New York private equity group, BelHealth Investment Partners, has acquired a controlling interest in Richmond, VA home healthcare provider Care Advantage. The home healthcare and private duty company provides both skilled and unskilled home care services to more than 1,000 patients in the Richmond Virginia area. Care Advantage was founded in 1988 by Deborah Johnston. BelHealth’s intent is to create a regional, diversified home healthcare platform. The private equity group has hired former Intrepid USA and Amedisys home care executive, William Mayes, to lead Care Advantage.
This is a good signal to the home care market that diversified revenue (private duty and Medicare) models is a solid strategy. Both Amedisys and Almost Family have been pursing this strategy and BelHealth likely sees these publicly traded providers as the ultimate acquirers of Care Advantage in the future. Amedisys has recently made several investments in private duty in the Boston area and has indicated is will make future investments in other markets. Almost Family has made dozens of investments in private duty and Medicaid over the last five years, particularly in Ohio. Of the three publicly traded home care companies, Almost Family is the most diversified in terms of revenue.
As Medicare margins continue to decline, companies have launched private duty initiatives or acquired local private duty agencies. We expect this trend to continue as Medicare margins come in line with those of private duty. Also watch for other large acquisition to be announced in the coming days of Medicaid companies getting into the Medicare business.
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