PE-owned home health company terminates operations in Alabama
September 21, 2023
Private equity-owned home health provider Help at Home will completely terminate services in Alabama at the end of September after 45 years in the state, citing Alabama’s inaction to expand Medicaid.[1] As a result, Help at Home will lay off 785 employees throughout the state.[2] As of September 2023, the company claimed to employ 49,000 caregivers who provide services to 66,000 seniors and people with disabilities in twelve states.[3]
Alabama’s inaction to expand its Medicaid program is certainly a challenge for healthcare providers in the state. But private equity’s involvement cannot be ignored. According to one recent analysis, private equity firms exit markets eight times more frequently than public firms.[4]
Help at Home is owned by private equity investors Centerbridge Partners and Vistria Group. The firms acquired the company in November 2020 from private equity firm Wellspring Capital for $1.4 billion, with Wellspring retaining a minority stake.[5] The buyers partially funded the deal by placing $745 million in debts onto Help at Home.[6] The company has since then taken on more debt to fund additional acquisitions. In 2022, credit rating agency Moody’s Investor Service estimated Help at Home’s debts to be approximately seven times the amount of its equity.[7]
Help at Home’s owners have each previously owned elder and disability care companies with concerning outcomes. For example, between 2015 and 2019 Wellspring Capital owned AdvoServ (later rebranded to Bellwether Behavioral Health), a behavioral health and disability services provider operating in four states.[8] AdvoServ ceased operations in 2019 after multiple investigations by state agencies found evidence of abuse and neglect.[9]
Help at Home’s current majority owners—Centerbridge Partners and Vistria Group—also own Sevita Health, a disability services provider that claims 45,000 employees and 55,000 clients.[10] In February 2022, PESP published a report detailing how Centerbridge and Vistria collected almost half a billion dollars in debt-funded dividends from Sevita over two years.[11] During their ownership, the company has faced allegations of widespread abuse, neglect, and deaths at its foster care and residential programs.[12]
Following Centerbridge and Vistria’s acquisition of Help at Home in 2020, newly appointed leadership indicated that Help at Home would pursue an aggressive growth strategy.[13] The company has made multiple acquisitions in 2023, expanding its reach in Pennsylvania,[14] Georgia,[15] Ohio, and Indiana.[16] In 2022, Help at Home acquired two home care agencies in New York, gaining 10,500 clients and 12,000 employees.[17]
The company’s plans to leave Alabama will result in layoffs for 785 workers. A spokesperson for Help at Home said the decision to leave Alabama was in part because the state’s inaction to expand Medicaid.[18] As of July, the state is one of ten to have not adopted the Affordable Care Act’s expanded Medicaid coverage.[19]
Many Alabama residents cannot obtain necessary healthcare due to state inaction to expand Medicaid. If Alabama were to accept federal funding to expand Medicaid, an estimated 300,000 state residents would gain eligibility for the program.[20] According to one analysis, the state uninsured rate would decline by an estimated 43.1% if Alabama were to expand its Medicaid program.[21]
Alabama’s inaction to expand Medicaid has likely limited Help at Home’s ability to operate, as it has for all providers operating in the state. In October 2020, Moody’s noted, “given its high percentage of revenue generated from Medicare and Medicaid, HAH is exposed to regulatory changes and state budget challenges.”[22]
However, Help at Home’s private equity ownership may have made it less capable than other providers of financially navigating the state’s tight reimbursement terrain. Centerbridge and Vistria acquired Help at Home with borrowed funds secured by the company, i.e., Help at Home is liable for the debts its owners used to buy and grow it, and must pay the debt and interest.
More broadly, private equity investment in healthcare is characterized by heightened focus on near-term financial outcomes, with firms seeking to make outsized returns in a three-to-seven-year period.[23] According to one recent analysis, private equity firms exit markets eight times more frequently than public firms.[24]
Help as Home’s exit from Alabama highlights how profit-driven investors can shape the economy of care. Help at Home has pursued growth in other states but now leaves Alabama entirely despite a continuing local need for its caregivers’ services.
Alabama and other states that have not already done so should immediately adopt the ACA’s expanded Medicaid coverage. Policymakers and regulators should also curb private equity’s reliance on debt-funded growth for short-term financial gains, which can leave companies with fewer resources to meet operating costs.
More resources:
- See our February 2022 report “The Kids Are Not Alright: How Private Equity Profits Off of Behavioral Health Services for Vulnerable and At-Risk Youth” for more on Centerbridge, Vistria Group, and Wellspring.
[1] Hannah Denham. “Home Health Company to Shutter Alabama Operations, Lay off 785 Employees.” AL.com, September 15, 2023. https://www.al.com/news/2023/09/help-at-home-to-lay-off-785-workers-and-leave-alabama-blaming-states-medicaid-policies.html.
[2] Made in Alabama: Alabama Department of Commerce. “WARN List,” September 1, 2023. https://www.madeinalabama.com/warn-list/.
[3] Help at Home. “Our Story.” Accessed September 19, 2023. https://www.helpathome.com/about/.
[4] Diana L Moss and Oscar Valdes Viera. “The Growth of Private Equity Ownership in the Home Healthcare Market,” p. 6, June 6, 2023. https://ourfinancialsecurity.org/wp-content/uploads/2023/06/AFFR_AAI_PE-Home-Health_Complete_6.6.23-1.pdf.
[5] Help At Home LLC. “Help at Home Acquired by Centerbridge Partners and The Vistria Group From Wellspring.” Cision PR Newswire, October 30, 2020. https://www.prnewswire.com/news-releases/help-at-home-acquired-by-centerbridge-partners-and-the-vistria-group-from-wellspring-301163971.html.
[6] Moody’s Investors Service. “Moody’s Assigns a B2 CFR to Help at Home; Stable Outlook | Rating Action,” October 5, 2020. https://www.moodys.com/research/Moodys-assigns-a-B2-CFR-to-Help-at-Home-stable-Rating-Action–PR_433679.
[7] Moody’s Investors Service. “Moody’s Assigns B1 to HAH Group Holding Company, LLC’s Incremental First Lien Term Loan | Rating Action,” March 23, 2022. https://www.moodys.com/research/Moodys-assigns-B1-to-HAH-Group-Holding-Company-LLCs-incremental-Rating-Action–PR_464274.
[8] Wellspring Capital Management LLC. “Wellspring Capital Management Acquires AdvoServ.” Cision PR Newswire, November 24, 2015. https://www.prnewswire.com/news-releases/wellspring-capital-management-acquires-advoserv-300183794.html.
[9] Kim Mulfor, “Judge approves receivership request for Bellwether, state’s largest group home operator,” NorthJersey.com, June 17, 2019. https://www.northjersey.com/story/news/2019/06/17/bellwether-group-homes-new-jersey-receivership-approved/1479623001/; Heather Vogell, “Maryland’s Move to Pull Children From Group Homes Came Too Late for Teenager Who Died,” ProPublica, October 18, 2016. https://patch.com/maryland/bowie/marylands-move-pull-children-group-homes-came-too-late-teenager-who-died; Heather Vogell, “Florida Moves to Shut Down For-Profit Residence After Finding Horrific Abuse and Neglect,” ProPublica, April 19, 2018. https://www.propublica.org/article/florida-carlton-palms-educational-center-horrific-abuse-and-neglect.
[10] Sevita. “About Us.” Accessed September 19, 2023. https://sevitahealth.com/about-us/.
[11] Eileen O’Grady. “The Kids Are Not Alright: How Private Equity Profits Off of Behavioral Health Services for Vulnerable and At-Risk Youth.” Private Equity Stakeholder Project, February 2022. https://pestakeholder.org/wp-content/uploads/2022/02/PESP_Youth_BH_Report_2022.pdf.
[12] Michelle Conlin. “Private Equity’s Latest Play: The Troubled Kids Industry.” Reuters, February 17, 2022. https://www.reuters.com/business/private-equitys-latest-play-troubled-kids-industry-2022-02-17/.
[13] Andrew Donlan. “Help at Home Continues Executing on Growth Strategy, Acquires Community Care Systems.” Home Health Care News, July 22, 2021. https://homehealthcarenews.com/2021/07/help-at-home-continues-executing-on-growth-strategy-acquires-community-care-systems/.
[14] Patrick Filbin. “Help at Home Adds 1,500 Clients After Latest Acquisition, Enters New Market.” Home Health Care News, January 3, 2023. https://homehealthcarenews.com/2023/01/help-at-home-adds-1500-clients-after-latest-acquisition-enters-new-market/.
[15] Help at Home. “Help at Home Enters Atlanta Market with Addition of Prosper Home Care.” Cision PR Newswire, March 7, 2023. https://www.prnewswire.com/news-releases/help-at-home-enters-atlanta-market-with-addition-of-prosper-home-care-301764538.html.
[16] Patrick Filbin. “Transactions: Help at Home Acquires 2 Home Care Agencies; Addus Completes Tennessee Quality Care Deal.” Home Health Care News, August 2, 2023. https://homehealthcarenews.com/2023/08/transactions-help-at-home-acquires-two-home-care-agencies-addus-completes-tennessee-quality-care-deal/.
[17] Andrew Donlan. “Help at Home Enters New York, Adding 10,050 Clients, 12,000 Employees.” Home Health Care News, April 18, 2022. https://homehealthcarenews.com/2022/04/help-at-home-enters-new-york-adding-10050-clients-12000-employees/.
[18] Andrew Donlan. “Help at Home Lays Off 785 Employees, Exiting Alabama Due To Reimbursement Challenges.” Home Health Care News, September 18, 2023. https://homehealthcarenews.com/2023/09/help-at-home-to-exit-alabama-citing-states-reimbursement-environment-for-hcbs/.
[19] KFF. “Status of State Medicaid Expansion Decisions: Interactive Map,” July 27, 2023. https://www.kff.org/medicaid/issue-brief/status-of-state-medicaid-expansion-decisions-interactive-map/.
[20] Louise Norris. “Medicaid Eligibility and Enrollment in Alabama.” healthinsurance.org, March 31, 2023. https://www.healthinsurance.org/medicaid/alabama/.
[21] Michael Simpson. “The Implications of Medicaid Expansion in the Remaining States: 2020 Update.” Robert Wood Johnson Foundation, June 8, 2020. https://www.rwjf.org/en/insights/our-research/2020/06/the-implications-of-medicaid-expansion-in-the-remaining-states–2020-update.html.
[22] Moody’s Investors Service. “Moody’s Assigns a B2 CFR to Help at Home; Stable Outlook | Rating Action,” October 5, 2020. https://www.moodys.com/research/Moodys-assigns-a-B2-CFR-to-Help-at-Home-stable-Rating-Action–PR_433679.
[23] Anaeze C. Offodile II, Marcelo Cerullo, Mohini Bindal, Jose Alejandro Rauh-Hain, and Vivian Ho. “Private Equity Investments In Health Care: An Overview Of Hospital And Health System Leveraged Buyouts, 2003–17.” Health Affairs 40, no. 5 (May 2021): 719–26. https://doi.org/10.1377/hlthaff.2020.01535.
[24] Diana L Moss and Oscar Valdes Viera. “The Growth of Private Equity Ownership in the Home Healthcare Market,” p. 6, June 6, 2023. https://ourfinancialsecurity.org/wp-content/uploads/2023/06/AFFR_AAI_PE-Home-Health_Complete_6.6.23-1.pdf.
