Advocate Offloads Senior Home Care Business To Private Equity Firm

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Dive Brief:

• Advocate Health announced it sold Senior Helpers, its home care and wellness business for seniors, to Chicago-based private equity firm Waud Capital Partners on Thursday. 
• The Maryland-based home healthcare company provides non-clinical services, such as meal preparation, to clients in 44 states, Canada and Australia. 
• Waud Capital’s Steve Jakubcanin will serve as executive chairman of the board of directors for Senior Helpers, according to the release. Terms of the deal were not disclosed.

Dive Insight:

Advocate Health’s investment arm, Advocate Aurora Enterprises, acquired Senior Helpers in April 2021. Advocate’s president and co-CEO, Jim Skogsbergh, said the purchase of Senior Helpers would allow the health system to become a “destination health company” that moved beyond sick care to focus on wellness. 

Investments in home care have proved lucrative for health systems. Home care revenues rose 50% between 2013 and 2020, according to an August 2022 report from the U.S. Census Bureau. Demand for services is expected to continue to grow as Americans age — by 2030, one in five Americans is projected to hit retirement age, according to the release.

In April 2021, Scott Powder, president of Advocate Aurora Enterprises, said in an interview with Healthcare Dive that Advocate’s investment arm was seeking long-term investments, rejecting the idea that the nation’s third largest health system was looking for a short-term revenue boost. 

“We are not going in with a defined four- to five-year exit strategy because a big piece, obviously, of what we’re trying to do is contribute to the financial health of Advocate Aurora overall,” Powder said.

Still, Advocate sold Senior Helpers less than three years after acquiring it.

The acquisition is Waud Capital’s seventh investment in the home care and post-acute space, according to the release.

The PE firm is one of many seeking profits from senior care. 

Home care mergers and acquisitions were down in 2023 compared to 2021 peaks, due in part to elevated interest rates, according to an analysis from Mertz Taggart. However, during the fourth quarter of 2023, 18 of the 25 home care and hospice transactions tracked by the consultancy involved either a PE buyer or a PE-backed portfolio company.

Private equity-owned healthcare ventures have come under scrutiny as reports indicate quality concerns and threats to competition. 

“Private equity is voraciously acquisitive and engages in consolidation that can increase market concentration but largely flies under the antitrust radar,” warned researchers from the American Antitrust Institute and the Americans for Financial Reform Education Fund in a June 2023 report about private equity acquisitions in home healthcare. “Moreover, a focus on stripping out cost, gaining bargaining power, and rapidly exiting markets to generate high short-term returns potentially jeopardizes the quality of healthcare and the stability of community healthcare systems.”