Dive Brief:
Providence is expanding its presence in the home care market after the nonprofit health system agreed to launch a joint venture this week with home care provider Compassus.
The JV, which will be called Providence at Home with Compassus, will offer home health, hospice, community-based palliative care and private duty caregiving services.
Compassus will manage operations, according to a press release. The JV will operate 24 home health locations in Alaska, California, Oregon and Washington, and 17 hospice and palliative care locations in Alaska, California, Oregon, Texas and Washington. There’s no timeline yet on when the parties might finalize the proposed JV, and the deal is still pending regulatory review in Oregon.
Dive Insight:
Providence wanted to form the JV to meet aging patients’ care requirements, CFO Greg Hoffman said in an interview about the initiative.
“Home health and hospice — it’s growing in all our communities in terms of needs, and it’s critical as we think about them in our continuum of care, from our acute hospitals, across our medical groups [and] ambulatory areas,” Hoffman said.
Home health also offers Providence the opportunity to reduce patients’ length of stay by opening up another option for post-acute treatment, allowing the system to process higher volumes of patients in acute settings, according to Hoffman.
Providence has recently focused on processing patients more efficiently as it looks to boost admissions and associated revenue.
Maximizing patient revenue is critical for Providence. The health system has been chasing a financial turnaround since the pandemic, when industry headwinds caused the system to suffer heavy financial losses.
This year, in large part due to Providence’s recovery and renewal efforts, the health system was in the black operationally for the first six months of its fiscal year.
One initiative was reducing patients’ length of stay, which would allow the health system to process more patients. During the first half of the year, Providence decreased patients’ average length of stay by 4% by opening up greater access to post-acute care, according to an August quarterly report.
Hoffman said that although the company has been recently known for its cost-cutting maneuvers — including downsizing and restructuring its executive team in 2022 — the system is ready to pursue an expansion.
Providence was attracted to Compassus’ track record, which includes past partnerships with nonprofit health systems such as Ascension, Bon Secours Mercy Health and OhioHealth.
“We go through a lot of diligence to ensure that we pick the right partners,” Hoffman said.
Compassus currently offers home health services, including skilled nursing visits, physical therapy, occupational therapy, rehabilitation services, as well as hospice care, palliative care and home infusion services.
The global home health market is expected to balloon to $666.9 billion by the end of the decade, up from $420.8 billion in 2024, according to market research firm Grand View Research.
Baby boomers’ enhanced demand for services and a broader adoption of telehealth will drive market growth, as aging populations require more care and advancements in technology allow additional patients to seek care at home.
Vice President Kamala Harris has also had her eye on expanding Medicare coverage for certain home health services if she wins the presidential election in November.
Former President Donald Trump has also pledged to prioritize home care, vowing to “ensure seniors receive the care they need without being burdened by excessive costs.”
