Optum Rounds Out Its Home Health Portfolio as Competition Heats Up

UnitedHealth Group (UHG) and its information and tech-enabled health services business Optum have been grabbing headlines over the past 15 months as they continue their rapid footprint expansion into home-based post-acute care services.

UHG via Optum plans to shell out $3.3 billion to acquire home health care company Amedisys, a deal that is still subject to regulatory review. Amedisys provides value-based home health, hospice, palliative care and skilled nursing care at home to more than 465,000 patients per year, its website notes.

In March 2022, UHG paid $5.4 billion to buy LHC Group, which provides home health, hospice, home- and community-based services and facility-based care in 38 states and the District of Columbia. The company says it reaches 68% of the U.S. population 65 and older.

But there’s more to these developments than Optum’s simply buying market share. Other competitors in this highly active sector have been busy as well. CVS Health completed its purchase of Signify Health for $8 billion in March and Walgreens Boots Alliance in October snapped up the remaining 45% stake in CareCentrix, a home health benefits-management firm.

By bringing care into the home, payers like CVS’ Aetna and UHG believe they’ll be able to lower costs and act on health concerns before they become more acute.

For its part, Optum also has focused on buying companies that complement each other, Tyler Giesting, director in West Monroe’s health care and life sciences practice, recently told MedCity News.

LHC Group’s personal care services business helps with nonmedical services like meal preparation, an area that Amedisys gave up this year. Optum, through its Landmark Health acquisition, also has a geriatric primary care offering. This creates the potential for the combined organization to provide a more diverse range of services for patients across more of the post-acute care space as their needs change and to do it at a greater operating scale, Giesting noted.

This strategy’s effectiveness will be determined in the years to come. In the meantime, the post-acute care market seems likely to grow increasingly competitive among those looking to transform care — whether it be traditional providers or disruptors that have insurance assets, provider capabilities and services aimed squarely at America’s senior population.

And no matter who the winners will be, it appears they will be pressed to deliver high-quality care at reduced costs after the Centers for Medicare & Medicaid Services recently proposed cutting reimbursements to home health agencies by 2.2% or $375 million vs. 2023 payment levels.

Nevertheless, the opportunity for the winners in this market will be significant.

McKinsey & Company estimates that $265 billion worth of care services could shift from traditional facilities to the home by 2025 without reducing quality or access. This would represent 25% of the total care cost for Medicare fee-for-service and Medicare Advantage beneficiaries.