According to IBISWorld, the US home care provider market has grown a steady 2.5% over the past five years. Its market size is about $137.2 billion. Demand continually rises as retiring baby boomers seek to remain at home in their elderly years. Bain & Company reports that private equity (PE) firms acquired an estimated $115 billion in 2024 - the second highest total on record. The home care industry is a fragmented, cottage industry - that is, lots of small, unaffiliated operations. That could soon change. PE firms plan to consolidate the industry through acquisitions. As one PE investor commented,"as for competition, you are either at the table or you are on the menu."
What Do Private Equity Firms Do?
PE firms buy companies to increase their value and then sell them at a substantial profit. They do this by cutting operating costs, reducing overhead, capturing market share, raising prices, and other processes to create more sustainable business operations. PE firms primarily buy private operations and install a management team that will get the financial results the PE firm wants. Most PE firms get their funding from private investors and banks. The PE firm has an investment time limit (usually 5 to 7 years) to make substantial investment returns for their investors. Some of the top PE firms in healthcare include:
Addus HomeCare: acquired by Guggenheim Partners
Companions Forever: acquired by BPEA Private Equity and InTandem Capital Partners
AccordCare: acquired by BPEA Private Equity and InTandem Capital Partners
Specialty Service Solutions: acquired by Great Point Partners
HouseWorks: acquired by InTandem Capital Partners
Senior Helpers: acquired by Waud Capital Partners
Berkshire Homecare: acquired by Centerbridge Partners and the Vistria Group
My Care at Home: acquired by Centerbridge Partners and the Vistria Group
Superior Health Holdings: acquired by Renovus Capital Partners
SYNERGY HomeCare: acquired by Levine Leichtman Capital Partners
How Can You Protect Your Agency?
As our Founding Father George Washington often said, "the best defense is a good offense." Here are some moves to help home care and home health owners:
Ensure your agency's brand is well known in the community.
Know your target audience and the needs they have.
Define the specific geographic area you compete in and protect it.
Offer high quality and best of breed services.
Offer a fair price for great service.
Train your staff in patient care as well as client interpersonal skills.
Get client feedback. Promptly and professionally reply to it.
Communicate often with your team about your agency's core values
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