Watchdog sounds alarm over private equity investment in home health, hospice

A nonprofit watchdog group is raising a red flag over private equity’s growing role in home health and hospice services. In a recent report, the Private Equity Stakeholder Project said for-profit home health and hospice agencies have been linked to lower standards of care, fewer patient visits, higher hospitalization rates and poorer pay than their nonprofit counterparts.

“Private equity’s increased involvement in for-profit home healthcare and hospice companies may exacerbate the aforementioned issues due to the industry’s focus on profit maximization — sometimes at the expense of good stewardship —and therefore should garner more scrutiny by those concerned about the quality of our healthcare system,” the report noted.

M&A advisor Michael Moran believes the watchdog group’s concerns are overblown. His firm M&A Healthcare Advisors helps home health and hospice agencies find buyers. He told McKnight’s Home Care Daily Pulse many private equity firms buy a majority stake in agencies and provide much needed capital to help the businesses survive and grow.

“They are in the background providing capital for growth initiatives, resources wherever they are needed to improve the business and human capital in terms of hiring,” Moran explained.

Moran said ultimately it is the home health or hospice agency owners who decide what is best for the future of their businesses. That often involves a deal with a private equity firm or a larger company looking to expand its footprint.

“At the end of the day our clients are making decisions on what is best for them and what will help their brand,” Moran said.