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H2C INDUSTRY INSIGHTS • M&A
Why PACE Presents Strong
Opportunity for Investment
By William B. Hanlon III, Bill Watts, and Renee Rizzuti
September 9, 2020
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Hammond Hanlon Camp LLC (“H2C”) is an independent strategic advisory and investment banking firm with a singular focus on health care. Our commitment to exceed our clients’ expectations begins with senior leadership on every engagement and continues with independent and objective strategic advice. Our belief in the markets and in the power of competition has resulted in loyal clients and long-term relationships.
The experienced professionals at H2C are well positioned to serve as your trusted advisors. We have the expertise to understand the unique complexities of the healthcare industry and an in-depth knowledge of the range of potential alternatives essential to designing and implementing highly successful business and financial strategies. We bring in-depth knowledge and experience across the full continuum of care and across a wide range of healthcare-related businesses.
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The growing trend toward community-based, integrated care continues to gain momentum, and this trend may even be accelerating in the midst of the pandemic. One of the more recent developments in community-based care is the formation and expansion of Programs for All-Inclusive Care for the Elderly, or “PACE,” also known in the mid-Atlantic states as “LIFE,” or Living Independence for the Elderly.
PACE programs are designed to manage the complex medical, functional, and social needs of seniors who require nursing home-level care, with the substantial majority of participants being Medicaid and Medicare beneficiaries. The goal of these programs is to reduce the cost burden of unnecessary nursing home admissions while allowing participating seniors to receive appropriate care and services at home or in other lower-cost settings.
For PACE enrollees, who have complex healthcare needs, these programs offer a vital way to receive highly integrated care and daily support that reduces total costs of care while protecting seniors’ independence. According to the National PACE Association (“NPA”), states pay PACE programs on average 13 percent less than the cost of caring for a comparable population through other Medicaid services, including nursing homes and comparable community-based waiver programs. And PACE programs demonstrate an ability to reduce hospital readmission rates, resulting in further savings the total cost of care.
But PACE only exists in 31 states—and the limited reach of this program means many seniors who would otherwise qualify for services are unable to gain access. More than two-thirds of Medicaid-eligible seniors with complex care needs do not have access to PACE. Only eight PACE organizations have enrollment higher than 1,000; of these, three have enrollment higher than 2,000, and one has enrollment greater than 3,000.
As the need for PACE services rises, experts believe PACE is on the verge of significant expansion—presenting strong opportunity for home health providers and private equity investors.
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