Preparing for a Resurgence in Hospice and Home Health Care Mergers and Acquisitions
Author: Shea Swenson
Posted: January 7, 2025
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Mergers and acquisition (M&A) activity in the home health and hospice space has fluctuated over the last few years. These dynamic shifts reflect the broader changes in regulations, evolving patient needs, and the healthcare space at large.
However, as the new year begins, home health and hospice agencies are preparing for a change in activity after a cooling period of activity in 2022 and 2023.1 In 2024, hospice deal volume increased by quarter, but had not reached the record highs in 2019 pre-covid.
Between the positive momentum of 2024 and evolving market dynamics, agencies are preparing for a potential resurgence in M&A activity. Let’s take a closer look at what is fueling this growth, what investors are seeking, and how MHA can help navigate the complex process.
What Is Driving The Resurgence In Home Care Mergers and Acquisitions?
Economic Stabilization
The healthcare market has regained stability after changes caused by the pandemic, fluctuating interest rates, and inflation. With this stabilization, organizations and investors are gaining confidence in the market dynamic. Private equity firms, a popular hospice buyer, are also gaining confidence in the new market. Private equity activity is “anticipated to ramp back up by the end of this year and beginning of next,” according to Rebecca Springer from Pitchbook.1
Regulation Clarity and Value-Based Care
The Centers for Medicare and Medicaid Services (CMS) introduced clearer regulations, specifically around Medicare Advantage and reimbursement rates, ultimately reducing uncertainty among buyers and sellers. These new regulations additionally push for value-based care. Value-based care aims to improve patient outcomes and enhance care coordination, an evolving expectation for buyers.2
Technological Advancements
The home health and hospice industries are seeing a significant change in technological advancements. More agencies are adopting digital health technologies such as artificial intelligence and machine learning—aspects that are increasingly sought-after in acquisitions.2
What Investors Are Looking For In Home Care Mergers and Acquisitions
When exploring opportunities within home health and hospice mergers and acquisitions, investors are prioritizing agencies that demonstrate:
Regulatory Compliance: With regulatory changes proposed by CMS, including stricter rules for Medicare, agencies that adhere to compliance standards are more likely to be sought after by buyers.
Operational Strength: Agencies with efficient management systems, diverse referral sources, and effective cost controls stand out as acquisition targets. Focusing on workforce retention, diversifying services, and maintaining accurate financial records are all ways to improve and attract buyers.
Technology Adoption: Investing in digital tools such as telehealth, data analytics, and other tech-enabled care solutions can help improve efficiency in care and operations. These innovations ultimately support better patient outcomes and overall efficiency while helping agencies to differentiate themselves in the market.2
How MHA Supports Home Health and Hospice M&A
Mergers and acquisitions in the home health and hospice sectors are not just about growth—they are strategic moves to achieve greater operational efficiency and scalability. Through M&A activity, home care organizations can optimize resources, expand their footprint, and enhance their ability to deliver quality care.
Maxwell Healthcare Associates offers invaluable expertise for home health and hospice agencies looking to scale, streamline, and optimize their operations through mergers and acquisitions. We know that acquiring and integrating home health and hospice agencies requires strategic planning to achieve sustainable growth and efficiency—that’s why we provide pathways to clinical, financial, and operational success with our home health and hospice seller agency check. This tailored service evaluates your agency’s readiness for a merger or acquisition by focusing on compliance, operational efficiency, and financial transparency.
Whether you need help with a pre-sale health check, due diligence, or a Strategic Integration Plan (SIP), MHA’s industry experts are here to help unlock your agency’s full potential, scale your operations, and drive greater efficiency through strategic M&A support solutions. Visit www.maxwellhca.com or contact us at [email protected] to explore our services that will prepare your agency for the opportunities ahead.
Resources
1. https://hospicenews.com/2024/11/13/signs-of-life-the-2025-hospice-ma-outlook/
2. https://vertess.com/blog/why-im-very-optimistic-about-healthcare-ma-for-2025/