Deaconess Associations Incorporated (DAI) has agreed to acquire 31 home health and hospice agencies – primarily home health – from HCA Healthcare.
The agencies, which consist of 24 home health locations and seven hospice locations, are spread across eight states. The deal is part of DAI’s strategic push to ‘double down’ its home health and hospice offerings, DAI CEO Trey Crabb told Home Health Care News.
“It gave us an opportunity in one transaction to buy something with some scale,” Crabb said. “It ended up making strategic sense for us, both in terms of the new markets that we’re going to enter, but also some of the assets that we already operate are in markets or close to markets where HCA had a presence, and so we’re adding to those. From a geographic and just opportunity perspective, it makes sense for us.”
The 31 agencies are primarily located in Texas and Florida, with smaller numbers in Tennessee, Kentucky, Virginia, Missouri, Kansas and Colorado. The agencies will become part of Central Pyramid, one of DAI’s four owned subsidiaries, and will retain local brands except in any instances where HCA requires DAI to change the name. DAI will hire all of the 31 agencies’ approximately 1,000 employees as part of the transaction, Crabb said.
DAI subsidiary Central Pyramid is a home health and hospice organization that often operates through long-standing local brands. Central Pyramid will continue to expand its ability to care for higher-acuity patients, Cherie Elledge, CEO of Central Pyramid In-Home Care Network, told HHCN in an email.
“Our strategy will be driven by investing in our people and culture, advancing clinical excellence, entering strategic markets and developing meaningful partnerships, joint ventures and relationships with health systems,” Elledge said.
Central Pyramid also aims to adopt new technologies as it grows, including tools designed to improve outcomes, care delivery and the employee experience.
Cincinnati, Ohio-based DAI is a faith-based, independent, non-profit health care enterprise with an over-$1 billion portfolio of diversified health services, programs, investments and community grant initiatives across the country. The organization operates in 23 states, six of which include home health and hospice offerings. DAI also provides physical, occupational and speech therapy in senior living communities across its footprint.
Home health, growth strategy
Crabb said the investment in home health made sense for DAI and Central Pyramid, despite rising labor costs and ongoing reimbursement pressure.
“We felt like growing larger makes sense in that environment, and serving more people, and spreading our costs over a bigger operation, and so we’ve made the decision to double down on home health and hospice,” Crabb said. “It’s important to us. It aligns with our mission. It’s a business we want to be in, and we think being bigger than it is the right strategy.”
Nashville-based HCA Healthcare is a health care network comprising 189 hospitals and approximately 2,600 sites of care in 19 states and the United Kingdom.
The acquisition expands DAI’s geographic footprint while increasing density in several existing markets, Crabb said.
Over time, DAI hopes to offer a continuum of home-based care services across its markets. For example, where it currently operates only home health, it may add hospice and palliative care, and vice versa.
While DAI aims to increase its density and expand its service lines, the organization is unlikely to complete another such acquisition any time soon, Crabb said.
“80% of my focus is on our existing business, and really 20% is looking outside for things like this,” Crabb said. “I wouldn’t say that this is going to be frequent or common. We looked at this as a one-time opportunity, and we’re just really excited to be in this position.”
Elledge said that Central Pyramid will strengthen density and expand through organic and acquired growth. DAI aims to grow in each of the new states it entered through the acquisition, Crabb said.
“With our mission and not-for-profit values here, we think that all of those services are extremely important,” Crabb said. “We think that care in the home is where things are headed, and we want to be connected there.”
The deal is expected to close by the end of September.