Stateline : Private equity’s growing footprint in home health care draws scrutiny

A Stateline story last month looks at the lightly-regulated home health care industry and the private equity firms finding the space to be lucrative.

Stateline January 31, 2024: Private equity’s growing footprint in home health care draws scrutiny

Help at Home, a major provider of home care services in Alabama, suddenly ceased operations in the state, leaving agencies scrambling to find caregivers for over 1,100 clients. The company cited challenges with the state’s reimbursement and regulatory environment. Critics see this as a cautionary tale of private equity investment in health care, where profit motives may compromise quality of care. Help at Home is private equity-owned, by firms Centerbridge Partners and Vistria Group, and continues to provide in-home care in a dozen other states.

Private equity firms are increasingly investing in the home care industry due to its growth potential, driven by an aging population and cost-saving preferences. However, these firms often load acquired companies with debt, making them financially vulnerable and prone to exiting states with less favorable reimbursement rates. While Medicaid expansion could alleviate some challenges, private equity’s profit-driven approach remains a concern. State and federal regulations targeting transparency, staffing ratios, and wage increases for caregivers may mitigate some risks associated with private equity ownership in health care.

“We leave a lot to the whims of the market and allow private players to dictate access to and quality of health care, and the case of Help at Home is a great example of that,” said PESP’s Mary Bugbee told Stateline. “At the end of the day it’s about money, and if we don’t have guardrails in our policies to prevent these pullouts, they’re going to keep happening.”

“Extra debt can leave a company more financially vulnerable and more likely to look for less-profitable service lines to cut,” said PESP’s Michael Fenne.

“This is a good example of the extent that private equity can shape the health care landscape in a state,” Fenne told Stateline using PE-owned home care company Help at Home’s abrupt departure from Alabama as a prime example. “They can do that in different ways; sometimes it’s cutting staff, sometimes it’s shedding real estate. What stood out about this situation is that they went beyond any of those more mitigated measures toward a complete removal from the state.”