Private Equity Health Care Acquisitions – April 2022

In light of the growing investor interest in healthcare and the risks associated with private equity ownership of healthcare companies, the Private Equity Stakeholder Project will be tracking private equity-backed healthcare acquisitions. Below is a list of private equity healthcare buyouts and add-on acquisitions completed or announced during April 2022. We will continue to track acquisitions on a monthly basis.

See March 2022 acquisitions here.

Kindred at Home

Private equity firm Clayton, Dubilier & Rice (CDR) struck a deal with Humana to buy a 60% stake in its hospice and personal care business Kindred at Home (KAH) for $2.8 billion.[1] KAH is one of the largest home health and hospice care providers in the US, with approximately 43,000 employees.[2]

Humana has owned KAH since 2018, when it purchased a 40% ownership stake in the company alongside private equity firms Welsh, Carson, Anderson & Stowe (WCAS) and TPG Capital, which held the remaining 60% stake. Then in 2021, Humana bought out the private equity firms’ shares for $5.7 billion.[3]

CDR’s acquisition of KAH marks another significant step in private equity’s growing footprint in the hospice industry. Between 2011 and 2020 private-equity-driven hospice deals rose nearly 25%.[4] Hospice care in the US is now dominated by for-profit providers, which in 2017 made up about two-thirds of all hospices compared to fewer than a third in 2000.[5]

For-profit ownership of hospice companies has been linked to lower standards of care, fewer patient visits, higher hospitalization rates and poorer pay than their nonprofit counterparts.[6]

In a March 2022 report, Private Equity at Home: Wall Street’s Incursion into the Home Healthcare and Hospice Industries, PESP wrote: “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.”[7]

Private equity ownership of hospice companies has also attracted scrutiny from lawmakers. Last summer, Senate Finance Committee Chairman Ron Wyden (D-Ore.) and Sens. Elizabeth Warren (D-Mass.) and Sherrod Brown (D-Ohio) opened an investigation into quality of care issues at PE-owned hospice companies that centered on KAH.[8]

In a letter to Kindred at Home, the Senators wrote: “We are concerned that when applied to hospice care, the private equity model of generating profit on a rapid turnaround can occur at the expense of dying patients and their families.” The Senators requested quality indicators at KAH over time and information about private equity ownership and activities between 2017 and 2021, when it was owned by Humana, TPG, and WCAS. [9] The results of the investigation have not been publicized.

See: “Private Equity at Home: Wall Street’s Incursion into the Home Healthcare and Hospice Industries”

April PE Buyouts

April Add-On Acquisitions

[1]https://www.cdr-inc.com/news/press-release/cdr-acquire-humana-home-hospice-and-personal-care-divisions

[2] Pitchbook, accessed April 2022.

[3]https://homehealthcarenews.com/2021/04/humana-to-acquire-all-of-kindred-at-home-divest-hospice-and-community-care-operations/

[4]https://hospicenews.com/2021/03/26/private-equity-investment-in-hospice-hits-all-time-high-valuations-rising/.

[5]https://www.gao.gov/assets/gao-20-10.pdf

[6]https://www.gao.gov/assets/gao-20-10.pdf

[7]https://pestakeholder.org/wp-content/uploads/2022/03/Home-Healthcare-and-Hospice-report.pdf

[8]https://www.finance.senate.gov/chairmans-news/wyden-brown-warren-probe-private-equity-ownership-of-kindred-at-home

[9]https://www.finance.senate.gov/imo/media/doc/080621%20Wyden%20Brown%20Warren%20Kindred%20Hospice%20Private%20Equity%20Letter.pdf