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In an effort to diversify their business and reach across the continuum of care, some home care providers are choosing to expand their service lines. Florida-based Empath Health is an example of a company making such a move.
Jonathan Freese, CEO of Empath Health, argues that the company needs to expand access to care.
“It's all about expanding access to help people in a bigger and deeper way during advanced and severe terminal post-acute events,” he said at the CONTINUUM conference in the Washington, D.C., area last week. “That was the case,” he said.
Based in Clearwater, Florida, Empath Health provides hospice, home health, palliative care, grief services, Program of Comprehensive Care for the Elderly (PACE), adult day services, primary care services, and more. The company is the parent company of 17 affiliated companies and two charitable foundations.
Earlier this year, the company completed a partnership with TrustBridge, forming the largest not-for-profit acute care provider organization in Florida. Based in West Palm Beach, Trustbridge provides palliative care, hospice care, support services and more.
“We have begun to expand into the area where we feel we have our deepest core competency, which is home care,” Freese said. “Eventually, that led us into the home health division and then the complete care division. Soon, we'll probably be the largest PACE provider in the state of Florida with about 1,000 participants.”
In some ways, diversification is a strategy to ensure Empath Health's overall longevity as a company.
Additionally, Fleece believes that diversification is essential for the company's future prosperity and growth.
“One of the elements that we're kind of dancing around a little bit is the economics of this kind of strategy with economies of scale, best practices and standardization,” he said. “I don't think anyone in this room is ultimately predicting that over the next five to 10 years we're going to receive more reparations. So, two ways to mitigate that. What's the point? Take advantage of economies of scale, reduce administrative and back office costs, and, frankly, jump into a risky business where there is an opportunity for shared savings and a value-based return. We also want to capture this aspect.”
Friese noted that if Empath Health is successful in its efforts here, it could represent a real economic opportunity for the company.
The question is whether to make it or buy it.
When expanding into new service lines, providers must decide whether it is best for them to accomplish this through acquisition or to build from scratch.
At Empath Health, the answer is all of the above.
“We've done all the different ways we can grow: M&A, de novo, joint ventures, collaborations,” Freese said. “We've had success in all categories, but we've also experienced challenges in all categories. We don't know which to prioritize.”
The company conducts an extensive community needs assessment each time it launches a new service line through de novos. This means working with focus groups to identify where gaps in care exist.
“From a competitive standpoint, when we enter a new market, we don't intend to overlap or overlap,” Freese said. “We are trying to be clear about addressing and closing the gaps.”
If Empath Health chooses to pursue M&A, it will all depend on the organization's talent.
“It’s really important to make sure at the forefront that we all believe in a common goal and a common vision of where we need to go,” Freese said.
When deciding whether to further diversify their business, Fleece recommends providers ask themselves core questions such as:
“The core question is: What is your organization currently best at and how can you build on that?” Freese said. “Adding to what you did best today is so important. Ask yourself that question and make it your journey. You might be surprised at the answer.”
Empath Health is learning from the past while incorporating forward-thinking solutions.
“Legacies are great and every organization has a legacy, but legacies can also create legacy thinking and hinder an organization's ability to transform, innovate and grow,” Freese said. “I think some of our lessons were where are we going, why and how do we fit into the organization?”
