Amedisys, a home health, hospice and personal care company, on Wednesday said it had signed a definitive agreement to acquire Nashville-based Contessa Health, a hospital-at-home and skilled nursing facility at-home provider, the company said.
The $250-million acquisition is expected to close in late summer. Contessa will become a wholly-owned division of Baton Rouge, La.-based Amedisys.
Amedisys Chairman and CEO Paul Kusserow characterized the acquisition as "strategic" and said it will allow the company to provide higher-acuity in-home care.
"Today's announcement is a strategic and promised milestone for Amedisys' strategic growth and differentiation, as we expand our capabilities to reflect growing market demands and evolving patient preference for higher-acuity in-home settings," Kusserow said in a statement. "While Amedisys continues to be a national leader in quality home health and hospice services, we have always worked to innovate and provide even more types of care in the home, as patients increasingly seek to 'age in place' in environments that are familiar and safe. Bringing the Contessa team into our family significantly advances this strategy."
Contessa, which was founded in 2015, partners with health systems and health plans across the U.S., including Mount Sinai Health System, Marshfield Clinic Health System, Ascension Saint Thomas, CommonSpirit Health and Highmark Health, to offer complex patients acute and post-acute care in their homes, the company said. Contessa has potential plans to expand to more than a hundred hospitals in 28 more states.
"To continue building on the momentum we've created and to take advantage of all the growth opportunities which currently exist, we wanted a partner with a national footprint, a reputation for outstanding clinical quality and the scale and infrastructure available to accelerate our trajectory. Amedisys has all of that and more," Contessa Founder and CEO Travis Messina said in a statement.
Under the deal, Messina and his management team will continue to lead Contessa, which will be operated and reported on as a separate business within Amedisys with its existing branding.
The acquisition comes at a time when competition in the home health space is heating up.
Even before the COVID-19 pandemic, home health was expanding as the U.S. population aged. The segment continues to grow as more people prefer to receive care at home, either nervous about returning to nursing homes that were hard hit during the pandemic or encouraged by the capabilities of home care, Kusserow said.
"Particularly since COVID, more people want to see if there are alternatives to what we call aging in place. This ability to take care of sicker, more complex patients in the home creates a real advancement in terms of home care," he said. "This plays right into the sweet spot of where home care is heading."
Messina said the acquisition will create a continuum of care for patients in what can otherwise be a fragmented industry.
"It is a wildly competitive space, and everybody is trying to figure out what they can do in the home," which can create fragmentation, he said.
Despite the current competition, Kusserow said he expects to see a greater consolidation of the home health space later this year when federal CARES ACT funding runs out and forces others out of the business.
"We see an opportunity to lay down a footprint to cover the needs of most of our potential partners out there," Kusserow said.
Amedisys expects the acquisition to expand its total addressable market for in-home care from $44 billion to $73 billion.
Amedisys is a partner to more than 2,900 hospitals and 78,000 physicians nationwide for post-acute care. Amedisys has about 21,000 employees in 514 care centers in 39 states and the District of Columbia and serves more than 418,000 patients and clients annually.
Contessa uses a proprietary technology platform called CareConvergence to coordinate and deliver home care.