More health systems are partnering with home health agencies after internal ventures sputtered and regulations have evolved, industry experts said.
Chicago-based NorthShore – Edward-Elmhurst Health is the latest health system to pursue a joint venture with a home health and hospice agency, announcing an affiliation Thursday with Residential Healthcare Group. It is one of dozens of similar joint ventures that have formed over the past 18 months.
"Joint venture arrangements have grown consistently over the past three years," said Nathan Ray, a partner at West Monroe. "A lot of hospitals and health systems have operated their own home health and hospice divisions as a loss leader, so these JVs are a way to improve the business model and do it at scale."
While Residential Group has managed home health and hospice services for Edward-Elmhurst over the past 10 years, other health systems have tried to develop internal home health divisions, with mixed success.
Tenet Healthcare Corp., for instance, sold its home health and hospice business to Amedisys in 2017, which provided a financial boost. Baylor, Scott & White also offloaded its home health segment into a joint venture with AccentCare and Christus Health tapped LHC Group to manage its home health, hospice and long-term hospitals via a joint venture. Beaumont Health sold most of its home health and hospice business in 2019 to Alternate Solutions Health Network and formed a joint venture.
It has been hard for some health systems to compete with home health agencies given their cost structure, experts said. Managing a large remote-based workforce isn't typically a health system's core competency—integrating home health into their broader organization also proved difficult. As a result, they've turned to companies like LHC Group to help them smoothly transition patients from hospitals to their homes without taking on too much risk, industry observers said.
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