Optum Acquires LHC Group for $5.4B

UnitedHealth Group subsidiary Optum will acquire home health and hospice company LHC Group for $5.4B. The acquisition highlights a growing trend in healthcare of shifting care from the hospital to the home. 

The Deets

Optum is UnitedHealth Group’s health services arm, which is a behemoth of a company. You’ve probably used their services and didn’t even realize it. LHC Group specializes in home health and hospice care. They have 960 locations in 37 states and brought in $2.2B in revenue last year. While the home health and hospice care market is quite fragmented, LHC Group makes up most of the market share at around 4.5%. The goal of the acquisition is to provide more integrated care.

LHC Group has some nice market share and revenue, sure. But what really makes them attractive to Optum is this “home health and hospice care,” an area in healthcare that’s about to take off as the population ages. After all, the quality of home care is the same, if not better than hospital care. Home care is also cheaper. Here’s what one analyst predicts:

UHG’s rival Humana already hopped on board the home health train with their acquisition of the largest home health and hospice company Kindred at Home.

Connecting the Dots

Hospitals across the country are trying out Hospital at Home programs, which I discussed several weeks ago. These programs allow for intensive care in the comfort of the patient’s home and are safer, cheaper (no need to pay for fixed facility costs) and more effective than traditional hospital care. It takes a tremendous amount of coordination though.

This acquisition is unique in that it hits many of these key areas in the image above: Optum = provider, UHG = Reimbursement, LHC Group = supplies the tech.

Key Takeaways

• Health at home will be the next big thing.

• UnitedHealth Group is a powerhouse of a company.

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