.

To continue this conversation, e-mail or call Chip Measells, Managing Partner, Wyatt Matas at ChipM[at]wyattmatas.com or 202.618.4713.

Sources:

1. Kaiser Family Foundation analysis. Medicare's Role and Future Challenges (2012).

2. Kaiser Family Foundation Medicare Beneficiaries' Utilization of Selected Medical and Long-term Care Services

3. Historical spending for 1980 - 2010 Congressional Budget Office (CBO) Budget and Economic Outlook (2011)

Home Health Public Company Analysis

Wed, 23 Jan 2013 00:00:00 -0600

The following tables highlight financial indicators in the home health sector to include: 1) home health market comparables and 2) a home health public company analysis with key financial indicators and multiples for Market Capitalization, Enterprise Value (EV), EBITDA, and more.

To continue a conversation regarding these public companies, their analysis, and how this analysis impacts your home health business please e-mail or call Chip Measells, Managing Partner, Wyatt Matas at ChipM[at]wyattmatas.com or 202.618.4713.

Related Posts:

Wyatt Matas 2013 Healthcare Outlook & Trend Focus, January 2013
January 2012 M&A Activity in Healthcare Set Records, January 2012

Healthcare Deal Activity (2010 - 2012) via Affordable Care Act Lens

Fri, 18 Jan 2013 00:00:00 -0600

The following charts display healthcare deal activity during a period of landmark federal healthcare legislation.
Deal activity shows an uptick following the signing of the Patient Protection and Affordable Care Act (ACA) legislation, then slows prior to Supreme Court hearings, to remain moderately flat throughout 2012--an election year.
In 2013, with healthcare markets moving toward ACA implementation, we project a bullish year poised for investment and capital deployment.

Wyatt Matas 2013 Healthcare Outlook & Trend Focus

Wed, 16 Jan 2013 00:00:00 -0600

In the wake of the 2012 U.S. Surpreme Court ruling upholding the Patient Protection and Affordable Care Act (ACA), the FY 2013 roadmap may represent one of the most active healthcare landscapes in recent memory. To our readers, we present our five key players setting the stage in 2013:

Value-Based Care & its Payment Models will be the vanguard. With the most recent (FY2011) data citing U.S. health expenditures at 18% of U.S. GDP, consumer healthcare spending at an all-time high, and $750B in wasted resources¹, the drive to value-based care systems, payment models, and value-based organizational structures (i.e. Accountable Care Organizations) accelerates. The cost-curve conversation continues while value-based care gains momentum in the marketplace.
- Via a value-driven lens, the integration of behavioral health (including mental health, mental illness, and spectrum disorders) and physical medicine will play a pivotal role in shaping the 2013 healthcare market.
  - The market now understands the care and cost impact of patients with behavioral and physical health co-morbidities, leading payers to search, test, and develop new care models to address both behavioral and physical health.
  - Along the way to integrating behavioral health and physical medicine, redefinitions for traditional case management occurs for cross-trained health workers, thus promoting system affordability, while placing greater emphasis on social and life circumstances (home health driver). Primary care will also have a greater ability to deal with behavioral health, i.e. via health risk assessments (HRAs) informed by the behavioral health screening.
- Newly established (and successful) Accountable Care Organizations (ACOs) and their models will play a vital role in shaping market expectations. Of great interest are models such as Washington State's FFS Demonstration to Integrate Care and Align Financing structures for Dual-Eligible Beneficiaries².
  - In this demonstration project, 21,000 Medicare-Medicaid dual-eligible beneficiares will be able to receive a physical health risk assessment and behavioral health screeening, while being able to select home health options as well.
  - Demonstration project savings will be realized based upon a Medicare Minimum Savings Rate (MSR), which at 20,000 beneficiaries is at the 2.45% level. If the demonstration realizes savings above the MSR, the state qualifies to receive 50% of federal savings.
- Health Insurance Exchanges (HIEs), especially those private HIEs may have an opportunity to gain market traction, thus potentially setting early consumer expectations, while federal and state-based exchanges continue their structural due-diligience to the October 1, 2013 deadline.
- Already, with America Health Insurance Plan (AHIP) CEO, Karen Ignani responding³ to a NY Times article regarding rising premiums⁴, there are clear signs that the value-based care conversations are converging within policy, finance, coverage, provider and patient-consumer circles alike.
Increasing Healthcare M&A Activity
- With 3 of 4 healthcare organizations considering merger or acquisition in 2011⁵, we believe a similar trend will continue in 2013. The 2012 post-U.S. presidential election M&A environment (Q4 FY2012) saw a 6% increase in deal activity vs. the same FY2011 period; 314 deals and $21.6B capital invested vs. 337 deals with $25.7B in capital invested in FY2012⁶.
- The 2013 healthcare landscape, built for economy-of-scale to realize more immediate value creation, provides a bevy of scenarios for mergers and acquisition activity, including: small business security, Accountable Care Organization (ACO) formation, information technology and big-data network access, and strong credit ratings.
- As noted in the CompHealth⁵ survey, merger and acquisition restraints may stem from system to provider-level cultural differnces, governance, and valuation agreement. Mitigating restraints depends upon an appropriate approach and early steps-to-diligence.
- In the realm of valuations, we see increasing valuations for those with high-cost patient solutions (Care Cycle Management companies). Following the trend from 2011: the 20x EBITDA multiple United paid for Inspiris, Davita's 8x EBITDA multiple for Healthcare Partners, Welsh Carson's investment in NaviHealth, and rumored 15x EBITDA multiple for Univita only strengthen the argument.
Healthcare Infrastructure and Operations move into focus as the federal government, states, systems, care providers, coverage providers, and patients begin to interact with the healthcare system via new financial mechanisms and care experiences, respectively.
- Specifically, increased capital deployment is required to build the infrastructure needed to coordinate care. The key provisions in the ACA: ACOs, Integrated Care Models, Patient Centered Medical Homes, Independence at Home, and bundled payments require the infrastructure to coordinate care. Up until this point, healthcare has yet to incentivize or pay for coordinated care, placing the onus on healthcare organizations to rapidly install system, organizational, and technological infrastructures to meet the demands of these contracting vehicles.
- Within our markets of interest for dual-eligible, home health, and behavioral health, many operators and providers will play a vital role in achieving value-based care milestones. Within these markets especially, this complexity requires aligned leadership, strategies, and operations to align for the realization, building, or maintenance of consistent growth.
- Accountable Care Organizations and their providers will be focused on achieving operational efficiences to achieve prospective or retroactive milestones under new payment scenarios.
Healthcare Information Technology will play a major role in 2013, as health systems, providers, patients and health consumers utilize new healthcare technologies based upon the precepts of internet operability, cloud-based technologies, and big-data to name just a few.
- Supporting the scrum of hardware and software integration are the major market influences taking place related to value-based care, including: Meaningful Use II, Comparative Effectiveness Research (CER), telemedicine, and big-data and data analytics (decision-support software, claims analysis, etc.).
- The reliance on the internet for patient information (59% of U.S. adults search online for health information⁷) along with the synonymous rise of the physician in-pocket tablet, are clear signals of new technologies integrating at the point-of-care.
- The inherent risks in any health information technology strategic implementation include: (1) speed-to-market: if the innovation can be realized quickly enough, and at-scale to take advantage of market convergences, (2) the deployment of knowledge-based capital for ROI benefit, and (3) data privatization and data security.
Innovation, albeit listed last, is the common thread linking each of the aforementioned. Innovation will play a role in defining new payment mechanisms and leadership must embrace innovative approaches to system (potential merger and acquisition) and organizational (operational) challenges. Innovation will be driven by Knowledge Networks and Markets (KNMs), largely via health information technology to support decision-making for governments, systems, providers, and patients.
- Faster adoption of innovation. With key provisions and penalities in the ACA implemented in 2014, providers will scale to test and adopt innovative care models and population health approaches in 2013.
- Creative strategic alliances and alliance networks: bundled payments, ACOs and the lack of infrastructure to coordinate care across silos require providers to build formal strategic partnership alliances across healthcare: provider-to-provider, provider-to-vendor, and provider-to-payer relationships will accelerate in 2013.

In sum, the acceleration of value-based care and its payment models create the demand for actual value creation in the 2013 healthcare marketplace. The valuation trends, health information technology requirements, etc., are largely driven by the need for healthcare players to achieve more rapid adoption and implementation of innovative care models.

For our readers and clients, the above convergences may represent a tremendous opportunity to set the stage in the right way for your system or organization. Please feel free to continue this conversation via e-mail or phone with Chip Measells, Managing Partner, Wyatt Matas at ChipM[at]wayattmatas.com or 202.618.4713.

Background Resources:

"Best Care At Lowest Cost: The Path to Continuously Learning Health Care in America." Institute of Medicine (IOM). September 6, 2012
"Washington FFS Demonstration to Integrate Care and Align Financing Structures for Dual Eligible Beneficiaries." Kaiser Commission on Medicaid and the Uninsured. December 13, 2012
"AHIP's Ignani Pushes Back on Premiums in the New York Times." AHIP Coverage. January 14, 2013
"Health Insurers Raise Some Rates by Double Digits." New York Times. January 5, 2013
"Facility Mergers and Acquisition Infographic." CompHealth. August 10, 2012.
Pitchbook Data. Accessed January 2013.
Susannah Fox, Maeve Duggan, Health Online 2013, Pew Internet & American Life Project, January 15, 2013. URL Accessed: January 15, 2013.

Related Posts:

Transitions to a Value-Based Payment System: The Accountable Care Organization & its Payment Models, January 2013
Payment Model Summary Table: Accountable Care Organizations (ACOs), January 2013
Pivot Point: Dramatic Healthcare Cost Increases Associated with Behavioral Health Comorbidity, December 2012
The Business Case for Behavioral Health, December 2012
New Healthcare Industry Class is Emerging, August 2012
Notable Transactions, August 2012
Capital Deployment to Build a Care Coordination Infrastructure, June 2012
Four Considerations When Evaluating Selling a Nonprofit Organization, March 2012
White Paper: Introduction of Care Cycle Management, April 2011

Transitions to a Value-Based Healthcare System: The Accountable Care Organization & its Payment Models

Fri, 11 Jan 2013 00:00:00 -0600

The Accountable Care Organization (ACO), a collaborative provider network comprised of groups of individual (i.e. physician) and system (i.e. hospital) providers, and payers is designed to create economies-of-scale, thus cost savings and potential margin sharing derived from value-based provider structures (versus traditional fee-for-service or volume).
Complexities arise in developing Accountable Care Organizations as physicians, hospitals, and payers determine: (1) if it's financially beneficial to establish these business structures, (2) if they are closely aligned to like-minded organizations to develop ACOs, and (3) if they have the infrastructure and processes available to create value-based healthcare models.
In a recent report¹, The American Academy of Actuaries organizes the ACO payment models along a spectrum of financial risk: one-sided shared-savings to global payments, respectively. These payment models are outlined, in brief, in the Wyatt Matas Table: Accountable Care Organization (ACO) Payment Model Summary (here/below).
To achieve seamless integration of value-based payment models, while mitigating risks, it's necessary for ACOs, potential and current, to: (1) consider benefits amongst various stakeholders, (2) risk considerations (i.e. patient profiles, risk adjustment tools, benchmarking, and financial models), define savings, and define collaboration and its boundaries. At the same time, key strategic business questions may also be considered:
- Is the ACO model best for me and my organization? How does my organization develop an ACO?
- How can my organization decide the appropriate amount of risk within our ACO structure? How can that risk be reduced, or leveraged to our advantage?
- Defining and developing benchmarks--where to begin?
- How can smaller physician practices, hospitals, and health systems reach this scale of accountability while accepting risk under the ACO payment models?
- Should we align with or become a public vs. a private ACO?
- How should my organization account for moral hazard and patient risk adjustments?
- Does my organization have the ability to create system-level data via information technology networks and interfaces?
During this post-Patient Protection and Affordable Care Act transition period, Wyatt Matas is prepared to provide its suite of services, designed to assist ACOs, current and potential, to determine what payment model(s) work best for your respective organization.
Additionally, modeled after the Centers for Medicaid and Medicare Innovation Grant, The Fund for Health Innovation (The Fund), is designed to work directly with potential limited partners and health systems, providers, and nonprofit organizations to develop and test new value-based care delivery models.

For more information about Wyatt Matas or The Fund for Health Innovation, please e-mail Chip Measells, Managing Partner, Wyatt Matas at chipm[at]wayattmatas.com or call 202.618.4713 to begin a conversation.

Background Resources:

An Actuarial Perspecitve on Accountable Care Organizations, American Academy of Actuaries, Issue Brief. December 2012.
Bundeled Payment: An AHA Synthesis Report, American Hospital Association. May 2010.
Medicare Program; Medicare Shared Savings Program: Accountable Care Organizations, A Rule by the Centers for Medicare & Medicaid Services. November 2, 2011.

Payment Model Summary Table: Accountable Care Organizations (ACOs)

Fri, 11 Jan 2013 00:00:00 -0600

This table organizes Accountable Care Organization (ACO) payment models along a spectrum of financial risk: one-sided shared savings to global payments, respectively.

Turning Point: Transitions to a Value-based Healthcare System: The Accountable Care Organization (ACO) & its Payment Models

Healthcare Fiscal Cliff Summary

Fri, 11 Jan 2013 00:00:00 -0600

Without healthcare's involvement the fiscal cliff would not have been averted. The two largest groups, from a provider healthcare reimbursement perspective, affected by the fiscal cliff deal include: doctors and hospitals.

Doctors, at least for another year, will see Medicare payments remain stable (termed, the "doc fix). Without the fiscal cliff deal, doctors would have seen a 26.5% reduction in Medicare reimbursements in 2013 due to the 1997 Balanced Budget Act's Sustainable Growth Rate (SGR) provision.
The cost of implementing the "doc fix" has been shifted to hospitals largely via Medicare reimbursements, or lack thereof. These hospital costs fill a variety of reimbursement buckets, including: diagnosis-related-group (DRG) adjustments for Medicare and bundled payment adjustments for end-stage renal disease (ESRD). Additional examples outlined in Table: Healthcare Fiscal Cliff Summary : Congressional Budget Office Figures

Meanwhile, the impact within the healthcare system will be multi-layered, affecting policy-makers, hospitals, physicians, and patients alike.

On the provider side, hospitals, currently positioning themselves for Patient Protection and Affordable Care Act provisions; such as meaningful use II and Accountable Care Organization (ACO) models, may be further positioned for merger, consolidation, and strategic alliance networks to either: (1) maintain and develop future cash flows or (2) to begin considering difficult decisions regarding their Medicare service offering.
Doctors will have another year to decide the risks involved in treating Medicare patients long-term. Some doctors have founds ways to optimize the Medicare reimbursement model for their practice--these physicians may provide increasing value to hospitals within the ACO structure.

Healthcare's Fiscal Cliff Savings Impact Summary:

Total Near-term (2013) Projected Savings Impact: $.3B
Total Long-term (2014 - 2022) Projected Savings Impact: $30.3B

Healthcare's Fiscal Cliff Cost Impact Summary:

Total Near-term (2013) Projected Cost Impact: $13.1B
Total Long-term (2014 - 2022) Projected Cost Impact: $18.5B

Table: Healthcare Fiscal Cliff, Congressional Budget Office Figures

Fri, 11 Jan 2013 00:00:00 -0600

This table displays Congressional Budget Office projected savings and projected costs, respectively; organized via near-term (2013) impact and long-term (2014 - 2022) impact.

Healthcare Fiscal Cliff Summary

Payment Model Summary: Behavioral Health

Sun, 16 Dec 2012 00:00:00 -0600

This table consolidates payment model findings from Colonnade's December 2012 report, Home Health Pivot Point: Mental Health, outlining key considerations for building and taking to market behavioral care products for home health companies.

The Business Case for Behavioral Health

Sun, 16 Dec 2012 00:00:00 -0600

Care Cycle Management, the integration of disease management and care delivery to improve outcomes and lower healthcare expenditures for at-risk patient populations, is the fulcrum of our evolving portfolio of strategies. Here, we have been investigating emerging trends and success indicators in areas that can provide growth opportunities to home health agencies, vendors and providers. Our objectives are to:

assist them in creating more value to payers by moving beyond traditional (commodity) program and pricing models;
demonstrate that by already providing "boots on the ground" services, home health companies already have a significant down-payment augmenting their product lines with the addition of mental health^[1]
to help sell integrated solutions to payers in general, and managed care companies in particular.

Our Theses:

Mental health patients are often the highest cost. The following data illustrate our point, see Wyatt Matas Pivot Point: Dramatic Cost Increases Associated with Behavioral Health Comorbidity
Payers are looking for models to integrate physical medicine and behavioral health.
Home health has a unique value proposition--boots on the ground leveraged to include mental health supports--not necessarily treatment--packaged for cost savings and quality guarantees.
New types of cross-trained community workers, people recruited from the neighborhoods in which they will work, are not only the most cost-efficient, but also the most appropriate team members to help people at home.

Key Indicators of Change at the Payer Level:

The implementation of the Patient Protection and Affordable Care Act (ACA) with its concomitant effect of expanding the role and scope of Medicaid, largely into the hands of health plans[2]

Continued downward pressures on Medicare expenses.
The ongoing emergency of the dual eligible marketplace.
A heightened focus on the highest cost and most vulnerable members.
The roles health plans are playing as they seek to maximize their efforts to control both medical and behavioral costs.
The desire of health plans to have innovations presented to them that move beyond fee-for-service contracting; and, last but by no means least..
Widespread redefinition of traditional forms of case management into newer forms of community health worker (CHW) initiatives.

Data and the Need for Integrative Programming

Key Data Points: Abundant data points support the business case for integrating mental health and medical care while underscoring why primary care should drive the incorporation of mental health care into it, below a few:

Approximately 20% of adults 55+ suffer from a mental disorder, American Psychological Association, 2001.
The current prevalence estimate is that about 20% of the U.S. population is affected by mental disorders during a given year. Mental Health Report of the U.S. Surgeon General, 1999
Total ambulatory healthcare costs were 43% - 52% higher and total ambulatory inpatient costs were 47% to 51% higher in older, depressed primary care clients compared with a comparable group who were not depressed after adjustment for chronic medical illness. Wayne Katon, el al., "Increased Medical Costs of a Population-based Sample of Depressed Elderly Patients," Archives of General Psychiatry, 2003 60(9)

Integrating Services and Supports

Ingredients for success, engagement, and improvement include three key components to meet contract and infrastructure demands:

Finding the patient -- leveraging "boots on the ground"
Diagnosing the patient -- a screening tool
Engaging the patient -- boots on the ground and case/care management

Payers, particularly health plans, are starting to retool traditional case management programs and are seeking vendors that can supply new product offerings.

Leveraging Technology and Boots on the Ground

Payers and program sponsors are working to develop consolidated Continuity of Care Records spanning a patient's experience within and across the types of care they receive.
Not only do they need these data in order to better manage care, they are working toward implementation of enterprise-wide and government sponsored Health Information Exchanges (HIEs) to fill the large data-gaps limiting the effectiveness of many health plan initiatives.

Business and Pricing Models, and Risks

Business Models
- Training and Certification - focus on equipping community health worker trainees with skills designed to significantly abet a program's efforts to use non-traditional personnel who are appropriate for working in varied neighborhoods and in home health care environments.
- Screening - a critical infrastructure component; assists in meeting contract demands for payers.
- Staffing - according to model preferences, home health service entities may wish to deploy clinical personnel into the field and home, and to a certain extent this will happen under any model.
- Technology - It is axiomatic that Commercial Off-The-Shelf (COTS) products are not yet widely available. Custom program is typically required.
Pricing Model Considerations, see Wyatt Matas Directions Blog Post: Payment Model Summary: Behavioral Health
Risks: value-based care (VBC) is best supported by demonstrations of efficacy and cost savings related to high-need and high-cost patient management programs. Integrated medical/behavioral programs serve these populations best. To hedge against risk, opportunities must be examined on a state-by-state basis.

Summary

Providers and payers are beginning to design care models that merge physical health care models with the treatment of mental illness.
Payers in particular are acutely aware of these costs as they take on more responsibilities for managing the dual eligible populations as well as Medicaid Aged, Blind, and Disabled (ABD).
These new care models are classic examples of Care Cycle Management: integrating disease management with care delivery to improve outcomes while lowering costs for at-risk patients.

How Colonnade Helps Your Organization

Colonnade is a post-acute care strategy firm that assists clients to create high-value positions in integrated care delivery models. As industry thought-leaders, we have been on the forefront in developing and implementing integrated post-acute care business strategies and care coordination models for healthcare systems, home health agencies, physicians practices and managed care organizations.

Colonnade invites discussions regarding Care Cycle Management, the integration of disease management and care delivery to improve outcomes and lower healthcare expenditures of at-risk patient populations. In particular, we wish to discuss relative viability for a home health pivot point to include mental health:

Situational Analysis -- What are you doing now, with whom or what, and how does that compare with where you want to go? To include:
- Current and needed organizational strengths
- Market opportunity, and implications relative to the prior point
- Payment Model Assessment
Capabilities Analysis -- How close or far away from agreed-upon goals are you?
- Staffing and management
- Data capabilities
- Pricing
- Cost of going to market
Marketing/Branding Campaign -- How are you going to win contracts?
- Assistance with communications
- Assistance with proposals and RFP responses, including possibilities for joint venturing and/or conducting procurements for needed capabilities and/or relationshps
- Assistance with payer and stakeholder access and relationships

For more information, kindly contact:

Brent Feorene, President bfeorene@colonnadehealthcare.com

Colonnade Healthcare Solutions
30628 Detroit Road #148
Westlake, OH 44145-5844

[1] A standard industry term is “behavioral health”, which may include mental health and/or substance abuse. While our predominant focus is on mental health, it is noted that substance abuse is often a compounding factor in patients with chronic conditions and attempts to help them. Some agencies may find the addition of substance abuse programming beneficial to their goals.

[2] The ACA supports more behavioral services in the following ways: (1) with the passage of the federal mental health parity law, many (but not all) insurers were required to treat mental disorders with the same coverage limits as any other disease or health concern. While this has helped many people obtain needed treatment without having to jump through as many insurance company hoops, it hasn’t really mattered much to the indigent — many didn’t have insurance coverage in the first place. (2) Also, the law is designed to increase incentives to physicians and other health and mental health professionals to provide services across the entire continuum of care — holistically (patient-centric), not just Patient X presenting with Z symptoms. It is also focused on preventative care, which can help keep a person out of the hospital.

Healthcare Merger & Acquisition Activity, 30-days

Thu, 13 Dec 2012 00:00:00 -0600

This summary highlights healthcare M/A activity over the 30-day period (Nov 12, 2012 - Dec 14, 2012), while making comparisions to data during the same time period in the previous year (2011).
During this 30-day period (2012) there were 113 healthcare deals, with $9.6B in capital invested, representing a 130% increase in overall healthcare deal activity over the previous 30-days. Healthcare M/A activity accounted for 10.9% of total deal volume during this period.
During the same 2011 time period there were 92 total healthcare deals, with $6.4B in capital invested, with M/A representing 10.7% of deal activity.
In 2012, there were 13 healthcare M/A deals during this 30-day period, spread in an almost even distribution across healthcare's provider-focused niche verticals.
In 2011, there were 11 healthcare M/A deals during this 30-day time period, concentrated primarily on the bio-technology/pharmaceutical sector and its connected ancillaries.
We believe this recent surge in M/A activity is based upon the rush to meet capital gains and based upon more clarity in the healthcare market place since the U.S. Supreme Court Patient Protection and Affordable Care Act ruling coupled with the U.S. Presidential election 2012.

Congressional Budget Office Estimates Savings on Healthcare Reform Repeal

Thu, 13 Dec 2012 00:00:00 -0600

The Congressional Budget Office (CBO) released revised figures estimating the repeal of the Affordable Care Act (ACA) health insurance expansion to yield savings of $150B in 2020, broken down as follows:

repealing the individual mandate: $40B;
increasing Part B premiums to 35% of program cost: $40B;
limiting medical malpractice torts: $10B;
raising the Medicare eligibility age to 67: $30B;
Expanding Medicaid rebates into Part D:$15B;
adding a public plan to the exchanges: $15B

Additionally, the CBO estimates that potential legislation exempting agent and broker fees from the ACA's medical loss ratio (MLR) calculations would increase the deficit by $1.1B from 2013 to 2022, assuming it went into effect beginning in 2014. If the broker and agent fees are excluded, csonsumer rebates are initially expected to fall by 60% - 70%, while premiums would increase by an average of 0.2%. The legislation has not yet been scheduled for floor consideration.

Dramatic Healthcare Cost Increases Associated with Behavioral Health Comorbidity

Mon, 10 Dec 2012 00:00:00 -0600

This chart compares the annual cost of a chronic disease patient to the annual cost of a chronic disease patient with a behavioral health/mental illness comorbidity. This chart also recognizes the opportunity to implement value-based healthcare solutions throughout the ecosystem, from small providers to regional and national provider system levels.

5th Annual Healthcare Deal Making Summit

Thu, 06 Dec 2012 13:35:33 -0600

Chip Measells will be panelist at the 5th Annual Healthcare Deal Making Summit. The Summit brings together buyers, sellers and financiers to exchange perspectives, network and create a marketplace for transactions. In today's healthcare environment, consolidation and strategic alliances or partnerships provide various strategic advantages.

Three Benefits of a Strategic Auction When Exploring an Exit Strategy

Tue, 18 Sep 2012 00:00:00 -0500

Three Benefits of a Strategic Auction When Exploring an Exit Strategy

As the implementation of PPACA ramps up, many healthcare companies are considering their strategic options. Certainly there are opportunities for growth in every market, but some companies believe the reimbursement, compliance and competitive risks outweigh the potential future returns. Aside from having to consider the personal transitions involved when owners sell their businesses, many CEOs tell us that the idea of opening up the sale of their company to the broader marketplace in this competitive environment raises a number of concerns. These concerns are valid, and in some situations we recommend exploring exit options through the process of a strategic auction.

A strategic auction, sometimes called a limited auction, is the process of formally or informally presenting the company to a limited number of buyers. Unlike a broad auction, it’s a more focused discussion between the company’s adviser, the executive team and 3-6 potential buyers, all of whom have been selected in a strategic way. With a broad auction, an investment banker presents the company to dozens of potential buyers and guides them through specific deadlines, requirements and milestones to continue participating in the auction. A strategic auction slows the process down in order to evaluate buyers and alternatives more strategically.

Boards of directors, senior executives and business owners choose the option of a strategic auction for a few reasons. Perhaps they want to test the market to see how certain buyers perceive their company. We’ve also recommended a strategic auction to owners who want to explore strategic options to growing the business so they have a complete picture of all of the available possibilities. Other companies use a strategic auction process because they receive an unsolicited offer, and they want to make sure it is an appropriate price. Then there are those executives that have determined that an exit is the right strategy, but want to proceed slowly.

There are three distinct benefits to using a strategic auction process:

More control. With a focused, strategic list of potential buyers, companies can maximize control over the process, especially in the area of confidentiality. With broader auctions, keeping the sale of a company confidential can be a challenge, because the process requires exposing the company to a wide array of potential buyers across the marketplace. We usually work with our clients to develop a focused list that comprises 1-2 financial buyers, 1-2 strategic buyers from within the client’s industry segment, and 1-2 strategic buyers from outside the industry segment who may present an interesting synergy.

Limited disruption to the business. The M&A process – especially a broad auction – can disrupt the day-to-day operations of a business. It is common in a broader auction for executive teams to sit through 10-20 buyer presentations and participate in countless conference calls to answer questions about the business. A strategic auction restricts the amount of disruptions because the conversations are much more exclusive with a narrow group of buyers.

Preparing for a strategic auction helps solidify a strategic direction. With a strategic auction it is necessary to develop a strategy for each buyer group. Often this preparation will reveal growth alternatives that do not involve divesting from the business. The process can identify joint ventures, partnerships and other strategic initiatives that can rejuvenate or accelerate a company’s growth trajectory.

As the healthcare landscape evolves over the next 5 years, it will be essential for all executives to know all of their strategic options. Wyatt Matas has developed several service options to help our clients review, validate and explore their strategic direction. Visit our Thought Center for more of our research publications or contact Chip Measells at chipm@wyattmatas.com or at 202 618 4713.

House Call Practices Provide Powerful Solution for Post-Acute and Acute Pra

Fri, 24 Aug 2012 00:00:00 -0500

Thriving in the health care industry is based firmly in providing "value-based" solutions - and participating in the value created. House call practices are poised to provide these value-based care models as a powerful solution in the post-acute and community settings.

Recently, Brent T. Feorene, President of Colonnade Healthcare Solutions, was interviewed and featured in Frontiers, the American Academy of Home Care Physicians (AAHCP) monthly newsletter as their Strategic Thinker in Home Care Medicine. Brent offers us his expert viewpoints on the seismic shift in the health care industry and how house call practices play an increasingly strategic role.

You can read the entire interview by clicking on the link below.

VantagePoint-Insider's View of Healthcare

Mon, 13 Aug 2012 00:00:00 -0500

Wyatt Matas has launched a new service to ensure boards of directors and executives of healthcare companies have a clear understanding of the complexities and changes shaping the healthcare industry. VantagePoint is used by healthcare leaders to leverage our unique access to market intelligence to improve their strategic position and fully understand the opportunities and challenges facing their companies. Feel free to download the document below for more information or call Chip Measells at 202-618-4713.

New Healthcare Industry Classification is Emerging

Thu, 09 Aug 2012 00:00:00 -0500

New Healthcare Industry Classification is Emerging

As payers and providers move forward in the wake of health reform, one thing we’ve seen everyone agree on is that the market will reward providers that can demonstrate the ability to lower the costs associated with caring for chronically ill patients.

Although providers from established sectors – such as disease management, home healthcare, physician groups, skilled nursing facilities or other traditional vendors to the system – are developing solutions to bend the cost curve, investors are perplexed about how to value these new solutions. We’ve seen this confusion stall several transactions as solutions providers seek to be valued differently from vendors to the system. Many solutions providers will rely on their legacy businesses to fuel innovation, with the ultimate goal of spinning off or reducing reliance on the original business line once the novel solutions have begun to gain traction with payers.

Even though investors may target a particular provider because of its strategic direction and planned innovative solutions, they will still value the company as a traditional provider, focusing on all of the challenges facing the legacy business and downplaying the value of the innovative solutions. Some providers also struggle to define their innovation because they are linked to a sector filled with peers who are unable to think of themselves outside their historical boundaries.

We think it is time to define a new healthcare industry classification that recognizes the market trends for managing high-cost patients and values the providers that bring innovative solutions that will change healthcare. We think that a term we coined in previous research – care cycle management – describes this sector perfectly. CCM Summary.

We think a new classification will help for three reasons:

Differentiation. Providers need to clearly communicate their value proposition in a way that differentiates them from their slower moving peers. Declaring themselves as a care cycle management company requires prospective payers to view them differently. For instance, a disease management company that has a solution to manage chronically ill patients is different and is valued differently from their peers that focus on a wellness or preventive care offerings. Value Continuum.
Identification. While working to differentiate themselves from traditional fee-for-service offerings, providers are working to identify themselves with other providers that can bend the cost curve. Healthcare reform and new research encourages payer sources to look for new solutions to managing high cost patients. Being grouped in a new sector with other providers that can lower the cost of care while improving quality, regardless of methodology, improves the likelihood of being considered as a solution provider.
Clarity for capital markets. Right now the market recognizes that payers are the winners of healthcare reform and providers are not. There is a lack of understanding in the capital markets in terms of what it will take to implement healthcare reform and who will provide these solutions. Ultimately, those who have the solutions to reducing the cost of care will be the most valuable to payers and the healthcare system. Additionally, a new industry classification will help the markets make sense of recent transactions and industry activity, such as the Davita/Healthcare Partners transaction, why Humana paid the multiple it did for SeniorBridge, or why LHC Group didn’t find a buyer at the multiples it was seeking. Notable Transactions.

What do you think about the creation of a new market sector that values care cycle management providers? How do you think a new market sector will affect your ability to convey the value of your solutions to the marketplace and investors?

Gaining insight to this new healthcare industry classification, Care Cycle Management, and acquiring the market intelligence to position your company for the future, may be a critical turning point for you right now.

If it is, we invite you to explore the unique and timely opportunity to engage in VantagePoint, our series of executive-level presentations and discussions providing an insider’s view of healthcare.

VantagePoint brings you and your team:

Inside the minds of industry thought leaders
Market intelligence to improve your strategic position
The competitive advantage of innovative opportunities

To discuss how our VantagePoint program works, how it can be a strategic advantage for you company, or just want to share your thoughts or suggest your own ideas, contact Chip Measells at chipm@wyattmatas.com or at 202 618 4713.

Notable Healthcare Transaction

Wed, 08 Aug 2012 00:00:00 -0500

The attached chart highlights a few notable healthcare transactions that have closed or been announced in the last 12 months.

Care Cycle Management Business Model Chart

Wed, 08 Aug 2012 00:00:00 -0500

Care cycle management is the integration of disease management and care delivery to manage and care for high cost patients. Wyatt Matas developed the business model in 2010 along side several of our clients and advisors. Since then, Wyatt Matas has raised over $80 million for companies pursuing a care cycle management business model.

Webinar Healthcare Services Valuations in the Post-Reform Environment

Thu, 19 Jul 2012 08:25:33 -0500

Wyatt Matas will be holding their lastest webinar entitled Healthcare Serivices Valuations in the Post-Reform Environment. The webinar will be held on July 11th at 1:00 PM EST. Participants will learn how a changing healthcare landscape is impacting how healthcare services providers operate, evaluate growth strategies and are being valued. The presenter, Chip Measells will discuss the strategic crossroads all heatlhcare providers are facing and the consequences their decisions will have on the valuation of their companies. The webinar will also include case studies and specific examples of how healthcare services companies are being valued.

Those interested in participating can contact Rob Downey at rob@wyattmatas.com for an official invitation. As with all of our webinars and publications, there will be no-charge for participation.

Healthcare Services Valuations in the Post-Reform Environment

Thu, 19 Jul 2012 00:00:00 -0500

This webinar explains how a changing healthcare landscape is impacting how healthcare services providers operate, evaluate growth strategies and are being valued. The presenter, Chip Measells will discuss the strategic crossroads all healthcare providers are facing and the consequences their decisions will have on the valuation of their companies.

Four Steps to Developing a Personal Transition After the Sale of Your Businiess

Mon, 02 Jul 2012 00:00:00 -0500

Four Steps to Developing a Personal Transition After the Sale of Your Business

Although most business brokers would describe the process of selling a business as building a series of strategies to assess the value, capacity and future plans of the organization, few would include in that process the owner’s personal exit strategy. In our experience working with owners to sell their businesses, most have detailed plans for the company’s transition to new owners, but few have any idea what their own personal transition will entail. Many owners talk vaguely of early retirement, possibly starting another new business or spending more time with family, only to find themselves feeling a little lost within a few months post-sale.

At Wyatt Matas, part of the advice that we provide to business owners throughout the process of a sale includes helping them develop a plan for their own future post-sale. We come to this process naturally, having been in the Owner chair ourselves and selling companies we led or started. Developing a personal post-sale strategy is a critical part of the sale process, and having a partner who is well-versed in all facets of the process is key.

Building a personal post-sale strategy requires a great deal of thought and guidance, but we recommend that owners start with the following steps:

Prepare for a personal reaction to the sale. Many business owners are not prepared for the “empty nest” feeling that hits after they close the sale of their company. This sense of loss is natural, considering that owners pour time, energy and financial resources into building and growing a business. Understanding what feelings might arise from the sale of your company and preparing for how you might respond to those feelings will help you avoid feeling lost, hopeless or without a future direction.

Outline some possible “first steps” that you will take post-sale. We’ve seen many owners unable to think about the steps involved in a larger post-sale strategy because they get stuck trying to visualize the small steps. After years spent following the same routine every morning, it’s challenging to picture what that first week will look like after you hand off your company to new owners. Having specific steps to take after you complete your company’s transition will help your own personal transition. One of the most powerful first steps is to reconnect with your network. People and organizations who you weren’t able to talk with while going through the sale will be eager to hear from you and will be some of your best connections going forward.

Define your options for your next career move. Without a list of possible career moves, business owners are opening themselves up to greater feelings of loss, confusion and doubt. You will most likely be in a non-compete agreement with the company that is acquiring your company for typically a 3-5 year period after the sale. Taking some time to identify all the possibilities in terms of your next act – be it starting a new company, consulting or leading someone else’s company – helps alleviate worry and lays the groundwork for a larger career strategy. One way to think about it is that you would probably not make a big decision for your company without a strategic plan. The same holds true for your career move after the sale – you’ve got to have a plan.

Recognize what you carry forward from the experience. In selling your company, you leave behind your business and its assets, but you take with you all of the experiences you gained and the skills you built from starting, leading and growing that business. These are considered your own saleable assets when it comes time to place yourself in front of your next successful career venture. Identifying what skills and experiences you take with you helps to sort out possible future career paths and aids in your personal transition.

Carving out time during the sale process to build a personal transition plan is a critical activity for all owners who are selling their businesses. Having a knowledgeable partner who will guide you through the necessary steps, flag important considerations and offer thoughtful counsel on this facet of your company’s sale is a key factor in closing a successful deal.

Contracting with Managed Care Organizations

Wed, 27 Jun 2012 00:00:00 -0500

In our engagements with clients, there is broad recognition that the top five percent of Medicare beneficiaries present unique challenges to Medicare, Managed Care Organizations (MCOs) and office-based primary care practices. The multiple chronic conditions, polypharmacy, physical limitations, as well as psycho-social concerns of this population impede access to primary care and often are ill-suited for office-based practices.

CMS desire to launch the Independence at Home Demonstration clearly acknowledges the advantages house call practices can offer this population. In addition, recent MCO acquisition activity and our extensive work with Medicare Advantage plans nationally demonstrate the MCOs' understanding of the extraordinary value these house call practices bring to the care management of these frail, medically complex seniors.

Unfortunately, episodic and fee-for-service reimbursement alone excludes providers from participating in the significant value they create. In order to participate in this value, Colonnade uses our programs and models to enable practices to develop strategic, shared savings relationships with MCOs.

Our Webinar shown here shares our experiences about:

Why MCOs are looking for relationships with house call programs;
The need for close integration and collaboration with other community-based providers, such as home health agencies;
Operational and clinical practice requirements to participate in these relationships;
The features and pricing of typical contracts that define these relationships;
Legal issues fundamental to success and compliance; and
Success factors and lessons learned from Colonnade's extensive experience.

Is Your Housecall Practice Ready to Offer Solutions to a Managed Care Organization?

Fri, 22 Jun 2012 00:00:00 -0500

Is Your Housecall Practice Ready to Offer Solutions to a Managed Care Organization?

Managed care organizations (MCOs), especially those providing Medicare Advantage plans, are seeing a growing concentration of chronically ill enrollees drive a need for better care management. Quality ratings, service scorecards and public reporting of outcomes data adds to increasing regulatory burdens and a competitive marketplace to place an enormous amount of pressure on MCOs to perform, and perform well. Medical housecall practices are poised to help MCOs as they struggle to evolve in the changing healthcare landscape – and in the process, seize an opportunity to transform themselves from vendors to solutions providers. By contracting directly with a managed care organization to provide care solutions, a medical housecall practice can deliver the high quality care that ensures good clinical outcomes with a payment model that ensures sustainable margins for the practice.

Why medical housecall practices specifically? Medical housecall practices bring a unique value proposition to managed care providers. T..The coordination of care and the delivery of hands-on care in the home help enhance outcomes, reduce inappropriate utilization and eliminate redundant services. Medical housecall practices also offer MCOs a competitive advantage and key market differentiators by allowing them to offer personal service and in-home care, and they can help an MCO generate goodwill in a community through the provision of these services. Because of their specific makeup and how they deliver care, housecall practices also enhance diagnostic coding, ensuring it is more accurate. Not only does accurate coding eliminate waste and overutilization, it also maximizes the hierarchical condition category (HCC) score, the calculation upon which CMS bases its payments to Medicare Advantage plans.

Although every medical housecall practice has the potential to offer this unique value proposition, not all practices are ready to begin delivering on that value or transitioning to a different payment model. As you consider contracting directly with an MCO, think about the following factors:

Scope of service. For the relationship to be successful, the MCO will expect care management services to enhance access and coordination. Does your practice have the capacity to offer these services? If not, are you able to expand? What additional resources would you need? Do you have a clear understanding of the costs associated with providing this scope of service?

Financial factors. Finances are a critical consideration, ranging from negotiation terms and details about the method, calculation and frequency of payments to start-up costs and financial risk in transitioning to a different payment model. You should be especially mindful of costs associated with additional staff or technology upgrades necessary to offer the solutions that an MCO requires. Finally, does your practice have the capabilities to track and monitor the payments and associated costs inherent to an MCO relationship to ensure your success?

Relationships. What partnerships with external providers – such as social service agencies, physicians and nurses, lab facilities, DME providers and palliative care groups – will you need for success? Do you have these relationships? If not, do you have the capacity to create and maintain them?

Outcomes, quality and satisfaction. How does the MCO track outcomes, clinical quality or patient satisfaction data? More importantly, who tracks these metrics, and how are they reported? Does your practice have the capacity to handle all of the reporting requirements for every metric? What is the burden of compliance for your practice?

Medical housecall practices have an enormous opportunity to provide solutions to MCOs as they compete in this new healthcare marketplace – but proper evaluation and preparation is a must to ensure a successful transition to this new model. For more information about how to evaluate your practice’s readiness to participate in the value you are creating with MCOs, contact Chip Measells at chipm@wyattmatas.com or 202-618-4713.

Post Acute Care Valuations

Thu, 07 Jun 2012 20:17:19 -0500

Participants will learn how a changing healthcare landscape is impacting how post acute care providers operate, evaluate growth strategies and are being valued. The presenter will discuss the strategic crossroads all post acute care providers are facing and the consequences their decisions will have on the valuation of their companies. The webinar will also include case studies and specific examples of how companies in post acute care are being valued.

Capital Deployment to Build a Care Coordination Infrastructure

Wed, 06 Jun 2012 00:00:00 -0500

Capital Deployment to Build a Care Coordination Infrastructure

The innovative payment models spurred by the Patient Protection and Affordable Care Act (PPACA) reward providers for delivering efficient, quality care and coordinating care along various points of the healthcare continuum. Companies with sophisticated care coordination systems are winning a unique place in the market as they provide innovative solutions for health systems and payers. This presents an immense opportunity for post-acute providers who want to evolve their existing care management models into more sophisticated care coordination solutions. We’re currently seeing capital being deployed into companies to build and/or buy the infrastructure to effectively coordinate care for high-cost patients. This capital is being used to fund investments in four areas:

Technology Platforms. Although there are some off-the-shelf care management technology platforms currently available, many companies have found them to be insufficient and are building their own platforms. Of course, electronic medical records and e-prescribing are important solutions for care coordination companies. Companies focused on caring for the chronically ill are also investing in remote patient monitoring technology to encourage daily interactions between the care manager and the patient. Since technology platforms must also provide robust data analytics for patient selection, risk stratification and predictive modeling, we’re seeing investment funding building these capacities as well. The right sophisticated technology solutions will help a provider manage the necessary data analysis, reporting requirements and demographic management that are part of most innovative payment models emerging from managed care organizations, large employers and demonstration projects.

Patient Recruitment. Providers with experience working with managed care organizations (MCOs) understand the challenges of patient recruitment, but many providers who are new to this area of the market mistakenly believe the payers will simply refer the patient to the company and they will begin providing the services. For the most part, MCOs depend on the provider to engage the patient. The provider must be able to find patients who need their services, convince them that the services are right for them, ensure the patients that the service is a benefit paid by their insurance, and then perform those services given the payer’s interest in managing the patient’s care and expenses. The typical disease management company has a patient engagement rate of between 20-30%, meaning that less than a third of the patients in need of a care coordination solution actually receive it. Most managed care organizations see the top 25% of their beneficiaries absorb 83% of their total costs. Investing in patient engagement capabilities has become an important subject between providers, MCOs and investors, and we have begun to see investments made to solve this particular problem.

Risk Management. Successful care coordination solutions providers have systems and staff in place to quickly identify, track and manage chronically ill patients at risk of an adverse event, emergency department visit or re-hospitalization. Many post-acute providers possess this capability to a certain degree, but not all providers leverage it appropriately to offer a truly sophisticated, coordinated solution. We have seen many examples of organizations that use a successful mix of staff talent and technology to identify, recruit and manage at-risk patients. Management teams and investors realize investing in a risk management capability can allow them to partner more closely with payer sources and take on additional risk that can lead to higher profitability.

Care Delivery. Being able to provide care delivery as part of a comprehensive care coordination solution seems like a given to post acute providers. Where care management and disease management have failed – especially with high cost patients – has been their lack of ability to put hands on a patient to prevent a clinical situation from worsening. The most successful care management companies have used every care model from house call physicians to home health nurses to nursing aides. Companies that have a care delivery component as part of their care coordination models have also increased their patient recruitment rates as high as 90%. With this level of patient recruitment and the ability to provide targeted care, the cost curve bends significantly and provides a tremendous improvement in the quality of care. We’re seeing capital deployed to acquire and build care delivery systems as part of a comprehensive care coordination infrastructure.

Innovative payment models are reshaping the healthcare marketplace in different ways, ranging from providers leveraging their unique solutions to take advantage of market opportunities to available capital flowing to those providers who want to augment existing capabilities with new systems, capacities and talent. Investors understand the future of healthcare will value those providers with competencies for coordinating the care for high-cost patients. Capital is ready to flow to those companies who need resources to build the infrastructure to manage high-cost patients effectively. For questions about specific directions and opportunities we see, please contact Chip Measells by email at chipm@wyattmatas.com or by phone at 202 618 4713.

ResCare Secures $375 Million Credit Facility

Wed, 30 May 2012 00:00:00 -0500

ResCare and their private equity owner, Onex Partners, annouced that they had secured a $175 million term loan and $200 million revolver for the purpose of acquisitions and working capital. Before Onex took ResCare private in late 2010 for $388.1 in cash and assumed debt, ResCare was one of the more active acquirers of home care companies. The new credit facility will likely signal a return as a consolidator of home care, behavioral health programs and residential facilities.

1st Quarter Healthcare M&A Transactions

Wed, 23 May 2012 00:00:00 -0500

The chart shows the lastest merger and acquisition data for the 1st quarter 2012. Coverage includes valuation ranges for home healthcare, hospice, behavioral health, healthcare staffing, healthcare IT, billing and oustourcing services.

Active Healthcare Lenders

Tue, 22 May 2012 00:00:00 -0500

I had the chance to get together with several debt and equity providers last week at a couple of conferences I attended. We generally speak to these groups on a weekly basis, but it was nice to be able to spend some time talking shop over a couple of drinks. A couple of points of interest came up.

There is still a lot of capital chancing healthcare deals. Private equity has a lot of money to put to work after being on the sideline for two years from 2008-2009. Their interest varies from sector to sector, but it is encouraging to see capital flowing into the market.
Debt providers are being very aggressive in putting money to work. Senior lenders have reasonable leverage expectations of around 2-3x EBITDA at rates of 300-400 basis points above LIBOR or approximately 4-5%.
Because of the private equity groups need to put more money to work, they have been using mezzanine debt to get transactions closed. This has driven "all-in" rates down to around 12-14% on leverage multiples of 4-5x EBITDA.

These are very encouraging signs.

Chip

Understanding the Anatomy of Selling a Business

Wed, 16 May 2012 00:00:00 -0500

Understanding the Anatomy of Selling a Business

Faced with a changed environment in the wake of healthcare reform, many healthcare business owners are taking advantage of favorable tax circumstances and an increased number of buyers in the marketplace to consider selling their business. We frequently see a misunderstanding of the acquisition process lead to shock and surprise as it becomes clear how much time and effort is involved. Not fully understanding the acquisition process and what is involved in each step can cause a company to miss opportunities, which could result in value left on the table.

To prevent this from happening, we developed an in-depth guide to help owners better understand the acquisition process, to see beyond the numbers to the strategy supporting every deal and to help them appropriately prepare for the sale of their business. Eight chapters provide a detailed walk-through of the process of selling a business; checklists, tips and definitions throughout the guide make it more than just a timeline – it’s a roadmap.

The guide includes detailed information about the following elements:

The acquisition process. What are the five phases of the acquisition process? How quickly can you execute the sale of your business? What are the critical elements in each phase that you can’t afford to rush?

The exit strategy. How do you build an exit strategy? What are the four critical questions that every business needs to ask in order to develop an exit strategy? Will not building an exit strategy affect the sale of a business?

The value of your business. Why is the valuation process so important? What critical elements form a business’ valuation? What can a business owner expect to happen during the valuation process?

Selecting a buyer. Who are the buyers? What are buyers looking for? Where do you find a buyer? How many buyers do I need to evaluate? What are the determining factors in selecting a buyer?

Protecting confidentiality. How do you ensure that the process of selling your business remains confidential? What are the potential warning signs that can alert an owner to a confidentiality breach? How do you limit exposure while you look for potential buyers?

Due diligence. What critical steps comprise the due diligence process? Why is the due diligence process so time-consuming – and what can you do to streamline the process?

Legal concerns. What four legal issues should concern you the most? What steps can you take to address these issues? What basic legal concepts should every owner understand in a purchase agreement?

We’ll be releasing the guide’s eight chapters each month through our article series or you can send an email to Chip Measells at chipm@wyattmatas.com to receive the full guide.

Evaluating Post-Acute Partnerships: Four Critical Considerations

Tue, 15 May 2012 00:00:00 -0500

Evaluating Post-Acute Partnerships: Four Critical Considerations

In the last two years, rapid changes to the healthcare marketplace have driven a sharp increase in the number of strategic partnerships formed between hospitals, skilled nursing facilities (SNFs), physician groups and payers. Bundled payment initiatives, readmission penalties, value-based purchasing programs, Medicare rate adjustments and the birth of ACOs have motivated many organizations to seek synergies and combine efforts to thrive in the new marketplace. Hospitals and SNFs particularly see additional pressure from market forces and regulatory agencies to focus more on what happens to their patients both during a stay and post discharge. Patients, caregivers and payers are taking a closer look at quality measures, health outcomes and costs. Now, more than ever, hospitals and skilled nursing facilities need to carefully evaluate their partners to ensure consistent results across the care continuum. Partnerships will be formed to create networks of preferred providers, and organizations that are not competitive candidates will be left out. All partnerships must be value-based in this new environment, leading hospital and SNF executives to also consider their own value proposition and what they bring to the table to stay competitive.

Although the path to evaluate existing and potential partners requires an in-depth, strategic process, there are some considerations that we view as the critical foundation for any hospital or skilled nursing facility management team. They include:

Management and coordination of care. The new healthcare marketplace requires both hospitals and SNFs to carefully evaluate how potential partners manage and coordinate care. What processes are in place to ensure appropriate care, reduce emergency room visits and prevent unnecessary hospitalizations? What happens to a patient post-discharge? How does a potential partner leverage technology to share information, monitor progress and track outcomes?

Capabilities. What specific skills does an organization bring to the partnership? Although an organization's unique strengths and market differentiators will be key components of an evaluation, the new marketplace also has raised the bar in terms of minimum skills needed to compete. Some post-acute facilities are even embedding primary care in their care models to improve outcomes. Beyond clinical capabilities, hospitals and SNFs should also think about payer relationships, information technology and staff expertise – these can also be important differentiators for a partner.

Quality. Healthcare reform spurred payers, providers and patients to emphasize and improve quality of care across the healthcare spectrum. Innovative payment demonstration projects, pay-for-performance incentives and quality scorecards on both the state and federal level have placed additional pressures on post-acute organizations to stay competitive. Evaluating a partner's quality of care can encompass multiple facets and incorporate many different measures – so it is critical to be mindful of context. What quality measures does your own organization target? What areas of quality hold potential for the greatest synergy?

Cost. The post-reform marketplace has pushed providers to “own the cost” for patients, especially for those with multiple chronic conditions – and hospitals and SNFs must shoulder a large portion of the burden. How a partner manages the costs of care can make a significant difference in the level of success a partnership reaches, especially for those organizations participating in payment innovations or payer incentive programs. How are costs tracked and managed per episode of care? What processes are in place to balance care innovation, appropriate utilization and cost management? And, for those organizations participating in innovative payment programs with deferred incentives, does the partner have the ability to share payment risks?

Having a knowledgeable partner to help formulate a strategy and guide an organization through the process of evaluating capabilities and partnerships is critical. For example, we have assisted a health system that did not own a skilled nursing facility to develop an SNF network strategic business plan, draft an RFP to develop the network and craft the clinical models to be embedded in the SNFs selected for the preferred network.

To evaluate your preparedness as a SNF in a competitive market place or to explore your health system’s SNF partnership strategy, contact Brent Feorene at bfeorene@colonnadehealthcare.com or 440-871-2756.

Published WyattMatas Research for Colonnade Healthcare Solutions

Spotlight on Hot Healthcare Subsectors

Mon, 14 May 2012 09:51:22 -0500

Chip Measells will be a panelist on a session to discuss emerging subsectors in healthcare that are attracting capital and M&A activity.

Humana Developing a Care Cycle Management Capability

Mon, 07 May 2012 00:00:00 -0500

The link below was the featured article in Deal Magazine, an investment banking trade magazine. The article is not particularly interesting, but I think it does send a signal to the market. One of the acquisitions it mentions is SeniorBridge, which is somewhat interesting because at $72 million it represent a fairly tiny transaction for Humana. Either way, I think the SeniorBridge transaction was an extremely important acquisition for HumanaCares. HumanaCares is Humana's high-cost patient business unit. I've included a link of a slide that explains HumanaCare's solution...looks a lot like Care Cycle Management, don't you think?

You might remember that in August of 2011, Humana announced that HumanaCare's would be hiring 700 people in a remote monitoring call center. At the same time they begin to look for a home care company because they knew they would need to put hands on the patient because of the acuity of their population. They also believe they could achieve results they were looking for by sending in mostly non-clinicians to the home, which is most of SeniorBridge's field staff. They are hoping the results will be a better ability to arrest the exacerbations of their patients' chronic illnesses. This is a case study of Care Cycle Management. We also think as Humana starts to see cost savings, they will start create products to attract at-risk patients. Certainly a reversal of the old mindset of avoiding at risk patients at all cost.

I think when the market starts to understand what Humana is up to there will be strong push to duplicate the model. This will include more health plans acquiring home care companies and various providers trying to create similar models that will likely include home care. The good news for home care is that health plans are likely to pay higher multiples because of the excepted return they can achieve.

Very interesting times.

Chip

Raising Capital for New Care Models

Fri, 04 May 2012 10:52:19 -0500

The presentation discusses where capital is flowing in the new environment since healthcare reform. Chip Measells of Wyatt Matas provides valuation data and analysis on which companies are having the most success in accessing capital.

Buyer's Perspective; The Wyatt Matas Buyer Survey

Wed, 18 Apr 2012 00:00:00 -0500

Buyer’s Perspective: The Wyatt Matas Buyers Survey

Over the last several months, we have pored over market data, shared in-depth analysis and published trend forecasts for M&A activity in 2012. In our daily work advising CEOs, entrepreneurs and boards of directors, all of whom are considering the option of exiting their businesses, we routinely connect them with the market to gain a full perspective on how the buyers are currently viewing the market. We thought that our readers might like an insider’s view as well. Given our extensive access to buyers in the healthcare space, we reached out to our network to get specific answers from buyers to help bring additional clarity to the current market environment. We received responses from 74 buyers, all of whom provided some key insights into their acquisition plans for the coming year. As we listened to what buyers were telling us, a few key trends emerged.

Buyers are looking now. Nearly two-thirds of respondents told us they were looking to acquire companies right now and were actively seeking acquisitions. This validates the trend we have seen developing throughout 4Q11 and 1Q12, where buyers are taking advantage of favorable tax circumstances and low cost of borrowing to make strategic acquisitions. We expect this trend to continue throughout the rest of 2012. The remainder of our survey respondents were divided in terms of acquisition timing. Roughly ten percent of buyers said they were looking to complete a transaction sometime within the next year; another ten percent took an even longer view and said they were looking into the next 1-2 years. Interestingly, the remainder of respondents (approximately 20%) wouldn't commit to a timeline, instead saying they were opportunistic buyers and would acquire if a potential acquisition target matched their strategic needs and overall goals.

Buyers are focused on specific industries. Although healthcare services – a broad category representing home health, managed care, LTC, hospitals, physician groups and behavioral health – was by far at the top of buyers' shopping lists, buyers overwhelmingly identified home health, hospice and disease management companies as specific acquisition targets. We also noted that buyers were most interested in companies that were focused on care coordination for elderly, homebound or chronically-ill patients – this includes such diverse choices as medical housecall companies, home infusion firms, behavioral health and providers with remote monitoring solutions. We see this trend as part of the focus on strategic acquisitions – because the reformed healthcare marketplace places a higher priority on coordinated care and greater accountability for patient outcomes and cost, buyers are looking for companies that can help them meet these goals.

Buyers are shopping for small- to mid-size companies. We have frequently pointed out that the lower end of the market will be the “sweet spot” for M&A activity this year, and buyers responding to our survey confirmed that once again. Although a little more than a third of respondents are shopping for companies with revenues greater than $10 million, the vast majority of buyers in our survey pool are looking for companies that bring in less than $10 million annually, with the largest focus on the $1M-$5M range. The limited interest in companies with revenues above $10 million was category specific. For instance, there was very little interest in larger home healthcare companies; instead, buyers were more focused on smaller home care transactions. However, there is high interest in hospice, care coordination companies, healthcare IT and behavioral health with substantial revenue. We expect to see high deal volumes of companies below $10 million in revenue as buyers look to scale their businesses to offset future reimbursement cuts. We expect the next three quarters of 2012 to heat up with deal activity as buyers leverage their access to capital and sellers take advantage of reasonable valuations and a lower capital gains tax rate.

For a deeper dive into what buyers told us about their goals for the year, or to learn how you can leverage these insights for your own strategy, contact Chip Measells at chipm@wyattmatas.com or 202 618 4713.

April 2012 Directions

Thu, 12 Apr 2012 00:00:00 -0500

Four Considerations for Health Systems as They Navigate a Post-Reform Environment

Since its passage two years ago, the Patient Protection and Affordable Care Act (PPACA) has changed the healthcare marketplace by placing additional pressures on healthcare provider organizations to improve the quality of care while at the same time reducing the cost of care. These forces – primarily market pressures in the form of payment reforms, financial incentives and penalties – ask all health providers to better coordinate care, improve overall health outcomes and reduce overutilization of services. Health systems, however, bear a large share of the burden in “owning” the patient's cost and therefore have greater reason to make significant strategic adjustments to their business models – not just to respond to this new marketplace, but to thrive in it.

This isn't news to most health system executives – in the last two years, hospital leaders have been bombarded with declining reimbursements, financial penalties, thinning margins, increased regulatory scrutiny and greater accountability for patient care access, quality, outcomes and cost. In addition, the competition for market share has grown more complicated as organizations not typically competing in this service area – such as payers – build business models that ultimately compete with hospitals for business. Greater credit risk and an increased cost of borrowing makes capital improvements – which are necessary to stay competitive and provide cutting-edge services and necessary care models – difficult to complete. Accountable Care Organizations (ACOs), bundled payments and episodes of care are just a few recent developments in this new, post-reform marketplace that have caused significant concerns for health system leaders.

So what should a health system leader do?

Most health system executives are familiar with the value that post-acute services provide for certain types of patients, but what many leaders are learning is that these same programs offer tools to address many of the larger challenges inherent in this new environment, ultimately improving provider quality and strengthening market share, financial performance and physician relations. Developing a successful post-acute strategy and business model can create the opportunity for a health system to improve the quality of care its patients receive, gain greater control over its market share and better manage the costs it bears in caring for the sickest patients.

Hospital leaders should consider the following factors as they think about how to develop a post-acute strategy to navigate the post-reform environment:

Multiple targets. Gone are the days of focusing solely on additional revenues, cutting-edge procedures and market share; hospitals in the post-reform environment must also worry about enhancing care quality, reducing the cost of care, delivering care efficiently with the resources available and controlling utilization. With multiple targets to hit, it is critical that hospital leaders develop a sophisticated strategy that leverages the tools, training and knowledge found in the post-acute environment to create the care models and business strategies necessary to compete in the new healthcare marketplace. For example, home care services offer hospitals potential ways to leverage remote monitoring technology, home visits and care coordination models to provide high-touch, high-quality care for high-cost patient populations that reduces complications and avoidable readmissions – and effectively manages cost.

Increased risk. Hospitals today must grapple with the critical problem of balancing cost and quality in a very public way. Quality scorecards, increased regulation and public reporting mandates make the hospital leader's job even harder, because the risk of error is amplified by increased scrutiny from many directions. Increased competition from both traditional and nontraditional service providers means that not only market share is at risk – physicians and payers working with a hospital place additional pressure on hospital management to build a strategy that guarantees success for all stakeholders. After all, physicians and payers want to collaborate with health systems positioned for success. Quickly developing a carefully considered strategy depends entirely on working with knowledgeable partners who are aware of industry trends, successful models and pitfalls to avoid.

Limited timeframes. The payment reforms and quality initiatives launched by PPACA place pressures on health systems to develop solutions that improve quality, reduce cost and control utilization within given timeframes or face financial penalties. Hospital leaders do not have the luxury of time to develop a solution – not only is the potential of financial penalties for nonperformance a very real threat, but the promise of competitors achieving quality targets in a faster way means that it is critical to form a solid strategy quickly. Many hospitals and new, non-traditional competitors are working on innovative, post-acute solutions to compete for market share. For example, national payers are acquiring care management networks and clinical models to take control of the population of older, sicker patients responsible for the bulk of healthcare costs in the US. These patients also offer the greatest opportunity for value creation, since high cost often means a high opportunity for savings. Hospitals without a coordinated strategy will not only encounter difficulty navigating the marketplace, they may find themselves losing their place in the market, bested by competitors who quickly developed a smart post-acute strategy.

Denial. Most executives with an historical perspective might be tempted to think that health systems traditionally have always experienced up and down cycles – so it's easy to think that “business as usual” will keep them steady through the storm. But the post-reform marketplace is vastly different, and relying on the same strategies and business models will only result in declining performance and the risk of not surviving this changed healthcare environment. Understanding this critical reality is the first step in developing a sophisticated solution that integrates the post-acute model with a successful business strategy. Regardless of the outcome of the legal challenges against health reform legislation, the new environment that the legislation spurred has taken root. Consumers, providers and payers have bought into the concepts promulgated in the legislation, making the post-reform marketplace a reality that health systems must address.

For more information about how you can leverage the post-acute model to improve outcomes, reduce costs, raise quality and increase market share, contact Chip Measells at chipm@wyattmatas.com or 202-618-4713.

Expected Increases In Capital Gains Tax Drive M&A Activity to Highest Level in 8 Years

Wed, 04 Apr 2012 00:00:00 -0500

As we close out the first quarter of 2012, we note record M&A volumes for the healthcare sector already this year, and many reasons to expect this activity to continue it upward trend. One big reason to expect increased M&A activity this year is timing: at the end of 2012, legislated cuts to the capital gains tax rate will expire, hiking the rate by a third. The capital gains tax increase serves as a motivating factor; it is by no means the only one. As you evaluate your strategic options, think about the following key factors:

Consider the overall economic picture - The healthcare sector has outperformed every other market segment in terms of M&A activity this year.
Understand your long-term growth realities - With reduction in Medicare reimbursements, thinning margins and a changed marketplace, healthcare service providers will have to grow at least 3.5% annually to overcome reimbursement cuts over the next 5 years.
Think critically about timing - Sellers are seeing a larger range of potential buyers to choose from and higher valuations resulting from more and more buyers entering the marketplace and competing for acquisition targets.

Four Considerations when Evaluating Selling a Nonprofit Organization

Thu, 22 Mar 2012 00:00:00 -0500

Moody's Investors Service released a report this month predicting increased M&A activity in the nonprofit healthcare sector, citing decreased Medicare reimbursements, changes to state funding schemes for Medicaid, and a post-reform environment that urges increased efficiency and care coordination. Some nonprofit providers are being forced to consider merging with another organization or putting the organization up for sale. In today's healthcare environment, it is imperative that board members of nonprofit provider organizations evaluate all of the options available to them. We normally recommend that nonprofit organizations thinking about selling undertake a rigorous strategic analysis, but the following four considerations are a good start to that strategic process:

Sustainability of the Mission
Impact on Mission
Impact on the Community and Stakeholders
Impact on Quality and Service Lines

March 2012 Directions

Tue, 13 Mar 2012 00:00:00 -0500

This month's Directions analysis includes:

M&A activity continues to point to heightened industry consolidation in the wake of health reform
Geisinger reports its remote monitoring program lowered hospital readmissions by 44% -- Private home healthcare results even better
Care coordination partnership linking acute care with community-based resources serves as ACO centerpiece

Nonprofit M&A: Four Issues to Consider when a Non-Profit is the Acquirer

Wed, 07 Mar 2012 00:00:00 -0600

Nonprofit M&A: Four Issues to Consider when a Non-Profit is the Acquirer

Since Congress enacted health reform legislation in 2010, there has been a marked increase in mergers and acquisitions in the healthcare space. Although for-profit organizations drove the bulk of the nearly 1,000 transactions taking place in 2011, a growing number of nonprofits have begun to see mergers and acquisitions as part of a larger strategy to effectively navigate the reformed healthcare marketplace. This reflects the increasing role that nonprofit organizations play in the delivery and financing of healthcare in the US – according to an estimate by a nonprofit healthcare trade group, about 60 percent of community hospitals are nonprofit, roughly one-third of nursing homes are nonprofit, and almost 20 percent of home health agencies are nonprofit. Further, over 40 percent of all private health insurance enrollees receive services from a nonprofit health plan.

Nonprofit healthcare organizations consider mergers and acquisitions for the same reasons for-profit entities do. They seek to improve quality or efficiency; they desire increased access to capital, enhanced capital base or expansion of cash flow; they want to expand service lines, enhance product offerings or target other geographic areas; or they seek to gain specific types of talent or other assets. But unlike the for-profit environment, nonprofit organizations have other specific issues to consider as they plot a merger or an acquisition strategy. Although we recommend that a nonprofit organization's board and management should perform a detailed strategic analysis before executing an M&A strategy, the following four considerations are a solid start.

Fit. The idea of considering organizational fit when thinking about pursuing a merger or an acquisition with another company seems simple, but it can be a rather complicated matter. Although for-profit companies also consider whether a potential buyer or acquisition fits strategically or organizationally, nonprofit organizations have their mission to the communities they serve to consider beyond these primary issues when it comes to fit. Unlike for-profit companies, nonprofit healthcare organizations exist within a framework of mission-based operations, and the mission colors everything from operational strategy to daily execution. The leadership of every nonprofit organization considering an M&A strategy needs to be clear about its mission, how open to change that mission might be, how an M&A strategy will affect that mission, and what limitations – or opportunities – that mission offers. And if acquiring another non-profit, boards must think about how changing the target's mission affects perception or buy-in among the target’s patients, providers, staff or payers.

Financial impact. Nonprofit board members and staff management need to think carefully about the financial implications of the potential transaction. Naturally, a common part of the M&A process is to weigh the financial advantages and disadvantages of the transaction, as well as to evaluate an organization's financials and assess its real value. Part of the discussion is whether an acquisition is best the use of funds to further the organization’s mission. In today’s environment, many providers are leveraging their healthy balance sheets to reach a level of scale that can offset future reimbursement cuts. This may be an appropriate strategy, but an organization that may not have internal acquisition and integration experts must evaluate if the use of funds for an acquisition is priced appropriately considering the internal and external integration risk. Nonprofits also need to consider additional layers of financial impact; any partners advising a nonprofit about a transaction need to be well-versed in these layers. Special tax situations must be considered, as well as the value and disposition of certain types of charitable assets.

Process. There is a logical process to every transaction – but nonprofit organizations have additional steps to follow and angles to consider. The additional steps can extend the acquisition timeline and put the nonprofit buyer at a disadvantage when they are competing for a target. An experienced advisor can help a nonprofit board and leadership prepare and execute the specific processes that need to happen and minimize the potential disadvantages. All nonprofit M&A transactions will naturally need to involve a realistic valuation of the transaction, a substantive due diligence process, evaluation of legal and antitrust issues and a detailed analysis of financial impact. The legal and financial implications of a nonprofit transaction differ from those of a for-profit transaction, so any strategic process should accommodate not only specific evaluation and analysis of these implications, but appropriate planning to execute them.

Access. Probably the biggest difference between a for-profit entity considering a merger or an acquisition and a nonprofit entity is that in the nonprofit world, there are relatively few knowledgeable financial and strategic advisors who understand the nonprofit environment, and of these, even fewer have significant access and deep relationships across the industry. As your organization considers an M&A strategy, ask yourself whether you have the right access – not just to sources of capital, but also to potential buyers or acquisition targets. Do you know how to source and evaluate potential targets? Do you how to begin a conversation with a target? Finding the right partner with the right access and market credibility is critical to the success of your M&A strategy.

For more information about what M&A opportunities exist for nonprofit organizations, contact Chip Measells at chipm@wyattmatas.com.

References:

Alliance for Advancing Nonprofit Health Care. “The Value of Nonprofit Health Care.” http://www.nonprofithealthcare.org/reports/5_value.pdf

for more news updates visit our website at www.wyattmatas.com

about us:
Wyatt Matas is a healthcare investment banking firm providing strategic advice on mergers and acquisitions and capital raising initiatives. We are advisors in the truest sense, partnering with healthcare entrepreneurs, management teams, board of directors, and investors

January 2012 M&A Activity in Healthcare Set Records

Fri, 02 Mar 2012 00:00:00 -0600

January 2012 mergers and acquisition activity for healthcare reached its highest volume in a decade led by Healthcare services, which occupied a little less than half of the total deal volume followed by Home Health, which tied for third place in number of deals but first in total deal dollars, and Healthcare technology taking up the remainder of deal activity. The majority of deal making in January occurred in the lower-end of the market which makes it a "sweet spot" for activity through 2012....

Charting the Course in Value-Based Health Reform

Thu, 01 Mar 2012 08:16:16 -0600

Chip Measells and Brent Feorene will be presentating a webinar to the Health Plan Alliance entitled, "Charting the Course in Value Based Health Reform: Market Challenges and Strategic Opportunities for Health Systems-affiliated Health Plans." The presenation will discuss current market dynamics that are driving change in healthcare. Chip and Brent will also discuss specific strategies health plans, health systems and healthcare providers are pursuing to best position themselves for the future.

Post Acute Strategies Presentation

Wed, 29 Feb 2012 09:26:30 -0600

Chip Measells and Brent Feorene will be presenting before a private group of home care providers. They wil be discussing the crossroads healthcare providers are facing in deciding to be a vendor or a solutions provider to the healthcare system.

Post Acute Care Strategies

Wed, 29 Feb 2012 09:26:07 -0600

Encore presentation for the VNA of New England entitled, "Post Acute Care Business Strategies."

McKesson Webinar-The Role of Homecare Agencies in Today's New Payment Models

Wed, 29 Feb 2012 09:25:57 -0600

This presentation will discuss the future of home care in today's healthcare environment.

Introduction to Care Cycle Management--HealthCare First User Conference

Wed, 29 Feb 2012 09:25:39 -0600

Chip Measells will present two sessions at the HealthCare First User Conference. This presentation will introduce the business model developed by Wyatt Matas called Care Cycle Management, which is the integration of disease management and care delivery to coordinate the care of high-cost patients.

Home Health Providers Choosing a Vendor or Solutions Provider Strategy

Wed, 29 Feb 2012 09:24:53 -0600

One of two presentations Chip Measells will be making at the 2012 Southwest Home Care Conference, this presentation will discuss the strategic decision map that home healthcare providers are exploring to become either a vendor or solutions providers to the healthcare system.

Six Reasons to Watch the Medical Housecall Industry in 2012

Thu, 16 Feb 2012 00:00:00 -0600

The medical housecall industry is emerging as a powerful solution for post-acute and acute care providers that are looking for ways to effectively coordinate care and manage costs for the sickest portion of the population. In our industry outlook for 2012, we noted the medical housecall industry was one to watch this year - here's why:

Medical housecall practices fit the post-reform environment
Medical housecall practices appeal to all stakeholders in the healthcare marketplace
Medical housecall practices dovetail with innovative payment demonstrations
Medical housecall practices offer a way for post-acute providers to move up the value chain and remain competitive
Medical housecall practices will see a significant boost in valuations
Medical housecall practices offer an ideal fir for many different types of buyers

Contract Innovation vs. Clinical Innovation

Fri, 10 Feb 2012 00:00:00 -0600

The healthcare system did not provide incentives to providers to coordinate care. Each company maximized efficiencies through processes and care pathways that only applied while any patient was in its care--so the care continuum developed into a chain of silos that did not maximize efficiency across the continuum, only wihtin each silo. Healthcare reform changed this by driving down reimbursement for fee-for-service payments and encouraging providers to be more accountable for the patient's care and costs. To own the patient's cost, however, a provider must have the incentive and the authority to coordinate care across the healthcare continuum--the envrionment of silos. Because they have been operating in a landscape where there was no incentive to invest, very few providers currently have the infrastructure in place to coordinate care effectively, which brings us to the delimma of Contract vs. Clinical Innvoation.

February 2012 Directions

Tue, 07 Feb 2012 00:00:00 -0600

This month's Directions analysis includes:

In a changed environment, post-acute providers have two strategic options
Citing uncertain post-reform environment, AMN sells Nursefinders Home Care to NJ home health agency
Industry proposal offers deal to save skilled nursing facilities from further Medicare cuts
DoD to issue solicitation for massive nurse triage contract

Choosing a Successful Post-Acute Business Strategy in Today's Changing Healthcare Environment

Mon, 06 Feb 2012 00:00:00 -0600

The passage of the Patient Protection and Affordable Care Act (PPACA) represented the beginning of landmark changes to America's healthcare delivery system. PPACA aimed to drive down healthcare cost by slashing reimbursement rates of providers and encouraging healthcare providers to become more accountable for patients' care and costs. All stakeholders in the healthcare system have begun to see a new emphasis on coordinating care, improving quality while reducing costs and managing chronically ill, high-cost patients that are currently responsible for the majority of total healthcare spending in the United States. Between now and 2013, a series of adjustments to payment models and reimbursement rates will mean that already-thin margins will evaporate. Post-acute providers are standing at a critical crossroads in therms of their business strategy--they must choose between two pathways, and the decision will have serious ramifications for a company's strategic direction and its future valuation. The paper describes the choice providers have between becoming a vendor of services or becoming a specialized solutions provider in managing high-cost patients. We will discuss the steps necessary to evaluate a company's capabilities, explain how best to maximize opportunities found in the reform legislation and explore ways to discover how a company can fit in the new healthcare environment. We review the benefits and risks of each option, explore case studies of providers that have already made this decision, explain the issues every provider should consider, and map the questions a compnay's leadership should ask as the calendar moves closer to 2013 and implementation of health reform.

Outlook in Post-Acute M&A Activity for 2012

Mon, 06 Feb 2012 00:00:00 -0600

Since the passage of the Patient Protection and Affordable Care Act (PPACA) in March 2010, there has been a marked increase in healthcare merger and acquisition activity. Nearly 1,000 healthcare-related mergers and acquisitions took place in 2011, transactions that equaled over $227 billion--the fourth largest year in terms of dollar value since 2002. This is especially noteworthy because the US Deparment of Health and Hman Services is still defining much of the actual legislation. As the provisions and implementation of healthcare reform become clearer, we expect the activity to become even more robust. Looking deeper into what will influence this activity over the next five years is important to consider as providers determine how their current market position will be challenged and new business models emerge to change the competitive landscape.

Four Considerations for Your Participation in the CMS Independence at Home Demonstration

Tue, 17 Jan 2012 00:00:00 -0600

Published for Colonnade Healthcare Solutions www.colonnadehealthcare.com:

As we reported in our January newsletter, the Centers for Medicare and Medicaid Services recently issued a call for applications for the Independence at Home demonstration. As you think about your organization's qualifications for the demonstration, and how you might participate, include the following considerations in your deliberation and preparation.

Qualification: How are you planning to leverage your organization's capabilities in order to meet the demonstration's requirements?
Performance and capabilities: Provider incentive payments for the Independence at Home model are tied to savings generated by performance - coordinated care, innovative use of technology and focus on tailoring quality care to the patient.
Organizational structure and size: Smaller providers participating in IAH have a higher hurdle to jump.
Relationships: Connections to vendors, access to systems experts and links to other providers and practices will help an organization take full advantage of the opportunities in the IAH demonstration and offer a competitive application to CMS.

January 2012 Directions

Sun, 15 Jan 2012 00:00:00 -0600

This month's direction analysis includes:

Care cycle management is on of the keys to controlling healthcare costs, says health policy expert
CMS, providers will measure effectiveness of home-based care through Independence at Home demonstration
Medicaid: boon or bane?

Post Acute Care Value Continuum

Wed, 11 Jan 2012 00:00:00 -0600

The chart explores how the healthcare system is valuing various post acute care providers. As provisions of healthcare reform are implemented through 2015, companies will be faced with critical strategic decisions on how to position themselves on the value continuum. Accountable providers will have the opportunity for valuation expansion, while those not seen as problem solvers of their sickest portion of the population will likely see valuation retraction.

January 2012 Directions

Sun, 08 Jan 2012 00:00:00 -0600

This months Directions' analysis includes:

Care Cycle Management is one of the keys to controlling healthcare costs
CMS, providers will measure effectiveness of home-based care through Independence at Home demonstration
Medicaid: boon or bane?

Three Consequences of the Hospice Aggregate Cap

Thu, 05 Jan 2012 00:00:00 -0600

Although most hospice providers would agree that the hospice aggregate cap has an impact on their businesses, few would probably cite effects beyond a direct financial burden. Beyond obvious financial and regulatory issues that the cap has caused hospice providers, we've seen three specific downstream consequences that the hospice cap has had on the merger and acquisition market. They include:

Valuation: A hospice provider's value can change because of its risk of exceeding the aggregate cap.
Transaction Time: Potential buyers of hospice providers are taking longer to calculate a selling company's potential risk in exceeding the cap, and sellers often disagree with the buyer's risk calculations, adding more time for negotiation.
Market Research: As more hospices exceed the cap, it is driving more distressed merger and acquisition activity in the hospice market.

Future Drivers of Mergers & Acquisitions and Joint Ventures in Post-Acute and Healthcare Services

Wed, 30 Nov 2011 00:00:00 -0600

Webinar discusses driving trends in the post-acute care industry that are impacting mergers and acquisitions and joint ventures. Topics will include the need for scale among providers, accountable care organizations and bundling, and providers’ aggressiveness towards changing their business model to be accountable for the patients’ costs. The panelists will also discuss the opportunities and challenges in structuring partnerships with hospitals as they seek post-acute care solutions.

Home Care Valuation Analysis and Projections

Tue, 04 Oct 2011 00:00:00 -0500

Introduction of Care Cycle Management

Fri, 08 Apr 2011 00:00:00 -0500

Based on our research and experience, Wyatt Matas & Associates has identified an emerging opportunity for care providers focused on serving severely chronically ill patients. We have named this new industry Care Cycle Management, which is defined as integration of disease management and care delivery to coordinate the care of high cost patients. The report discusses the business model of integrating disease management with care delivery to care to manage the care of the chronically ill.

How Home Healthcare Thrives with Healthcare Reform

Thu, 10 Mar 2011 00:00:00 -0600

This white paper discusses two points: 1) avoidable hospital re-admissions represent the most important measure by which home health will be evaluated, and 2) to advance along the “Value Continuum”, a company must build care delivery and business models that add value to their patients, which will in turn bring value to referral sources, the health care system, and the provider and/or their organization.

Delineation of Home Healthcare: The Natural Evolution of a Healthy Industry

Mon, 12 Apr 2010 00:00:00 -0500

The whitepaper discusses the opportunity for home healthcare to become the center of chronic care disease management and identifies a particular business model that some more advanced companies are implementing. The whitepaper also discusses the delineation of those agencies that are moving towards becoming chronic care disease management companies and those that are being left behind to chase lower margin business. Finally, the whitepaper discusses several action steps the industry must consider to move home healthcare up the continuum of care ladder.

Wyatt Matas

Culture Focus for Hospitalist Success

Home Health Pivot Point: The Business Case for Behavioral Health

President Obama's Budget vs. Home Health

Accountable Care Organizations, Part 1 of 3: A Balanced Intro to the ACO

The Process of Selling a Hospitalist Group from Start to Finish

Deal Activity Snapshot: Post-Acute & Home Health 2010 - 2013 Q1

Focused Insights into Home Health: the State of Home Health Care

Overview: Key Behavioral Health Data Points

Strategic Investing in Healthcare

Chronic Conditions as Value-based Care Drivers

U.S. Healthcare Expenditures: Home Health Lens

Understanding Value in Nonprofit Healthcare Organizations

Wyatt Matas Summary: "Sustaining Medicare for the Future: What's Next in the Debt-Reduction Debate"

Overview: Key Medicare Data-Points

Home Health Public Company Analysis

Healthcare Deal Activity (2010 - 2012) via Affordable Care Act Lens

Wyatt Matas 2013 Healthcare Outlook & Trend Focus

Transitions to a Value-Based Healthcare System: The Accountable Care Organization & its Payment Models

Payment Model Summary Table: Accountable Care Organizations (ACOs)

Healthcare Fiscal Cliff Summary

Table: Healthcare Fiscal Cliff, Congressional Budget Office Figures

Payment Model Summary: Behavioral Health

The Business Case for Behavioral Health

Healthcare Merger & Acquisition Activity, 30-days

Congressional Budget Office Estimates Savings on Healthcare Reform Repeal

Dramatic Healthcare Cost Increases Associated with Behavioral Health Comorbidity

5th Annual Healthcare Deal Making Summit

Three Benefits of a Strategic Auction When Exploring an Exit Strategy

House Call Practices Provide Powerful Solution for Post-Acute and Acute Pra

VantagePoint-Insider's View of Healthcare

New Healthcare Industry Classification is Emerging

Notable Healthcare Transaction

Care Cycle Management Business Model Chart

Webinar Healthcare Services Valuations in the Post-Reform Environment

Healthcare Services Valuations in the Post-Reform Environment

Four Steps to Developing a Personal Transition After the Sale of Your Businiess

Contracting with Managed Care Organizations

Is Your Housecall Practice Ready to Offer Solutions to a Managed Care Organization?

Post Acute Care Valuations

Capital Deployment to Build a Care Coordination Infrastructure

ResCare Secures $375 Million Credit Facility

1st Quarter Healthcare M&A Transactions

Active Healthcare Lenders

Understanding the Anatomy of Selling a Business

Evaluating Post-Acute Partnerships: Four Critical Considerations

Spotlight on Hot Healthcare Subsectors

Humana Developing a Care Cycle Management Capability

Raising Capital for New Care Models

Buyer's Perspective; The Wyatt Matas Buyer Survey

April 2012 Directions

Four Considerations for Health Systems as They Navigate a Post-Reform Environment

Expected Increases In Capital Gains Tax Drive M&A Activity to Highest Level in 8 Years

Four Considerations when Evaluating Selling a Nonprofit Organization

March 2012 Directions

Nonprofit M&A: Four Issues to Consider when a Non-Profit is the Acquirer

January 2012 M&A Activity in Healthcare Set Records

Charting the Course in Value-Based Health Reform

Post Acute Strategies Presentation

Post Acute Care Strategies

McKesson Webinar-The Role of Homecare Agencies in Today's New Payment Models

Introduction to Care Cycle Management--HealthCare First User Conference

Home Health Providers Choosing a Vendor or Solutions Provider Strategy

Six Reasons to Watch the Medical Housecall Industry in 2012

Contract Innovation vs. Clinical Innovation

February 2012 Directions

Choosing a Successful Post-Acute Business Strategy in Today's Changing Healthcare Environment

Outlook in Post-Acute M&A Activity for 2012

Four Considerations for Your Participation in the CMS Independence at Home Demonstration

January 2012 Directions

Post Acute Care Value Continuum

January 2012 Directions

Top 11 Trends Affecting Post-Acute Care in 2012

Three Consequences of the Hospice Aggregate Cap

Future Drivers of Mergers & Acquisitions and Joint Ventures in Post-Acute and Healthcare Services

Home Care Valuation Analysis and Projections

Introduction of Care Cycle Management

How Home Healthcare Thrives with Healthcare Reform

Delineation of Home Healthcare: The Natural Evolution of a Healthy Industry