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UnitedHealth Group subsidiary Optum will combine with in-home healthcare service provider LHC Group, with UHG purchasing the latter for about $5.4 billion.
LHC provides healthcare services in the home for a demographic of mostly older patients dealing with chronic illnesses and injuries. It will be melded with Optum, which manages drug benefits and offers data analytics services and works with more than 100 health plans.
WHAT’S THE IMPACT
Optum positioned the move as helping to advance value-based care, and said it would accelerate the combined companies’ ability to deliver integrated care, leading to improved outcomes.
LHC Group’s 30,000 employees, including frontline care providers and administrative and support personnel, provide more than 12 million annual in-home patient-focused interventions, according to the announcement.
The organization’s quality scores run about one-third higher than the industry average, the companies said. The LHC Group leadership team will continue forward as part of Optum Health.
The agreement calls for the acquisition of LHC Group’s common stock for $170 per share in cash and is expected to close in the second half of 2022 subject to shareholder approvals, regulatory approvals and other customary closing conditions.
Co-founders Keith and Ginger Myers will personally invest $10 million in UHG stock following the close of the combination.
The acquisition is expected to be neutral to UHG’s outlook for adjusted net earnings per share in 2022, modestly accretive in 2023, and advancing strongly in subsequent years.
THE LARGER TREND
Hospital at home services have risen during the pandemic.
There are many hospital at home services, from urgent care, to skilled nursing, to home infusion services. But acute care at home has received the lion’s share of attention from health systems, according to Mark Larson, principal of Sg2, a consulting and analytics firm and Vizient subsidiary.
Hospital at home became a concept that found itself in the right place at the right time, he said. Hospitals saw the hospital at home model worked so well, both for the patient and for the economic benefits, that the model is being pursued beyond the pandemic.
There is a financial advantage – Larson estimates a $3,000 contribution margin – if hospitals can backfill a lower-acuity patient from the hospital to the home, for a patient with a higher acuity-level and higher margin. Another advantage is providing an alternative avenue for hospitals to participate in value-based arrangements, especially with Medicare Advantage payers.
The Optum and LHC merger is focused more on services at home for those who are chronically ill or injured.
During the HIMSS22 annual conference in Orlando, Philips gave its top predictions for the future of healthcare systems over the next three years based on labor market trends and the expansion of hospital-at-home services. Among those predictions: Over the next three years, 40% of providers will shift 20% of hospital beds to the home.